Even though the global financial crisis, which started in the developed world, particularly the United States, has not yet directly hit African economies, experts predict that things are still to get worse before they could get better.
Dominique Straus-Kahn, International Monetary Fund (IMF) Managing Director addressing Ministers and Central Bank Governors and Finance Experts from African countries, at a conference in Dar es salaam, Tanzania, under the auspices of “Change; Partnerships for Africa’s Economic growth”, said, “Continued deleveraging by the world’s financial institutions, combined with a collapse in consumer and business confidence is depressing domestic demand across the globe.”
World Trade is also falling apart at an alarming rate and commodity prices have tumbled.
“Even though the crisis has been slow in reaching Africa’s shores, we all know that it is coming and its impact will be severe,” stated Straus ÔÇôKahn.
He added that ‘the third’ wave of the crisis, which is hitting low-income countries, will depress economic growth, put budgets under strain and weaken external accounts. To this end, the chief of the IMF further pointed out that the threat is not only economic and that, ‘there is the real risk that millions will be thrown back into poverty.”
Against this background, ensuring that the voices of the poorest of the world are heard is viewed as very critical – a point of departure in any endeavor at confronting the challenges presented by the present crisis.
Thus, Straus-Kahn intimated, it is not only about protecting economic growth and household incomes but, it also involves containing the threat of civil unrest, perhaps even of war.
It is about people and their future.
A report of the World Bank projects that over 50 million people in low income countries, many of whom live in Africa, could be thrown back into absolute poverty and obvious ills like sickness and infant mortality.
In this context, a proposal was made during the deliberations by host President, Jakaya Kikwete, before the end of the conference, to the effect that IMF consider reducing charges for its technical assistance in developing countries, adding the current costs are prohibitive and further that consideration be given to offering the services free of charge.
Furthermore, the Breton Wood Institution was asked to increase its support “with more finance greater flexibility, enhanced policy dialogue and further strength of Africa’s voice in the fund”.
However, the IMF official defended the payment for the services saying it reflected partnership and not a case of a powerful body giving orders to an inferior entity.
With regard to increasing finance, he acknowledged the request but stated that it would be a matter of looking at the merits of each case, especially in relation to poor nations.
A report presented earlier by the Institution’s African Department Director, Antoinette Sayeh, highlighted the need by African policy makers to balance two competing priorities, namely, “supporting domestic activity while at the same time maintaining macro-economic stability” Sayeh also made the point that some countries have the space for fiscal easing and therefore it would be proper that they respond by targeting the poor by putting in place social safety nets.
Strikingly though, without Africa’s own initiative, the future is bleak or there is the increasing risk of being mortgaged by the Breton Institution for the salvaging of Africa’s human lives.