The poorest continent is being crowded out of global capital markets because of the massive demands of the developed world, and will need additional aid to avert a “full-blown development crisis”, according to some of Africa’s most influential policymakers.
At next month’s meeting of the Group of 20 countries, representatives of the continent will lobby for fresh resources towards a fiscal stimulus on top of aid already committed by industrialised nations towards reducing poverty.
The myth that Africa and other low-income countries have been only marginally affected by the global economic crisis is exploding, Donald Kaberuka, head of the African Development Bank, Trevor Manuel, South Africa’s finance minister, and Lina Mohohlo, Botswana’s central bank governor, told the FT before a meeting with Gordon Brown, UK prime minister.
African economies are being ravaged by a collapse in world commodity prices. Foreign investment is drying up and some of the continent’s star reformers are struggling to contain ballooning budget deficits.
Countries such as Ghana that were weening themselves off development aid by tapping into international bond markets could face an additional 10 years of aid dependency, Mr Kaberuka said. Overall growth for the continent would be offset by rising populations for the first time in a decade.
“There are 900m Africans who have been doing mainly the right things and now they are being hit by a crisis that is not of their own making,” Mr Kaberuka said. A recurring question was whether African democracy would be undermined as a result of the economic crisis.
Mr Kaberuka argued there was a real risk of a populist backlash against the western reform medicine prescribed over the past two decades if more was not done to prevent economic progress from being reversed.
But the signs are not auspicious. Core development aid has declined by 4 per cent since industrialised nations committed to increasing it at the Gleneagles summit in 2005. Mr Kaberuka said he feared any new pledges for aid to Africa would be tied up with so much conditionality that it would never be deployed.
He cited Iceland, which was able to access emergency financing from the International Monetary Fund in days after the collapse of its banks. African countries appealing for far smaller sums faced at least six months of waiting.