Euro crisis and Africa
I’ve just had a fascinating discussion with the chief economist of the African Development Bank about the impact the eurozone crisis may have on Africa.
It’s a very popular question right now, and Mthuli Ncube is hoping that his optimism is well-placed. In brief, according to Ncube, Africa should be ok as long as economic management stays in ‘sound’ hands and Africa’s impressive growth continues (something much more elusive in Europe).
But the main areas for concern – trade deals (if Europeans aren’t buying African exports); lines of credit from richer nations; whether aid budgets will stay intact (not very country has been as committed as the UK); and of course the dreaded food price inflation. Falling commodity prices are something of a double-edged sword – bad for Africa’s small number of oil producers, good for those dependent on oil imports. Another cause for concern is how those countries which use the CFA (which is tagged to the Euro) will be affected if the Euro’s value begins to change – although again this could help small exporting industries.
Still, Mr Ncube thinks Africa will ‘weather the storm’.