Emerging African economies: strategies for coping with global financial crisis

The recent global economic recess has far reaching implications on the stock market, employment of labor and survival of the production sector. Investors are poorly compensated, jobs are lost in thousands and hitherto viable industries are folding up. The African economy is not spared either. Policy makers and technocrats are now being challenged in an attempt to arrive at workable solutions to the current economic quagmire. In this paper therefore, several economic indicators were examined.

The implications of the various manifestations of the global financial crisis on the economic indicators of the African economy were investigated. These indicators include the gross domestic product, GDP, foreign reserves, employment opportunities among the active working population and rate of inflation on consumable goods and services, level of exports and interest rates, and so on. Some stopgap measures put in place by the African countries to circumvent or mitigate the effects of the global crisis were identified and many relevant policy frameworks were suggested for implementation. To avoid an unmanageable economic recession therefore, it was suggested that more attention be paid to the efficiency of resource use and minimization of leakages or wastages in the African economies.

Following the global financial crisis which reared its ugly head late last 2008, the level of unemployment in the United States and many European countries (particularly Britain, Germany and France) hit all-time high levels (IMF, 2009). The number of people on low wage part-time jobs had spiraled in those countries. Again, there are observable frenzied stock markets and social dislocations in these hitherto booming economies. The general manifestation of this scenario is that there is a negative growth across the various sectors in most developing economies. In addition to this, it is very clear that no African country is safe from the global financial crisis and slowdown in the over- all global economic growth. Given the inter-linkages in the global economy, policy makers also foresee the global slowdown will invariably reduce the demand for African exports. This has already been reflected in the demand for and prices of commodities in African countries. For South Africa and Egypt, there was an appreciable increase in the demand for exports and non-factor services between year 2000 and 2008 while the story was different for Nigeria and Ghana.

However; there was a general increase in the demand for imports and non-factor services by South Africa, Egypt and Ghana within the same periods (Table 1). In his paper titled: ‘What the Global Financial Crisis Means for Sub –Saharan Africa,’ Takatoshi (2009) rightly observed that the world’s growth was expected to come to a virtual halt, which would require a decisive global policy response. Quite unfortunately, despite wide- ranging policy actions by governments and Central Banks around the world, financial strains remained acute, pulling down the real economy.