Africa News blog
African business, politics and lifestyle
Far from being all bad news for Africa, the global financial crisis is a chance to break a dependence on development aid that has kept it in poverty, argues Zambian economist Dambisa Moyo, who has just published a new book “Dead Aid”.
Moyo’s book, her first, comes out at a time when Western campaigners, financial institutions and some African governments have been warning of the danger posed to Africa by the crisis and calling for more money from developed countries as a result. The former World Bank and Goldman Sachs economist spoke to Reuters in London.
“I’m not saying its going to be easy, I’m just saying that there is a real opportunity for policymakers to focus on coming up with more innovative ways of financing economic development. In a way the crisis actually provides the African governments with the situation where they cannot rely on aid budgets coming through from the West.”
Moyo believes more than $1 trillion in development aid over the past 50 years has only entrenched Africa’s poverty, distorted economies and fuelled bureaucracy and corruption. She sees alternatives such as encouraging trade – particularly with emerging markets – encouraging foreign direct investment, microfinancing for enterprise and seeking funds from capital markets.
Where once African officials might have viewed infrastructure projects solely as a good source of kickbacks, these days there is pressure from electorates, at least in some countries, to deliver on promises of improvements.
The growth that many African states have enjoyed in recent years has exposed the failure of the continent’s infrastructure still more starkly – with even South Africa suffering the kind of power outages that much of the rest of Africa has grown far too used to.
Good news and bad news for Africa from the latest take on global risks from the World Economic Forum. Not much danger for most of the continent, it says, from an asset bubble burst. That’s the good. The bad, of course, is that this is because there are not many financial assets to bubble. In fact, it deems the overall exposure even to economic risks is small because African economies are not particularly tied in to global markets.
Actually, the report shows that there are two Africas. Mapped by their susceptibility for economic and asset bubble trouble, most African countries are bunched together in a low risk range. But another, smaller cluster, including Nigeria and South Africa, finds itself in much more peril and shares space on the WEF risk map with Western and Eastern Europe.
It was not the most encouraging message after a year that had few silver linings for the country of 36 million, still recovering from a bout of post-election violence early last year.
Given that the leaders of the world’s most firmly capitalist countries are splashing around unprecedented billions to nationalise banks, prop up industry and try to get economies moving, it might seem churlish for anyone to question South Africa’s ruling ANC for planning to spend a bit more freely.
This weekend, the African National Congress set out its election manifesto priorities of creating jobs and improving education and health – promises interpreted by many as marking a generally leftward shift under the leadership of president in waiting Jacob Zuma.
If you lived on an archipelago that defined paradise with palm-fringed white sand beaches and emerald green waters, you would expect a relaxed, lazy pace of life.
Lazy would be a generous description of the Seychellois soldier’s wave at the entrance to State House as I arrived with my local colleague George Thande – who is admittedly a regular visitor here.
African officials meeting in Tunis this week to discuss the impact of the crisis argued that the continent needed better representation, given the effects that the turmoil is having in Africa as well as the continent’s growing financial importance. The complaint could apply equally to other developing countries.