Johannesburg — MANY African countries would be hard hit this year if aid flows slowed down as a result of the global financial crisis, the African Development Bank (AfDB) warned yesterday.

In an economic overview for this year, it said growth on the continent was likely to slow to just over 2% this year, after seven years of a sustained pace of expansion at 5%.

Falling revenue would make it more difficult for governments to take steps to relieve poverty, said Frederica Marzo, development economist at the Organisation for Economic Co-operation and Development.

On the one hand, Africa was more resistant to "exogenous" shocks - partly due to improved economic management, falling indebtedness, and improved political stability.

Countries on the continent had also become integrated into the world economy and less dependent on traditional developed markets, she said. But budget deficits were set to rise in many countries, Marzo said. Botswana was under serious pressure, with its gross domestic product down more than 20% in the first quarter of this year.

"Africa is passing from one crisis to another ... many countries suffered from the increased food and oil prices in 2008," she said. In the context of decreasing resources, it would be harder for many governments to respond to the needs of their citizens.

"ODA (official development assistance) levels should be maintained if not increased, to allow African countries to use them counter-cyclically," Marzo said. This meant spending more when economic output slowed.

Only a few countries were able to do this on their own, like SA, Mauritius and Namibia, she said.

Last year, ODA rose more than 10% and this was expected to continue this year and next, she said.

"But these are commitments and there's lots of uncertainty around these figures -- some countries are already announcing cuts in ODA."

At this point it was also important for emerging markets not to forget Africa, Marzo said. Strong growth in India and China in the face of the global downturn made them strategically important to Africa, she said.

But the continent could not rely on external sectors for growth, and should focus more on improving domestic and regional markets.

"Today, less than 10% of African trade is regional -- this figure is very telling. In order to exploit this potential, structural reforms and investment in infrastructure should continue." Oil importers in Africa were likely to perform better than exporters this year, given falls in the oil price and production cuts imposed by oil cartel Opec , she said . Countries which relied more on agricultural output would be less affected by the downturn.

Output from SA would shrink this year but the AfDB was revising its forecast for a contraction of 0,5% downwards, she said.