Economic Slow Down in Africa
Global Recession Has Reached Africa with Alarming Forecasts
Mar 10, 2009
At the opening of a two days conference in Dar-es-Salaam, Tanzania, the International Monetary Fund (IMF) warned today about a slow down of the African economic growth to 3.25% in 2009, half the growth rate it previously thought. The slump in commodity prices and the credit squeeze are the main causes, the IMF said.
The conference, hosted by the Republic of Tanzania and the IMF, was called with the objective of discussing the external support that the IMF and other Western donors may be able to provide to help mitigate the impact of the crisis on Africa.
Alarming Forecasts for Africa's Economy
The financial crisis has slowly reached the continent but its impacts will soon be severe. This is what the IMF calls "third wave" of the crisis, which is hitting low- income countries and is expected to depress economic growth, put budgets under strain, and weaken external accounts. The risk for millions of Africans is to be pulled back into poverty.
"We must ensure that the voices of the poor are heard. We must ensure that Africa is not left out. This is not only about protecting economic growth and household incomes—it is also about containing the threat of civil unrest, perhaps even of war. It is about people and their futures" said IMF managing director Dominique Strauss-Kahn.
In the past years many African economies have grown at strong rates boosted by rising commodity prices, including oil.
"Africa is already facing the impact of climate change and food insecurity and will be heavily impacted by the economic meltdown. Immediate steps must be taken to allow African countries access to a large increase in financial flows. Africa must be part of the solution to the global economic crisis" said Kofi Annan at the conference.
Africa's New Faces of Hunger
Today sub-Saharan Africa is home of 212 million undernourished (State of Food Insecurity in the World 2008, Food and Agriculture Organization of the United Nations (FAO)). The urban poor in the Horn of Africa are the new faces of hunger in a region where 14.6 million of people now require humanitarian assistance due to poor rains, high food and fuel prices, conflicts, animal diseases, inflation and poverty (SOFI 2008, FAO).
The low growth predictions mean that the conditions of millions of Africans living in poverty are likely to become even worse than now. The IMF confirmed that many countries will not have the funds to protect the poor from the effects of the downturn and may need external assistance. "While African policymakers are rising to this unexpected challenge, donors must also play their part. They must maintain their commitments and scale up, not scale back their support," it said.
The IMF will ask for substantial increase in its funding at the next G20 meeting in April. Whether it will succeed in that, is going to be a chapter of further analysis.
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