So much for "we are well positioned to survive the credit crunch." Hard reality is starting to kick in.
Good. Getting real. Now maybe we stand a chance of dealing with the problem.The global economic crisis is stifling investment into Africa and will put strain on the region for at least another five years, Finance Minister Trevor Manuel said on Friday.
He said trade finance was drying up, budget revenue was more difficult to raise and some investments were being scrapped, resulting in job losses.
"The current economic pressures are not of short duration, we are looking at a number of years, at least five years or so," Manuel said in an interview on the sidelines of a meeting of African policymakers to find ways to deal with the crisis.
"If the conditions are as constrained over five years as they are now, then everything will go backwards."
Major developed countries are in recession, stung partly by a credit squeeze, and growth is slowing in emerging economies as commodity prices fall and capital inflows decrease.
Manuel said an International Monetary Fund report next week should give more details of its impact but it was clear that access to trade finance, which tended to be in dollars or other hard currency, was difficult to come by and interest rates, when finance was available, were high.
Much-needed investment was also at risk, while aid flows were falling.
"We are also seeing FDI [foreign direct investment] termination, where there were latent investments in sectors such as mining and so on, we are seeing outflows as these investors try and square their positions back in their home countries.
"The consequence of that is, of course, job losses."
full story from M&G here
Or maybe not.
You can't demand respect. You can't even plead for it.Finance Minister Trevor Manuel on Friday urged closer African collaboration to bring about equity and change in global economic affairs.
The global economic downturn had brought the collapse of commodity prices, huge currency volatility, the collapse of equity prices across all stock markets, the virtual inability of most firms to access trade finance and the dawn of a period when capital markets were effectively closed to all developing countries.
"We have also witnessed how the rich world has speedily moved to reflate their financial sectors, with most G7 countries now in an environment of negative real interest rates -- the United Kingdom, for example, now has interest rates at the lowest level in the 314 year history of the Bank of England, while we remain trapped in poverty.
"Furthermore we are witnessing almost daily announcements of additions to fiscal stimulus packages in the rich world -- the United States for example will run a fiscal deficit of $1.2 trillion before the announcements by president-elect Barack Obama; while we remain paralysed because of our dependence on the Bretton Woods Institutions for fiscal support.
"Our concern is that those countries that have had their power enhanced by the economic growth model with its emphasis in financialisation of the past three decades have found the means to try and dig themselves out, while we remain trapped in a cycle of poverty.
"People find it strange that we cannot have huge deficits in the same way as the wealthy countries can, yet we need additional financing to provide even elementary services.
"Our call has to be for equity and change," Manuel said.
full story from Business Report here
You have to earn it!
I agree $2.5 billion for Africa does not stack up "equitably" against $1.2 trillion for the USA (alone - let's not even get into what is happening in Europe and the UK), but when the chips are down you focus on what is important.
And the chips are down.
So let's face it. We're pretty much on our own. Now start planning around that!