Africa’s economies have put up with a lot from the West: colonialism, neo-colonialism, trade barriers, resource extraction, structural adjustment the list goes on. And just as we’re overcoming all these obstacles, showing solid macro-economic growth and a healthy response to the international financial crisis, it looks like the West might screw us over again, this time by mismanaging its own economies.
Reports released this week by the International Monetary Fund and the African Development Bank were encouraging about the state of Africa’s economies. The IMF predicted continued GDP growth for sub-Saharan Africa of 5.2% this year, and 5.8% in 2012, with low-income countries growing even faster. The AfDB commented on the resilience of African economies, which have weathered the international economic crisis remarkably well, although this is probably less about their inherent strength and more about their lack of involvement in the international economy to begin with.
But Africa’s not immune from what’s happening in the rest of the world, and the continent’s finance ministers will be watching what happens in Greece very nervously indeed. “A faltering US or European recovery could undermine prospects for exports, remittances, official aid and private capital flows,” said IMF boss Robert Zoellick. The chief economist of the AfDB, Mthuli Ncube, was similarly concerned, warning that if the Greek crisis develops into another recession, Africa will be hit with a downturn in trade, falling commodity prices and difficulties acquiring credit and foreign aid.
But Ncube maintained that Africa was still the place for smart investors who want high returns. “There’s enough cushion to do well even under the current circumstances… 25% [returns], that’s really the minimum you’re getting in Africa. Just look at the returns for mobile telephone companies,” he said.