AFRICA: ‘‘G20 Should Use Crisis as Opportunity to Fix Inequity’’

• by Michael Chebud (addis ababa)
• Tuesday, March 31, 2009
• Inter Press Service

Invited by the host country, Zenawi, who chairs the New Partnership for Africa’s Development (NEPAD), is the only African leader apart from South Africa’s President Kgalema Motlanthe to attend the G20 summit.

Zenawi was in London two weeks ago to hold pre-summit consultations with senior African officials and organisers of the summit, including UK Prime Minister Gordon Brown. His message to Brown was clear: that the richest countries cannot afford to ignore Africa in the wake of the global economic meltdown.

His is a belief shared by African trade ministers who met in Addis Ababa on Mar 19 at the headquarters of the African Union.

‘‘As a result of the global economic crisis, more than at any other time, there is a need to place African economic development at the centre of international efforts to build strategies towards the recovery of the global economy,’’ reads a communiqué the ministers issued at the conclusion of their two-day meeting.

They warned the G20 leaders that Africa should be fully represented in all deliberations regarding the impact of the global economic and financial crisis on the world economy, particularly with reference to the economies and trade flows of developing countries.

‘‘The cost of ignoring Africa, at a time when (the North) is injecting billions of dollars in bail-out money to rescue a single bank, will be immense,’’ Tefera Abebe, deputy head of the economic research department at the National Bank of Ethiopia, told IPS. ‘‘I hope the leaders will change course and focus on Africa.’’

Africa needs to convince the leaders’ meeting on April 2 to avoid protectionism, on top of inducing them to add the continent to their stimulus plans, argued Tewodros Belete, member of economic think tank the Ethiopian Economic Association.

‘‘Africa represents only three percent of world trade. This might lead them to pay no heed to the continent,’’ explained Dr. Assefa Zewde, an economist and consultant. The richest nations will not worry about Africa at a time when their own economies are besieged with a crisis unprecedented in scale and scope, he believes.

But African countries are urging the G20 to use the global economic crisis as an opportunity to move more quickly towards building a fairer and more equal world order. That’s a note Zenawi is expected to leave on the tables of the G20 leaders.

They should listen not only out of sympathy to the problems faced by Africans but as part of a remedy for their own economic woes, stressed Belete.

It is indeed true that the one continent that has contributed virtually nothing to the economic downward spiral is already paying a heavy price. According to trade experts, the global crisis has negatively affected Africa’s export demand, investment flows, commodity prices, remittances, exchange rates as well as employment.

Amidst a deteriorating global economic environment, growth in Africa dropped to 5.1 percent in 2008 from six percent the previous year, a 2009 report by the United Nations Economic Commission for Africa indicates. This growth is expected to decelerate to 4.1 percent in 2009.

The report warns as the global downturn extends into 2009, weakened trade with Europe and the United States, along with dampened commodity exports to China and the rest of the world will curtail growth in most African economies.

The International Monetary Fund is even more pessimistic, projecting that the continent’s growth is likely to fall by half in 2009 and beyond.

For instance, due to the fall in international prices of Ethiopia’s largest export item, coffee, the impoverished east African country has failed to meet its export target from the bean. In the first six months of this fiscal year, Ethiopia met only 61.2 percent of its 285 million dollars coffee export target.

Drop in commodity prices are also likely to affect Ethiopia’s fledgling flower sector, with prices falling sharply in European markets.

Ethiopia, which is the second largest exporter of flowers in Africa following Kenya, has projected 170 million dollars in foreign exchange earnings from its exports of flowers this fiscal year. But businesses expect a 10 to 15 percent drop in earnings, judging from the way prices are slumping.

The drop in commodity prices, as well as in demand in European and U.S. markets, has shattered Ethiopia’s foreign exchange reserve, which currently stands at a mere 1.3 billion dollars while the country spends nine billion dollars in imports annually, according to data from the Ethiopian central bank.

‘‘We are affected because international prices of coffee, sesame and hides have dropped,’’ Zenawi told the parliament two weeks ago. Indubitably, when he goes to the G20 summit this week he will be determined to put Africa at the fore of the debate.

Brown told African leaders two weeks ago that he would fight protectionism. But it will be seen if he can convince other members of the G20 of this position.

Set up after the Asian crisis in the 1990s as an economic multilateral forum, the G20 had its first meeting in 1999. These countries represent 90 percent of global gross domestic product (GDP), 80 percent of world trade and two-thirds of the world’s population.

© Inter Press Service (2009) — All Rights ReservedOriginal source: Inter Press Service

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