Gitura Mwaura
Africa continues watching anxiously as the eurocrisis persists. With many African nations relying heavily upon European investment and trade, the potential fallout from the crisis may not only lead to a decline in exports, but imports could be more expensive.
The African Development Bank says that though countries in Africa seem to have held up better than would have been expected, crisis could hit through multiple channels, including trade, capital flows, remittances and tourism.
How prepared were African policymakers and central banks for the direct and indirect effects of the crisis? The more pertinent question according to many observers is why Africa should always seem reliant on others than itself.
The very question has in turn shifted the focus to the hard and soft infrastructural barriers to greater intra-African trade and business. Sample the just released World Bank Report, De-Fragmenting Africa: Deepening Regional Trade Integration in Goods and Service.
The Report argues “that African countries are losing out on billions of dollars in potential trade earnings every year because of high trade barriers with neighboring countries, and that it is easier for Africa to trade with the rest of the world than with itself.”
Though the issue of existing trade barriers is not new to the continent, including the East African Community which is making all efforts to address it in the nascent common market, it still makes for a damning indictment. Consider that opportunities have always abounded for entrepreneurs to explore the latent potential in multiple sectors and countries, including appreciating infrastructure deficits as opportunities for investment rather than obstacles to it.
Whatever the reason may be for the seeming lack of movement towards intra-Africa trade, the eurocrisis has caught the continent flatfooted.
The African Development Bank observes that the European debt crisis has a potential to negatively impact Africa’s export and tourism revenues, which would lead to deteriorating current account balances that could impair the growth prospects of the continent.
The ADB says that a decrease in development assistance from European countries could pose tough challenges to African governments in managing public finance, especially in mobilizing resources for expanding infrastructure investments and strengthening social protection. It therefore goes without saying the situation could be worsened if tax revenues substantially decrease alongside declines in exports.
All said, it has not failed to be noticed that China has had its presence felt in Africa amid the global crises, including the eurocrisis. China eyes the abundance of natural resources on the continent, as well as the existing business opportunities. According to the International Monetary Fund (IMF), China’s contribution to the total direct investments in Africa rose from 1% in 2003 to 17% in 2011.
The spectre of China’s aggressiveness means that Africa remains a continent up for grabs. It also means that Africans have the choice to exploit it themselves or have others do it for them. Africa must style up.
As for the eurocrisis, the worst case scenario, according to the ADB, is that Africa’s medium- to long-term growth prospects could be undermined by decreases in investments, which could weaken competitiveness of African economies in the long-term.
Source: Newtimes,15/02/ 2012
Author: Gitura Mwaura
Contact email: Email: gituram@yahoo.com Twitter: @gituram
The African Development Bank says that though countries in Africa seem to have held up better than would have been expected, crisis could hit through multiple channels, including trade, capital flows, remittances and tourism.
How prepared were African policymakers and central banks for the direct and indirect effects of the crisis? The more pertinent question according to many observers is why Africa should always seem reliant on others than itself.
The very question has in turn shifted the focus to the hard and soft infrastructural barriers to greater intra-African trade and business. Sample the just released World Bank Report, De-Fragmenting Africa: Deepening Regional Trade Integration in Goods and Service.
The Report argues “that African countries are losing out on billions of dollars in potential trade earnings every year because of high trade barriers with neighboring countries, and that it is easier for Africa to trade with the rest of the world than with itself.”
Though the issue of existing trade barriers is not new to the continent, including the East African Community which is making all efforts to address it in the nascent common market, it still makes for a damning indictment. Consider that opportunities have always abounded for entrepreneurs to explore the latent potential in multiple sectors and countries, including appreciating infrastructure deficits as opportunities for investment rather than obstacles to it.
Whatever the reason may be for the seeming lack of movement towards intra-Africa trade, the eurocrisis has caught the continent flatfooted.
The African Development Bank observes that the European debt crisis has a potential to negatively impact Africa’s export and tourism revenues, which would lead to deteriorating current account balances that could impair the growth prospects of the continent.
The ADB says that a decrease in development assistance from European countries could pose tough challenges to African governments in managing public finance, especially in mobilizing resources for expanding infrastructure investments and strengthening social protection. It therefore goes without saying the situation could be worsened if tax revenues substantially decrease alongside declines in exports.
All said, it has not failed to be noticed that China has had its presence felt in Africa amid the global crises, including the eurocrisis. China eyes the abundance of natural resources on the continent, as well as the existing business opportunities. According to the International Monetary Fund (IMF), China’s contribution to the total direct investments in Africa rose from 1% in 2003 to 17% in 2011.
The spectre of China’s aggressiveness means that Africa remains a continent up for grabs. It also means that Africans have the choice to exploit it themselves or have others do it for them. Africa must style up.
As for the eurocrisis, the worst case scenario, according to the ADB, is that Africa’s medium- to long-term growth prospects could be undermined by decreases in investments, which could weaken competitiveness of African economies in the long-term.
Source: Newtimes,15/02/ 2012
Author: Gitura Mwaura
Contact email: Email: gituram@yahoo.com Twitter: @gituram
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