- The global economic crisis will hit African economies hard during the course of 2009, according to the forthcoming Economic Report on Africa 2009. The report calls for big-push on agriculture as the easiest sector to create new growth and to fight poverty.
The report, jointly published by the UN's Economic Commission for Africa (ECA) and the African Union Commission (AU), will be launched on Thursday 28 May. The theme of this year's report is: "Developing African Agriculture through Regional Value Chains," revealing that the analysts see massive investments in agriculture as the answer to the crisis.
The impact of the global financial crisis and economic recession has already resulted in lower demand for Africa's export and a sharp decline in commodity prices, the report documents. "At the same time, a projected decline in capital inflows to Africa, including aid, foreign direct investment and remittances will, accentuate the impact of the global credit crunch," it adds.
The report notes that all major industrialised countries have pumped the equivalent of billions of dollars into their economies to support struggling firms and stimulate demand for goods and services.
However, African countries do not have the resources to support their economies even though they are also feeling the pains of economic recession. "This is alarming as many people will fall back into poverty, making the Millennium Development Goals even harder to attain," the ECA/AU report warns.
"To mitigate the impact of the evolving crisis, African countries need sound domestic policies as well as continued aid flows and targeted financing facilities from international financial institutions," it adds.
The report calls for special attention to agriculture, since Africa is heavily dependent on this sector for providing employment, generating economic growth, foreign exchange earnings and tax revenue. "“Modernising agriculture is crucial to development and industrialisation in Africa, to food security, sustained poverty reduction and integration of Africa in the global economy," it says.
The report further points to the Comprehensive Africa Agriculture Development Programme (CAADP) of the African Union. In the framework of the CAADP, it points to a strategy that creates regional value chains that link agriculture to other sectors of the economy as the best way to initiate and sustain development in Africa.
"These value chains will include forward and backward linkages, from agribusinesses, agro-processing, ethanol production, other industrial processes to soil management, high-yielding seed varieties, fertiliser production, etc," the report concludes.
The report finally strikes an optimistic note: with sustained economic reforms, exchange rate adjustment, easing of inflation and efforts to revive domestic demand would contribute to low but still positive growth rates in some African countries in 2009.
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