Mariam Isa
11 March 2009
Johannesburg — AFRICA might lack the clout to get the financial support it needed to withstand the global downturn, and the threat of political risk on the continent was rising, Finance Minister Trevor Manuel warned yesterday.
He said at an International Monetary Fund (IMF) conference that attempts to address the global crisis might prove futile as there was a failure to acknowledge it stemmed from a "fatally flawed" model of capitalism.
"If we don't deal with that flawed model of capitalism, we will extend its life. The key issue is to ensure that the actions taken don't just mark time," he told delegates at the conference in Dar es Salaam, Tanzania.
IMF MD Dominique Strauss-Kahn said it was clear the global economy would contract, falling below zero this year, which might curb Africa's growth below an expected pace of 3%. Sustained donor support was vital, as more than 50-million people, many in Africa, could be thrown back into "absolute poverty", he said.
Strauss-Kahn was confident donors would pledge enough support to enable the institution to double its resources to $500bn by the time the G-20 group of countries meets in London next month.
IMF officials say this will enable the fund to provide $11bn in low-cost loans to the poorest countries, which are mainly in Africa, over the next five years.
These countries are now facing the full brunt of the global crisis as waning demand hits their exports while investment and aid inflows dry up.
The IMF says 22 countries, mainly African, will need at least $25bn to cope with the fallout.
"Although the crisis is slow in reaching Africa's shores, we know it's coming and its impact will be severe," Strauss-Kahn said.
"This is not only about protecting economic growth and household incomes, it is also about containing the threat of civil unrest, perhaps even war."
Manuel told Business Day in an interview that he hoped to be proved wrong, but he was sceptical that developed countries would cough up the cash that Africa needed to maintain political and economic stability.
"If you can't kick ass, no one takes you seriously," he said.
During a panel discussion, Manuel said it would be hard for African governments to explain why the world's developed countries were spending freely on huge economic stimulus packages while African countries could not.
"The issue of political risk is a very real one. We are in countries where people can't understand the benefits of tough decisions to reform," he said.
Manuel hoped that the G-20 meeting would take a "more co-ordinated" and "less protectionist" approach to the global crisis.
Strauss-Kahn said that some private financial institutions in developed countries had received more financial support than the entire African continent. "At a time when developed countries are finding hundreds of billions for private companies, I cannot accept that we cannot find hundreds of millions for developing countries."
The institution would reform its lending terms and conditions to make it easier for poor countries to access credit, he said. It would also push hard for more representation for low-income countries at the G-20 meeting.
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IMF - Meltdown Threatens Continent's Economic Successes
Is that the best IMF can do? If so, those phony "experts" at IMF may be disappointed to learn that many Africans know as much.
If 80% of our annual budget goes to pay the annual salaries & allowances of our "rulers" (Presidency, Ministers, Legislators, Judges and Permanent Secretaries) guess who would be affected most by this funding gap? We demand that this visionless administration invest the $50 Billion savings in the national Electricity infrastructures NOW. We cannot afford to wait any longer while the the savings whittle away as the Naira continues to depreciate, while the corrupt govt officials continue to use the $50 Billion savings to maintain their greedy lifestyle. Enough is enough.
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