What many suspected has just been confirmed by a new report, African Economic Outlook 2008/2009, issued by the African Development Bank, the OECD Development Center and the U.N. Economic Commission for Africa. According to the report, the continent will be “gravely” affected by the global economic downturn:
One of the hardest hit regions will be Southern Africa, where even economic powerhouse South Africa will see its growth rate fall to 1.1 percent due to falling prices and demand in the mineral sector and depressed consumption and investment in the domestic economy. This does not bode well for the new South African administration of Jacob Zuma, whose millions of supporters are expecting some taste of the country’s economic benefits that have thus far eluded them.
The least statistically affected region will be West Africa, which contains oil-rich Nigeria as well as economic basket-cases Liberia and Sierra Leone. Nigeria will tick downwards because of slowing investment and OPEC restrictions, but other poorer countries will continue their upward trajectory based solely on the profound weakness of their starting positions.
Nevertheless, the report takes pains to point out that the situation will likely create a situation where “tensions could explode” due to shortages of food and basic living necessities. Many major international deals that would have generated billions in foreign investment and employment opportunities have been put on hold. Foreign aid will simply serve to keep the boats afloat, not move them forward.
This is why World Bank President Robert Zoelleck recently warned that the crisis will cast 50 million or more people back into dire poverty. To claim that the 2015 Millennium Development Goals are looking unreachable is an understatement. We may be heading back to the starting line with regard to African development, which makes it a perfect time to make some hard decisions on the aid vs. trade debate now roaring through academia. If this crisis proves anything to Africans, it is that they are dealing with unstable and unreliable benefactors and that self-sufficiency ought to become their mantra.