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Impact of the Global Financial Crisis

Submitted by Shanta on Tue, 2009-11-03 09:43

Not a day passes without somebody asking me about the impact of the global financial crisis on Africa's poverty reduction efforts. So I thought I would share this interview I recently did for Deutsche Welle radio.

I have also written extensively about what the crisis may mean for Africa on this blog. You can see those entries here.

 

 

Madagascar - Economic Update: Going Down...

Submitted by Noro Andriamihaja on Tue, 2009-11-03 09:34

If recent trends persisted during September, three new developments seem to indicate a deterioration in public finance and economic activities: (i)  the Government borrowed on the domestic financial market (about half of its monthly expenditures) for the first time since the beginning of the crisis; (ii) the exchange rate depreciated compared to the Euro and the USD over the past two weeks (down by 6 and 4% respectively); and (iii) international trade continued to decline (exports in volume, down by 62% in August compared to the same period a year ago).

You can see the full analysis of Madagascar's economy here.

Your Comments on Africa's Successes

Submitted by Shanta on Wed, 2009-10-07 10:58

The African Successes post has generated a vigorous exchange of ideas.  I appreciate receiving your comments on the study, your suggestions for success stories, and your views on development approaches that have worked and those that have not.  

Many of you felt, as I do, that we need to highlight Africa’s recent successes.   Your responses voiced strong support for a focus on education, knowledge and dissemination, health, private-sector development, agriculture (irrigation and fertilizer), community-level development, governance, infrastructure, and information and communication technology.  

Another Reason Why Aid to Africa Must Increase

Submitted by Shanta on Thu, 2009-10-01 10:41

Cliquez ici pour lire ce post en français

Given its massive development deficits and the effects of the global economic crisis, many observers, included me, are calling for increased aid to Africa. Most of these appeals are based on Africa’s need for more resources.  But there is a different argument. 

Aid to Africa is today as productive as it has ever been. 

Craig Burnside and David Dollar identified a group of policies (including fiscal stability and low trade barriers) that strengthened the link between foreign aid and per capita income growth. These are the very policies that African governments have been improving over the past decade. 

 Even after the onset of the global economic crisis, and despite the fears that these

What AIDS Leaves Behind: A Heavy Burden on African Women

Submitted by Kathleen Beegle on Tue, 2009-09-29 12:12

Unlike other diseases in Africa (malaria, tuberculosis, intestinal worms, etc.), which mainly affect the young and the old, HIV/AIDS takes its toll on prime-age adults during the most productive years of their lives. The death of an adult family member can have large consequences for the surviving family. Given prevailing social norms in many African societies, the burden may likely be heaviest for women.

Most studies focus on the consequences for orphaned children – their schooling and health. We know less about how older adults are impacted.  In our study, we track individuals and their households in northwest Tanzania, an area of high HIV prevalence in the 1990s, over a 13-year period.

We find that, when a family member dies, women (even old women) end up working more on the farm; men do too, but not as much.  Having an asset such as goats enables them to work less. 

Useful Reading on Africa: Links of the week for Sept. 4, 2009

Submitted by Shanta on Fri, 2009-09-04 13:05

Here is some good reading on Africa:

- As Africa grows richer, there are reasons to be pessimistic about its ability to capitalize on the benefits of a reduction in population growth, says The Economist. One reason is that one in two Africans is a child, which means that traditional ways of caring for children in extended families are breaking down.

- Did you know that the IMF not always preaches tight budgets? Hugh Bredenkamp, Deputy Director of the IMF’s Strategy, Policy, and Review Unit explains why this is the case sometimes in the IMF blog.

A New Look for the Blog

Submitted by Shanta on Tue, 2009-08-25 09:29

Today we launch a new look for the AfricaCan blog.

The enhancements include links that are easier to spot. Also, we have added a list of guest bloggers and a blog roll listing some of the sites I regularly visit. You can find them on the menu on the right.

Over the next few weeks, we will continue to fine-tune the blog to ensure we have the platform necessary to best serve our community of readers. 

In the meantime, let me take this opportunity to thank you all for sharing your views about how Africa can end poverty.

Infant mortality rates in Africa will increase by 30,000-50,000 - Girls will fare worse

Submitted by Norbert Schady on Tue, 2009-08-11 02:00

The impact of the global financial crisis on infant mortality is a topic of great policy importance. However, estimates of the likely impacts of the crisis, cited by international institutions and in the popular press, differ wildly.

This blogpost summarizes the main conclusions from some of my own recent research on this topic, jointly with various colleagues.

These conclusions include:

1. The effect of negative growth on child health, including infant mortality, varies a great deal across countries. In developed countries, such as the US, infant mortality decreases when there are negative economic shocks. In low-income countries, including in India and countries in Sub-Saharan Africa, infant mortality increases in those periods (see Ferreira and Schady 2009 for a discussion). The picture for middle income countries is mixed, but on balance, it is closer to that found in the US. Important exceptions are cases in which the economic contraction was very severe--maybe 15 percent or larger. That was the case in two crises in Peru, and in Indonesia in 1998 (see Paxson and Schady 2005 and Schady and Smitz 2009).

African economic policies and the global crisis: Orthodox responses to a heterodox shock?

Submitted by Shanta on Sun, 2009-08-09 22:02

When the global economic crisis hit Africa, I worried (along with others) that the continent’s economic reforms would be stalled or reversed.  Political support for these reforms may be undermined as economic growth slowed.  Furthermore, the response of high-income countries in response to the crisis—large fiscal deficits and greater government participation in the banking sector—was in the opposite direction of the reforms that African countries had been pursuing in the past decade.

In fact, the response of African governments has been largely to maintain, and in some cases accelerate, their reform programs: 

- Zambia, for instance, is running a modest fiscal deficit (2.6 percent of GDP) while maintaining the medium-term expenditure program it had established before the crisis. 

- Tanzania’s emergency program includes government support to the banking sector that is strictly time-bound, something that the U.S. program lacks. 

- The Democratic Republic of Congo used an emergency credit from the World Bank to finance infrastructure maintenance and teachers salaries. 

- Nigeria is planning to deregulate its downstream petroleum sector, which will generate substantial savings from reduced subsidies.

The reasons for these responses are many.  First, in low-income countries, a large fiscal stimulus can have impact only if it is financed with additional external resources and with the exception of “front-loading” of already-committed aid, these additional resources have been lacking during the crisis. 

Education and Finance in Africa

Submitted by Shanta on Fri, 2009-07-17 17:48

At a recent conference that brought together African Finance and Education ministers, the keynote speaker, Tharman Shanmugaratnam, finance minister (and former education minister) of Singapore gave a beautiful speech about Singapore's experience that contained some potentially difficult and controversial messages for Africa.

1.  There is a virtuous circle of education and growth, but you need to create it.  This means that finance ministers should be concerned about education, and education ministers about economic growth. [At the conference, one participant, when asked a question about education in his country, said "I'm the finance minister, not the education minister."]

2.  Singapore emphasized technical and vocational education by giving it prestige that was almost equal to academic education.  This involved, among other things, a public relations campaign.  As participants at the conference said, in Africa, we also need to deliver on the quality of vocational and technical education.

3.  Singapore's insistence on education being a meritocracy (students advance purely on merit) has led to equity.  For instance, the top 5 percent of the students come from 95 percent of the schools.  But to make this work, the education system needs to be insulated from politics.  As Tharman said, the role of political leaders is to keep politics out of education.

4.  In Singapore, universities charge full fees, and give scholarships to low-income students.  The government encourages private donations to universities, matching them one-for-one.  How many African universities can overcome the political resistance to charging fees?.