8 Mar 2009
Too many disproportionate things are happening to the world around us that some Africans who try to grasp a bit of the information are simply dazed while the majority have given up trying to understand. It is difficult esp. for people living on less than two dollars a day to understand that a corporation can lose billions of dollars or that the very governments that have been telling us for decades to privatize state property are now using hundreds of billions of dollars to bail companies in the private sector. Within a very short time, we are just being bombarded with mind boggling figures—tens or hundreds of billions of dollars. How do you explain to an ordinary citizen in Cameroon, that Mr Madoff can orchestrate fraud in the U.S to the tune of $50 billion (ten times Cameroon’s national budget)? For those of us living in poor countries, these amounts are very scary to say the least. When our people hear that corporate giants like CITI Bank, General Motors, AIG etc are stumbling, their immediate reaction is to ask what will become of the small companies they work for?
The fallouts from the global financial crisis on Africa have gradually started hitting many ordinary people and the impact will be accentuated as the months go by. The real dilemma is that many African governments did not have the foresight to see the darkening clouds and as such some prepared budgets for fiscal year 2009 that may turn out to be unrealistic.
The very nature of this financial crisis is such that you cannot easily use empirical figures to explain the trend. It is preferable to view it from this analogy. Many countries in Africa rely on exporting commodities to finance their budgets. The consumers of our commodities are mostly based in Europe, USA, China and Japan. The financial crisis has created unemployment and job insecurity on a substantial scale in these countries. Some of the people who should have been buying our minerals, oil or coffee are out of work and those still working are spending miserly because they are not sure of tomorrow. As a consequence, the demand for our commodities has plummeted and down goes our income. Some of our brothers and sisters working out of the continent have curtailed remittances home because they have been caught in the web of the financial crisis.
Somewhere down the road and it is not far off, if the trend does not reverse, some African governments may not be able to honor their financial obligations to their employees and contractors. If that happens, the liquidity squeeze will become very dramatic and pervasive because the state in most of Africa is the main injector of money into the economy.
People living in Africa have genuine reason to be apprehensive.
1. Global Financial Crisis: Who has to pay for this mess?
2. Lessons from the U.S Financial Crisis
Njei Moses Timah