Global crisis hurting Africa: Manuel
19 January 2009
The global economic recession is causing significant outflows of capital from Africa as investors pull money back into their domestic markets, says South African Finance Minister Trevor Manuel.
"Increasingly, African states are encountering significant fiscal pressures as our revenue sources dry up, as expenditures rise to meet the most elementary levels of service provision and as we battle to retain expenditure levels in the face of significantly reduced GDP growth," Manuel said during a Committee of 10 (C10) meeting in Cape Town on Friday.
"We are witnessing that the export markets developed with enormous sacrifice are suddenly closed to imports from our countries, as a result of falling consumer demand and increased protectionism."
The C10 is a group of African Finance Ministers and Central Bank Governors who have come together to take stock of the impact of the global economic recession on Africa.
Liquidity pressures
Manuel said South Africa and Africa were living through intense liquidity pressures as the domestic banking sector battled to secure finance.
Many countries were also witnessing the drying up of remittance flows, which had over the past number of years been a reliable source of finance, offsetting the impact of the skills drain.
The market crisis has also meant a decline in the numbers of tourists visiting both country and continent, which had yet to recover from the severe impact of high food and fuel prices that had been present in the market over the last 15 months.
"We are seeing the first wave of unemployment as many foreign direct investors scale back or shut down their operations," he said.
Decline in development aid
Manuel added that developing countries were likely to witness a continuing decline in oversees development aid flows, which are needed to support the delivery of the United Nations' Millennium Development Goals, with there already being a cumulative shortfall of US$240-billion on the Gleneagles commitments.
"Ours is a history of a battle for a fairer, more equitable world," he said. "This period is one where we must amplify the call - neither for alms nor charity, but for an opportunity to deliver to our citizens that which they deserve."
To attain this, Manuel said, South Africa and Africa had to evaluate every aspect of what was done, to look at each institution that took decisions that affected people's lives, and make the case for fairness and opportunity.
Source: BuaNews
