Africa and the financial crisis, is it really going to be a war ?

Africa and the financial crisis, is it really going to be a war ?
H.Tlili

The African Development Bank (ADB) took the initiative to gather the African ministers and bank governors to debate the world financial crisis which has been raging for some time, and about which the world experts say that the poorest among the African countries will be the most affected. At a date between the seism and the G20 Summit, where Africa was represented by the Republic of South Africa alone, invited as an emerging country just like China and Brazil, the leaders coming from other African countries, decided to take action and discuss their own destiny. The Tunisian Prime Minister, Mohammed Ghannouchi, was the only guest among African high officials who, in turn, took the floor to express their need for a positive approach for the continent, some of them even qualified this Summit as a war council, in which the best decisions should be made to minimise the impact on Africa.

Africa saw the tornado in the far !

The African decision-makers were nearly unanimous on the cat that this crisis will progress from Wall street to Main street, that is to say from the virtual finance to the tangible real economy. The international banks operating in Africa are withdrawing partially or totally, fearing the collapse of their home market. However, in exchange, even though the crisis will, undoubtedly, oblige us to adopt a more cautious attitude, some private national and international investors are now bringing to the market a record volume of new funds dedicated to Africa. The financial institutions of the continent must find ridiculous the fact that Africa and most of the African countries have always been considered to be delayed and third world. The initial evaluation of the African banks shows that the majority of these banks as well as the African financial institutions witnessed the crisis from very close. These banks, these financial institutions including the insurance companies are doing relatively well compared to their international counterparts. However, if these banks and institutions benefited of their lack of integration into world economy, we are still concerned about the possible unforecast losses in the local markets of shares or due to the risk of change with the high devaluation of currencies in emerging markets.

If others were not able to avoid impact, Africa also will not also succeed to do so !

But we are sound and healthy on the financial plan, other sectors will certainly be affected. The global aspect of the crisis as well as the vulnerability of most African economies, do not leave room for imagining other scenarios, other than seeing the black continent affected, in turn by the financial tsunami. First, the donations promised by the rich countries to Africa, according to Jean Ping, President of the Commission for the African Union «the financial crisis could reduce once again the ADP (which represents 70% of 2007 budget of the United Nations Fund for Childhood) with the possible consequences this would have on all the engagements made towards Africa». Qualifying the African ministers Summit «a war council», J. Ping warned against a second wave of repercussions of the crisis as well as their impacts on the continent, which is translated in «a decrease in export receipts due to the decreasing world orders in terms of raw material, as well as a recession in the traditional partner markets of Africa which mainly affect tourism». Later, the continent will also have to expect another wave of the crisis drawbacks. There will mainly be an avalanche effect because the fall in export receipts will be followed by a decrease in national revenues, a decrease in the investment capacity, a fall in national demand in public as well as private consumption, a rise in joblessness, an inability to cope with servicing the external debt, and many other aches to be added to a neglected Africa and only considered as a reserve of raw materials by the industrialized countries.

A hard job is awaiting the whole world !

Awaiting a final declaration to finish the activities of this Summit, many issues, solutions, suggestions may be drawn for the African continent in order to cope with the various repercussions of the crisis. First, a climate of confidence must reign, not only in the choices and decisions made by the African political and economic decision-makers, but also and most importantly in the resources of this continent. Before this crisis all the African countries have been able to maintain a growth rate of 6.5%, of course « the economic repercussions are henceforward dark, specifies Donald Kaberuka, President of the Group of the ADB, and that growth rate would decrease now to 5% », but Africa is emerging now after a period of ten years of sustained growth, mainly thanks to international demand in African export products, that is raw materials. There are still so many raw materials in Africa, but also as underlined by the Tunisian prime minister, there is an important amount of human resources. 2008 did not only bring a financial crisis putting everyone in front of difficult choices, but it was also marked by a sharp food and energy crisis, Africa should learn from these crises not to let itself be dragged by overseas forces and expect the worse. A huge work awaits the leaders of the different African countries in order to make more reforms, a work which consists in mainly adopting a strategy which puts the human being at the core. A coordinated action should be undertaken to guarantee a good destiny to Africa, an action which should take into consideration the infrastructure improvement in the different African countries; these were the steps of a long and hard day. A day with as a result a result a small hope for this Africa in war with itself and a victory is too much asking !