Global Economic Crisis: Part XVI.

Although recessions are natural part of economic cycles that are characterized by peaks and troughs, the current recession is unique. This is so in that, unlike others before it which has hit various countries at various times, mainly due to structural economic problems or misplaced policies, this particular one has hit the entire world, and hard. A number of economist believe that, it has hit the bottom of the trough and the worst is over. This is based on the economic fundamentals of ‘confidence’ coming as it does from both consumers and producers of goods and services in the western world, but such confidence will have to be nurtured by political elites so ensure that it is sustainable. This as pointed out earlier, will depend upon how fast toxic assets are cleaned from balance sheets of financial institutions in western financial markets, so as to enable them give credit to consumers and producers alike. However, as the group of G8 (ie the US, UK, Germany, Japan, Italy, France, Canada, and Russia) meet in the earth-quake devastated Italian town of L’Aquila, the issue of global financial earth-quake will take central stage. Also during the summit development of Africa and impact of the financial crisis on the same will feature albeit in the absentia of Africa. Communiqués on what Africa should and should not do will on the table. Africa’s interests will as usual be articulated by major international NGOs (Non-Governmental Organizations), whose budgets are funded by the same countries, and one then wonders who is speaking for who? This is the state of African of African ruling elite, that international NGO can be trusted to ‘represent’ them, and their people. As President Kagame pointed out in London early this week, Africa should be consulted in matters affecting African livelihood, as mistakes made by multinational institutions representing (misrepresenting Africa) are indelible scars on our conscious. But this is the fate of the poor who cannot sit on the same table with the rich. We must change this state of affair for ourselves, and our future generations. These countries which account for more than 80% of world economy are expected to make more pledges of aid (following un-fulfilled pledges by the same meeting in Scotland’s Gleneagles in 2005 where slightly more than 50% of the said aid has been delivered) to African economies to enable develop. It is ironic that, some of our leaders and number of civil societies, have been complaining that, they are no getting enough hand outs, and even so in time. But, do these rich countries have any obligation to contribute to (a resource rich, yet poorly managed continent) our continent, expect moral which is not enforceable? Do these poor countries have a right to oblige these rich countries to contribute to their resource needs? Doesn’t it shame these political leaders, whom, or some of whose fathers (god fathers) were in power 40 years, when some of these economies they are begging from were far lagging behind in their development? And do these leaders have a specific and attainable plan as to when they will stop begging, and manage their own destiny?. How long will others define and redefine the development path of Africa, 40 years after ‘independence’, and independence that was merely on paper as there is nothing to show for, except trials of failures, of poverty, hunger, malnutrition, hosts of diseases, and ignorance, all of which is are at a degree that exceeds pre-independence?. There can be no political independence without economic independence, for the same rich nations paying for our lives, have also a right to know how we live such lives, and thus loss of total independence. Thus, these leaders should appreciate whatever they get from rich economies, for it is after all a judgment of the failure of their political economies to run viable states. And when they decide their fate in their absentia, is even a harsh judgment on their failure to develop their economies. Nonetheless, if one was to stick to economists’ definition/ measure of recession, a number of African economies have been in perpetual recession, except that, this particular one can only be blamed on western policy blunders, and only worsen existing recessed African economies. For instance, recessions are measured by job losses resulting from contraction of economic activities. In Africa, one can hardly tell how many are unemployed. It is easier to tell how many are employed than the reverse. The issue of depleted savings (another measure of recession) due to market crash is un-African, as our masses do not save due to poverty trap. One can not talk of a fall in consumer confidence for such a confidence is a factor of high incomes, which is also none issue in these economies. President Obama is expected to announce a major initiative worth US $ 5 billion to boost agricultural development and prevent hunger in Africa, a continent capable not only of feeding its self, but also other continents, if only our political economies adapt the right policies and strategies to that end. Resent research indicate that, most African economies have drawn some of the best agricultural policies (Rwanda has designed 3 agricultural policies since 1998), the problem remains their implementation. Good practice has it that, if such policies have been widely debated, all we change is strategy to achieve the desired end. This sectors, is and will for sometime remain critical to the development of African economies. As pointed out earlier, a 2% percentage points of growth in agriculture has a higher multiplier effect to the entire economy than 18% growth in construction sector. UN reports also indicate that, a dollar invested in agriculture in Africa has two to three times greater impact on poverty than similar amounts invested in other sectors. Moreover, other sectors of our economies from service, to industry, manufacturing to distribution draws from agricultural sector (with strong forward and backward linkages). During the current crisis and beyond, agricultural sector holds the key to the development of our economies, for as agricultural development trickles down, and so does the economic crisis. Yet under investment in agriculture has increased numbers of Africans living below the poverty line from 150 million to 300 million today according to AU-NEPAD’s reports. Reports from FAO (Food and Agricultural organization indicate that, trade in food is around 1.8 trillion dollars, but that, this is only 12% of the market potential of agro-products which is then worth approximately 15 trillion dollars, a market potential open to African economies most them duty free and quota free. In around 25% of the countries, the share of agro-exports exceeds two-thirds of total exports, while in a further 20% the share exceeds one-third. Low income countries like ours remain heavily dependent on agriculture trade, and rely on one or a few agricultural exports for most of their foreign exchange earnings. This coupled with the fact that, this sectors employs 80% of our population, and feeds the entire nations, can not be understated by our polity, for such would be a failure whose consequences would be a hard measure of their legitimacy. UN reports also indicate that, poverty levels will increase by 1.2% this year as a result of the current crisis and that millennium development goals are at stake as the ability of African economies to finance their development agenda is in jeopardy. This will be made worse by the declining aid, FDI, and low export to debt servicing ratio which is likely to divert resources so much so that priority sectors will be staved of resources. Ends