Tanzanian President Jakaya Kikwete has called for African leaders and the international community to take concerted actions (although I couldn’t find any specifics) to help Africa weather the current economic crisis. Like the previous commodities boom-then-bust cycle in the 1970s and 1980s, the current downturn threatens to erase the income, health and nutrition gains of the past decade or so, when Africa finally seemed to be breaking out of its economic malaise. (For more on that see the book this blog is named for, my forthcoming Africa’s Turn? with MIT Press.)
What should African countries do? Hopefully they’ve spent the last five years building up foreign exchange reserves, rainy day funds, showing fiscal restraint (knowing that a commodities price crash was inevitable), and making long-run investments in infrastructure projects rather than dealing with short-run political needs … OK, that’s probably too high a standard for any politicians outside of Norway. The next few years are going to be tough for African incomes and wellbeing.
I really believe that African will continue to thrive in this season. The present global uncertainties will pass and the economic realities of our time, the quest for rapid development of China and India, will once again require the resources of Africa.
I am an optimist.
The near future will certainly be tough - but there’s a silver lining for non-commodity exporters, whose economies will be less volatile than those who’ve had a good year or two. My hope seeing the recent rise in private investment in one or two other sectors, more small businesses, and examples like m-transactions (MPesa, MTN…) is that there are enough flickers of activity going on so far below the level of the global economy that they can still catch hold in some countries. Possibly insanely optimistic….