The consequences for Africa.

Author:Schmidt, Gerd
Position:A financial tsunami - Letter to the editor

There is an old saying that "it is an ill wind that blows no one any good", but I am afraid that in answer to the article 'Has Africa escaped the economic storm?' (African Business, March 2009 issue) any rational analysis would indicate the answer is 'No'.

It may not be apparent as yet, as the full force of this financial tsunami has yet to reach our continent, but sooner or later it will hit us, and hit us hard.

Many economies are already suffering, especially Africa's commodity-exporters, and single-resource economies--here I am thinking of Botswana's diamonds and Zambia's copper. But again the effect will be delayed; in the case of the former the slump in diamond sales will not impact the Bat-swana peoples until the end of this year and the beginning of next when Finance Minister Baledzi Gaolathe's cuts in budgetary spending begin to bite.

As for Zambia, the plunging kwacha (Zambia's currency), losing about a third of its value over the last year, merely reflects the slump in the world's copper price. Copper exports have always underpinned the Zambian economy and its currency.

South Africa's economy has been experiencing something of a downturn in recent months but it is not altogether certain that this is as a result of the financial crisis. I am of the opinion...

To continue reading