The main impact of the global financial crisis on the DRC economy is the slowdown in overall economic growth, which is projected to be 6 percent in 2009. With the crisis going on, the situation is likely to deteriorate. Two of the major sectors expected to drive DRC growth in 2009, i.e. infrastructure and mostly mining, have already been severely affected by the crisis.
I gave one of the keynotes (based on joint work with Markus Goldstein) at the recent ICASA 2008 in Dakar, Senegal on the title of this post. The fight against AIDS involves allocating scarce resources to multiple uses; and contracting, avoiding, preventing, testing for, and treating the disease all involve behavioral choices.
At a recent AERC research workshop in Nairobi, I made a comment about African governments’ not spending enough money on public goods, and spending too much on private goods such as fertilizers. The comment seemed to have struck a nerve. Several people in the audience pointed out that, in Malawi, fertilizer subsidies have increased cereal production, so government spending on fertilizers was not such a bad thing. Going beyond the general arguments that these fertilizer subsidies often don’t reach farmers (they’re
In the last few years, Lesotho has made significant progress in macroeconomic performance (strong GDP growth, fiscal surplus, current account surplus, and high international reserves). Nevertheless, Lesotho remains exposed to economic developments in South Africa (through the monetary union and the pegged exchange rate) and relies heavily on workers’ remittances, customs revenues from SACU, and royalties for transfer of water to South Africa.
The negative impact of the financial crisis on economic growth in Madagascar is expected to be relatively limited; growth is still likely to attain 7% in 2008. Over the medium term, declining demand in industrial countries is expected to affect strategic export oriented sectors such as mining, tourism, textiles and agribusiness. The depth of the banking sector in Madagascar is still very modest with deposits accounting for less than 9 percent of GDP.
Uganda has in the past few years showed impressive growth rates despite a number of shocks including prolonged drought, severe energy shortage and the adverse impact of high oil and food prices. Public finances are in good shape with a very favorable debt situation and the financial sector is sound and well-capitalized. Uganda is, therefore, entering the global economic slowdown in a relatively strong position.
When the storm hit, South Africa had been sitting on relatively strong fundamentals and emerging from a protracted period of economic expansion. The meltdown allowed “not-so-well-hidden” vulnerabilities to surface. Unemployment, inequality, poverty, crime, and HIV/AIDS still continue to plague the country. Agriculture, mining and manufacturing declined while the trade and current account deficit (CAD) widened.
The impact of the current global crisis on Angola’s economy can be divided into three parts. First, a marginal impact on the financial sector: no stock exchange, very small inter-banking credit markets, limited transaction flows with international markets (except via Portuguese Bank), low level of banking services, low ratio of loans to deposits, etc. Nonetheless, there was a decline of around 20% in demand deposits in foreign currency in November.
“When I was a boy of fourteen,” Mark Twain once said, “my father was so ignorant I could hardly stand to have the old man around. But when I got to be twenty-one, I was astonished by how much he'd learned in seven years.”
In the midst of the very serious resumption of violence in Democratic Republic of Congo, an interesting debate has broken out between Paul Collier and Adekeye Adebajo on the question of who should deliver basic services in post-conflict societies. Paul suggests these services be provided by non-state actors, such as NGOs and church groups. Dr.