AFRICAN SIDE ECONOMICS AND THE WORLD FINANCIAL CRISIS

The impact of the world financial crisis on African economies has been the subject of much debate in academic, business and popular circles on the African continent. Economic professors, financial analysts, ministers of finance, political scientists, journalists, and even opinion leaders in drinking spots, are all volunteering explanations like the six blind men describing an elephant. Some are parroting CNN without quotation marks, others are plagiarizing economic textbooks or financial journals but the question on what impact the crises will have on African economies remains.

By SNOWSEL ANO-EBIE

It is often taken for granted that Africa accounts for an insignificant proportion of world financial transactions. In the playground of world economics African countries can conveniently be relegated to the reserve bench even if South Africa is invited to sit among the emergent nations. Economically speaking, Africa has always provided problems for the world to solve and not solutions to world problems. One can therefore say that Africa will not have an impact on the world financial crisis but the crisis will have an impact on Africa.

In order to perceive how the crisis will affect African countries one must consider what I have decided to call "African Side Economics". Imagine an economy where the politicians decide what growth rate to announce today and what to announce tomorrow. The economic growth rate must thus be politically palateble irespective of the true performance of markets, and the laws of demand and supply. The government in place must constantly be given a good economic image. That is African side economics. Imagine an economy where the most successful businessmen are civil servants of the customs and taxation departments, or treasury officials who pay out money to government contractors for a percentage. Imagine an economy where those who succeed are those who win government contracts to supply everyday items at ten times their market value. That is African side economics. Just imagine a setup where all economic solutions are recommendations from IMF, the World Bank, the European Union and other bilateral donors. That is African side economics.
Now, how will African countries embrace the crisis if the global effect syndrome were to grip their countries?

1. The overbearing presence of politicians on the economy will become even more suffocating.

2. Commercial banks which are already reluctant to grant loans to investors will become more prudent. And this means that economic activities will slow down, for want of capital. Unemployment will attain astronomical proportions, and many more families and individuals will be recruited into the vicious cycle of poverty.

3. World Bank and IMF solutions will no longer be applied like gospel truth because the USA did not go to the IMF or the World Bank. If the US government attempted to bail out the economy why should African governments not also try this modus operandi?

4. The average honest investor will suffer a down turn as civil servants in "lucrative" government services invent new corruption tactics in order to finance their already arrogantly lavish lifestyles.

5. European countries and the USA are devoting more attention to their economies. This means that the money sent to Africa for debt relief and poverty reduction will dwindle or be granted with greater scrutiny.

6. Armed struggles resulting from illicit trade in diamonds and other natural resources will find more fertile grounds in Africa. The sale of arms will also be catalysed with the emergence of new warlords, followed by more blood shed.

7. African side economics will undoubtedly compete with capitalism, the welfare state, and diluted forms of socialism as different governments forge for a headway.
Truly speaking, if you ask me about Africa and the Financial Crisis, I will say that while Africa may not have any impact on the crisis, the crisis will have a huge impact on Africa.