Phillip Isakpa
In all the tsunami of comment, shameless posturing and self-contradictory attitudinising about ‘the crisis’, there is one obvious question. Although there are many divergent views on how long the global meltdown is going to last, or how deep it is going to be, there is, assuming that at some point there will be inevitable shakedown a longer term poser – who are going to emerge winners?
Before the full crisis began during last year, it was often suggested (not least in this column) that US world dominance was declining, and that we should expect a multi-polar world in which “the rise of the rest” was going to make the running. No one could ignore the future strength and potential of Asia, especially China and India. The West was the first main victim of the downturn, with the US infection spreading like a virus to Europe, while developing countries seemed relatively unaffected. It is now clear that, in part because of the massive advance of globalisation in the past twenty years, none will be untouched.
This is where prognostications become confused. There have been warnings, with ever greater frequency from quarters such as the UN, the World Bank, and other major international instances, that it will be developing countries that will be hardest hit, and may face greater political instability because of economic downturn. Many things, it is said, will be affected, such as overseas development assistance, remittances by nationals from developed to developing countries, and investment flows from the rich to emerging markets. Nevertheless, soaring food and fuel prices, which were such a feature of 2008, should continue to ease, as demand falls, and in the case of food, there is a greater concentration on supply. But, given all the other pain, will the G20 summit in London in April, one of President Obama’s first outings to the wider world, have the problems of developing countries high on its agenda?
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Although many African countries, such as the copper producers like Zambia, will be affected by decline in demand for minerals, the overall figures for last year have been so encouraging that, especially where provision for a rainy day has been made, the worst may yet be avoided. And others, including the poorest, simply have less to lose. These reflections come from an unusually sanguine piece run by the online website Allafrica.com, written by one Witney Schneidman, described as President of Schneidman Associates International, and an “adviser on Africa to the Obama campaign”, and none other than Paul Collier, not a known Afro-optimist – indeed best known for writing about global poverty and Africa’s “bottom billion”. After stating that poverty in Africa has stabilised for the first time in thirty years, with a sustained period of ten years of five to six per cent growth, they say “Africa, usually the poorest performing region in the world economy is now likely to be among the best performing”, and it has been largely immune from the present banking crisis although growth has slowed. “The continent’s financial institutions did not venture into derivatives or sub-prime mortgages”. While the fall in commodity prices has hurt, they note that levels are still higher than in the 1990s, and they conclude that although “Africa’s progress while significant and widespread, is fragile and reversible”, the article has a flavour of cautious optimism.
Two meetings I have been to in the past few days also carried a similar message. First, Nigeria’s Central Bank Governor Chukwuma Soludo told a briefing in London (mainly on the burning issue of the foreign exchange market) that “while the OECD countries are projected to experience recession, developing countries would continue to post positive growth rates averaging 3.25 per cent while Africa is estimated to out-perform developing country average (3.5 per cent)”, adding that Nigeria’s GDP, dominated by agriculture and oil is expected to post a positive growth in 2009 (probably in the range of 5 per cent), before going on to more sober short term assessments of Nigeria’s present position.
Secondly, the Liberian Ambassador in London Wesley Johnson, told a Meeting of the West African Business Association (WABA) that Liberia has made an encouraging recovery from the trauma of fifteen years of civil war, with growth advancing from 5.3 per cent in 2005 to 9.5 per cent in 2007. Although 2008 showed a setback because of some investment false starts, the removal of the ban on Liberia’s diamond and timber exports, and the adoption of the Kimberly process and new forestry regulations should help continue resuscitation in 2008, with investments estimated at $200m., and a major iron ore concession deal with the Chinese. The effect of the crisis has so far been mild, with the Arcelor Mittal iron ore project in Nimba still fully committed, although first exports have been delayed by a year. So, I guess when you start at a low point, global downturns matter less.
