AFRICA - The international financial crisis also affects Africa

Rome (Agenzia Fides) – What are the consequences for African countries suffering from the crisis that is hitting international financial markets?
According to experts, the continent is also suffering a financial crisis, in spite of the fact that the majority of the African nations are not fully integrated in international economy, as is the case with Asia and Europe.
Various factors should be taken into account, in order to evaluate what impact the financial crisis unleashed by the collapse of US mutual loans has had on Africa. First of all, the African banks are finding it harder to gain access to loans from their Western affiliates, who are in the midst of liquidation and cannot give them the money they need, which in turn makes it harder for local businesses to find the financial support they need to expand their activities. This slows down the economy (or worse even still, it enters into a recession) and it could lead to a considerable number of lay-offs.
Moreover, the Western governors worried about their own credit institutions and guaranteeing savings for their citizens will be less willing to finance programs for African development. The African Development Bank, for example, is mainly financed by sources outside the continent. “It was already difficult enough truing to get Western countries to keep their promises, let alone in times of crisis,” one expert on Africa commented.
The economic recession that is hitting the United States also implies a greater demand for raw material from Africa. The majority of African nations rely on income from exports of a limited number of basic materials, agricultural products, and minerals. The low value of the dollar, the currency used for international trade, is reducing the income of the exporting countries, especially those in the CFA area, linked to the Euro.
There is also the case of the African immigrants living in the United States, whose income is vital source of sustenance for their families. One department manager at the Ethiopian Central Bank told of his concern for the fate of Ethiopian immigrants working in the US. These people send 1,200 million dollars to their families in Ethiopia each year. If these immigrants lose their jobs, as a result of the crisis, the consequences for that African nation could be disastrous. (L.M.) (Agenzia Fides 6/10/2008)