Sometimes you may wonder what is going on in the minds of our top international leaders. Like the IMF-boss Dominique Strauss-Kahn who’ been touring Africa recently, praising the continents central banks for their way of handling The Great Recession when in fact Africa was never in one.
“When America sneezes, Africa’s tuberculosis gets worse.”
The global recession has barely begun to hit Africa. Its banks and stock exchanges have been isolated enough from the wider capital markets to suffer few shocks, foreign investment remaine steady and oil-rich countries such as Angola continues to boom.
But dampened demand for African exports last year, together with the shrinking of many venture-capital funds, has now hit the continent hard after a long period of unusually perky growth.
Countries south of the Sahara together grew by less than 2% in 2009, and in many places income has fallen and unemployment started to rise.
According to the IMF’s own figures, sub-Saharan Africa’s economy will grow overall by 4.5% this year.
But that may be distorted by a large boost from oil and gold, as well as from the guaranteed aid that makes up half the budget in some countries.
Kenya will struggle to grow by 3% this year and even that depends on an upswing in tourism.
Nearly every African economy will grow more slowly than the 6% that many development economists reckon is the minimum to enable countries with rapidly increasing populations just to stand still.
The problems are obvious, but the fact is that Africa hasn’t experienced negative economic growth yet, and will probably not do so in the foreseeable future either.
So, it sounds very strange when Mr. Strauss-Kahn is traveling through the continent praising Africa’s central banks.
He even says that Africa’s economies were more dynamic than most of Asia’s. The main point, he said, was that Africa was recovering from the global crisis faster than expected.
What if we apply the same degree of accuracy to some of the other statements made by the IMF chief:
“There is evidence of new thinking in recent financial sector reform proposals.”
(Financial Times, 03.17.2010)
“This time it’s different.”
(Huffington Post, 03.12.2010)
“My belief is that Haiti—which has been incredibly hit by different things—the food and fuel prices crisis, then the hurricane, then the earthquake—needs something that is big. Not only a piecemeal approach, but something which is much bigger to deal with the reconstruction of the country: some kind of a Marshall Plan that we need now to implement for Haiti.”
(IMF statement, 01.20.2010)
“The current international monetary system have demonstrated resilience during the crisis, with the U.S. dollar playing the role of a safe haven asset.”
(IMF press release, 02.26.2010)
“The IMF has already moved quickly to help many of our member countries in this time of crisis, including by protecting social spending in order to cushion the impact of the crisis on the most vulnerable.”
(The Guardian, 03.26.2009)
“Human society is not a force of nature. The financial crisis was a catastrophic event, but one created by human hand. The lesson we all need to learn is that even a free market economy needs some regulation, otherwise it cannot function.”
(Der Spiegel, 09.14.2009)
Get’s kinda confusing, doesn’t it?
In the election campaign against Nicolas Sarkozy in 2007 Strauss-Kahn was described as “talented and imaginative”.
Imagine All The (Black) People
“When America sneezes, Africa’s tuberculosis gets worse,” Kenya’s prime minister, Raila Odinga, told a sympathetic Mr Strauss-Kahn, as he passed through Nairobi to herald a new IMF Green Fund, The Economist writes in its latest issue.
A figure “rising to $100 billion by 2020” was mentioned, but this made some people wonder whether the IMF was simply trying to take over responsibility for the $100 billion that rich countries vaguely promised to spend on poor ones at December’s climate-change conference in Copenhagen.
Should so vast a dollop of cash become available, Mr Strauss-Kahn hints it would be divvied up along the lines of the IMF’s existing quota system.
He told Africans they would be hit first and hardest by climate change, so the need for the Green Fund was urgent.
Of course, the climate change!
Well, that’s another side of the story.
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- Dominique Strauss-Kahn: This Time It’s Different (huffingtonpost.com)
- Strauss-Kahn to Plug IMF Successes in Africa Trip (Update1) (businessweek.com)
- IMF Chief Lauds African Economies (online.wsj.com)
- Dominique Strauss-Kahn: Africa Is Back (huffingtonpost.com)
- How is Africa actually doing? (economist.com)
- Africa Is Becoming the New China and India (newsweek.com)