The causes of this worsening crisis include a wide range of internal weaknesses, a hostile external economic environment, and, in recent years, climatic factors. The African crisis is also unique in that many of its elements are uncharacteristic of other developing regions.
It is essential that the nature of this crisis be clearly understood by African governments, the multilateral organizations, and donor countries. Without that understanding, communication is impossible, nor is it possible to design economic measures and assistance programs to attack the crisis effectively and consistently.
Indeed, valuable time may continue to be lost in trying to sort out misunderstandings. Africa’s economic situation, already serious, is deteriorating. In fact, unless effective measures are taken now, the already fragile fabric of the economic, social, and political systems in many parts of Africa will break down. The starting point for discussions between the International Monetary Fund and the World Bank, on the one hand, and African central banks, on the other, should be a fresh examination of this crisis.
The African situation should first be looked at objectively, and then strategies appropriate for dealing with it should be considered. This sounds simple, but it will require determination by all parties to consider new approaches to the problems. In this connection, there appears to be no disagreement about the overall objective. Every African country is seeking balanced and sustainable economic growth, the same objective which the Fund and the World Bank wish to support. Disagreements continue to take place over strategies, such as policies needed, appropriate economic measures, and their timing. To overcome misunderstanding, the crisis facing Africa and its principal causes must first be understood. After that, since there is no disagreement about the basic objective, it is easier to discuss strategies appropriate for dealing with the crisis. In short, the first task is diagnosis, and only then should medicine be prescribed. To deal with the situation the other way around is to invite even more misunderstanding and disagreement.
The World Bank and other organizations have published materials on some aspects of the crisis and the complex range of issues resulting from it: mass poverty, unsustainable population growth rates, havoc wreaked by drought, the rapidly decreasing ability of the continent to feed itself, unemployment, shortage of domestic savings, accelerating desertification, and shortcomings in domestic policies. Two observations are in order.
First, for many African countries poverty and other hardships are more severe now than 20 years ago. In other words, in certain respects, such as per capita incomes and employment, the two United Nations Development Decades have seen virtually no development in many parts of Africa. Second, the interaction between rapidly increasing populations, shortage of resources and skills, and weak or ineffective administrative machineries will in many cases lead to greater human misery and to total collapse of many African countries unless appropriate measures are taken immediately. While appropriate internal measures by Africans themselves are necessary, many of these countries’ economies are often substantially influenced by forces beyond their control.
Climatic conditions are one such factor, but external trade (e.g., commodity prices) and other factors are of equal importance and capable of management, given willingness at the international level. Ten primary products account for 75 percent of Africa’s export earnings, making Africa’s export earnings extremely vulnerable to changes in demand.
Africa’s access to alternative sources of foreign exchange, especially the private loan markets, is circumscribed by its special circumstances. Africa gets only 10 percent of total foreign private investment flowing to developing countries, compared with 60 percent to Latin America and 30 percent to Asia.
A Guest Editorial