As the financial tsunami smashes across the world, how do the Africans feel it? With weak links to the Western economies and low exposure to financial risks, some people say Africa will only see limited impact.
Optimists may well have their reasons, but ordinary consumers and investors here have acutely felt the strain, and the African Development Bank has moderated growth rate for African economy from 6.5 percent to below 5 percent for the year 2008.
CURTAILED CAPITAL INFLOW
Many African countries rely heavily on foreign aid and investments. With troubles at home, rich nations have grown more reluctant to donate or lend.
Eastern African country Kenya signed with its top external financier the European Union (EU) a 400-million-euro budget deal last December. However, the country head of the EU delegation EricVan Der Linden has said recently that a set of conditions must be met before the disbursement.
Any delay or cut in the financial aid would slow down the African nation's infrastructure construction, which in return could scale down economic development.
Meanwhile, tighter control over their wallets also prompted many Westerners to cancel planned African safaris. This will hurt the tourism industry which is the major foreign currency earner in many of the African countries.
On the Cape Verde islands off Africa's west coast, economy grew by 10.8 percent in 2006 thanks to a booming tourism industry. Though the islanders themselves have little to do with the financial upheavals in the outside world, the departure of the once swarming visitors is expected to drag economic growth to around 7 percent this year.
As it becomes harder to secure a job in developed countries, those Africans working abroad are sending less remittances back home, sinking their families into poverty again.
For some Africans, the financial crisis matters not only with the money, but their hope for a better future through education.
The United Nations Educational, Scientific and Cultural Organization has recently warned that millions of children worldwide could miss school as donors delay to honor their commitments. Of the millions, a significant part live in Africa.
INTERNAL PROBLEMS FUELED UP
Poverty has been a chronic ailment for many African nations. The global financial turmoil, which caused depreciation of some local currencies against the U.S. dollar, has made life even harder for Africa's poor.
Local currency depreciation is evident in countries such as Kenya, Cote d'Ivoire, Nigeria and Mauritius. In Kenya, while 1 U.S. dollar traded for 62 shillings at the beginning of the year, it costs around 80 shillings now.
Plummeting shilling, paired with rising food prices, make life almost insufferable for the poor. In most of Nairobi supermarkets, a 2kg pack of maize flour now costs 120 shillings, the same amount that some 40 percent of the nation's population earns for a day's work.
Even like this, neighboring Ugandans choose to buy maize flour cross border in Kenya as prices are higher at home.
Also affected are the stock and real estate markets. As more foreign investors pull back their money, major indexes on the Nairobi stock exchange dropped more than 30 percent from June to the end of October.
As the poor have found life to be much harder, how about the continent's rich nations? South Africa, the region's largest economy, saw growth rate diving to 0.2 percent in the third quarter from 5.1 percent from the previous one.
Feeling the pinch of the global financial crisis, the country has readjusted growth forecast for the year from 4.0 percent to 3.7 percent, following four years of economic expansion at 5.0 percent a year.
WOES BEYOND FINANCIAL FRONTIER
In the era of economic globalization, even vast oceans can't protect the African continent from the tidal waves caused by an financial earthquake in the United States. African people suffer no less than those in developed countries, the only difference is they have woes beyond the financial frontier.
As African Development Bank chief Donald Kaberuka put it, the global economic downturn couldn't have hit Africa "at a worse time" as the continent struggles with food shortages and humanitarian crises.
"Over the past 24 months, Africa has been hit by crisis after crisis. Over the last 12 months, the world has been affected by a financial crunch," he told the sixth annual African Development Forum in Addis Ababa earlier last month.
As the developed world heal their economies, Africa has more wounds to take care of, like the armed conflicts in the Democratic Republic of Congo, pirates in Somalia, as well as the tens of millions of people facing starvation and the danger of deadly epidemics.
Source:Xinhua
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