Over the last eight months, many scholars have questioned whether Africa might escape the worst effects of the economic crisis. Some have hypothesized that the continent’s limited involvement in the world economy and international financial system might insulate it from a crisis stemming from credit systems and lending markets. In March, AIDemocracy blogged about surprising economic growth in Africa thanks to heavy Chinese investment and trade (African Trade Booms as World Economy Collapses). New economic reports, however, suggest that the situation is a little more complicated than it seems.

transafrica forumOn June 18th, the TransAfrica Forum held a roundtable discussion on the impact of the economic crisis on Africa. Panelists discussed the causes and consequences of the crisis on Africa and argued over some of its potential benefits. The speakers could whole-heartedly agree on two points: first, that the crisis has and continues to affect Africans dramatically, and second, that it provides an opportunity to achieve structural change through investment in women, workers, and other marginalized groups.

After nearly a decade of steady growth rates of 5-7%, the crisis is expected to make African nations’ growth negative. More developed countries like South Africa have seen stock market crashes and jumps in unemployment, as in the US and Western Europe. Developing economies, which had previously escaped the worst effects of the crisis, are now suffering as primary export prices fall. The crisis has reached these countries not through the stock market, but through the commodities trade in raw materials on which they depend. The implications of this crisis for an underdeveloped and impoverished continent are thus quite serious.

Economic troubles are only now beginning to descend on Africa. Social services in many countries are absent or underdeveloped and will only prove harder to find as the situation worsens and money becomes more scarce. Breadwinners are facing job losses that could endanger the economic security and survival of themselves and their dependents. This puts increased pressure on women and children, who must often sacrifice their education in times to crisis to make the families’ ends meet. Additionally, immigrant workers in Europe and the West are dealing with job loss themselves; remittances to Africa have already fallen dramatically, removing a financial support that previously exceeded international aid and investment figures in many countries.

As foreign aid promises go unfulfilled and capital flight accelerates, stimulus packages and government involvement in the economy have sought to lessen the crisis’ impact. Conditions in Africa are likely to get worse before they get better, however. Existing problems have only been exacerbated by the crisis; Africa still struggles to achieve sustainable growth and equitable wealth distribution, now also under the burden of a global economic crisis. Meanwhile, ethnic tensions related to resource distribution are feared to renew political instability in regions that had found peace in times of growth.

So where are these potential benefits? The economic crisis may force Africa to finally break its reliance on the international community for support – increased regional integration and the strengthening of the African Union may prove the continent’s best route to recovery. The crisis may also force nations to undertake much-needed structural reforms. Economic diversification, the development of higher value-added exports, the creation of social services, and the instigation of taxation to distribute resources could benefit African nations greatly in the long term. The crisis also offers an opportunity for countries to develop policies and strategies to link foreign direct investment to employment (so that Chinese investment is benefiting African workers first and foremost) and encourage entrepreneurship among women. Structural reforms necessitated by the crisis could finally raise African women and workers to the positions of power they have historically lacked.

Each of the panelists’ organizations provides statistics and resources that can help you get involved in sustainable recovery efforts. Learn more about the impact of the economic crisis on Africa and discover ways to push for workers’ and women’s rights through structural reform.

Jose Gijon, Organization for Economic Cooperation and Development

Regina Amadi, International Labor Organization

Tony Avignan, Economic Policy Institute

Briggs Bomba, Africa Action

Leonce Ndkumana, African Development Bank