Although the worst of the global economic and financial crisis now seems behind us, several challenges remain. Since mid-2009, developed economies started to recover as concerted efforts to avert a prolonged crisis started to pay off. Indeed, developed countries have started to grow but the effects of the crisis are still felt, especially in developing countries, where the poor have been particularly impacted. While financial markets are now generally on the path of recovery, the effects on the real sector will remain for some time.
In Africa, the effects of the crisis on capital flows, export volumes and prices, remittances and tourism were far reaching. The crisis also has resulted in depressed financial markets, delays of issuing sovereign bonds and depreciation of local currencies. There has been a significant reduction in credit and an increase in risk premiums facing African countries in global capital market. This has had a very negative effect on FDI (Foreign Direct Investment) flows to the region with dire consequences for growth and poverty reduction efforts. The disruption caused by the drying up of these traditional sources of finance has been compounded by observed reductions in workers’ remittances and possible declines in ODA (Official Development Assistance).
The crisis threatens to reverse trends in private investment and jeopardizes the gains from the good economic performance recorded since 2000. The crisis has led to increased unemployment especially in the mining, manufacturing and construction sectors, putting young and vulnerable people at the risk of sliding back into poverty. Without deliberate efforts to reverse these trends, progress towards achieving the MDGs will be stalled.
The crisis has significantly changed the landscape for Africa’s development. While the post-crisis era is characterized by the challenge to revitalize growth to pre-crisis levels, the continent is to do so in a less favourable environment. The African oil-producing economies no longer receive the windfalls of the years preceding the crisis, foreign investors have become cautious and the recovery in the developed world still remains very weak, with attendant negative effects on demand for African exports.
African countries have asked international financial institutions, mainly the Bretton Woods and the AfDB (African Development Bank) to support them to cope with the crisis. Several special facilities have been created for trade and emergency liquidity, and disbursement procedures have been accelerated. These helped a great deal to avert an economic recession. As the crisis subsides, African countries need adequate resources to continue the fight against poverty and close the infrastructure shortfalls.
In response to the crisis, the AfDB and the UNECA (United Nations Economic Commission for Africa) quickly revamped their capacity to provide analytical and policy support to African countries. They have sought solutions to reduce and mitigate the effects of the crisis. They organized the African Economic Conference 2009 on this subject as a way of energizing the debate on appropriate policy responses to the crisis. As it transpired throughout the Conference, the critical challenge facing Africa today is to preserve the foundations of growth and increase opportunities for growth in the post-crisis area. These issues require onsultation and professional debate among researchers, policy makers and development
practitioners, so as to provide input into improved policies at national and regional level.
The African Economic Conference (AEC) offers such an avenue for consultation and debate on development policy. The Conference is now well branded as a platform for professional discourse and debate that seeks to address Africa’s development challenges, bringing together researchers, policy makers, and development practitioners. The fifth edition of the AEC will be held in Tunis, Tunisia on October 27-29, 2010.