Africa and the financial crisis

The Millennium Development Goals are a set of promises 189 world leaders made to significantly reduce extreme poverty, illiteracy and disease by 2015. Charles Abugre is the UN Millennium Campaign's Deputy Director for Africa and is based in Nairobi, Kenya.

DW: The G-20 summit is about restructuring financial markets and rebuilding the global economy. Do you think that Africa is going to be benefit from the outcome of the summit?

Charles Abugre: I hope so, because Africa was badly affected by the global financial crisis. Africa was growing on average by 5 to 5.3 percent. The direct result of the financial crisis meant that growth fell quite steeply to 2.5 percent in 2009.

Africa is dependent on primary commodities, so a system that affects global demand affects Africa quite steeply. If they manage to discipline the financial system, to make it more stable, but also make the international exchange system stable, Africa will benefit. Remember, most African countries are holding reserves abroad, especially in US dollars. When the US dollar goes up and down, it affects Africa quite steeply.

Do you think that the international community has given enough attention to the effects that the global financial crisis had on Africa so far?

Not enough. They did something small, by increasing the International Monetary Fund's Special Drawing Rights (editor's note: the SDR is an international reserve asset created by the IMF). The IMF has about a billion dollars to lend to Africa. But that is a drop in the basket, compared to what was lost in the financial crisis.

Many African economies were hoping that this would be the time for the international community to bring back the compensatory facility that the IMF had. This facility was established in the 1970s to compensate African countries that lost money as a result of commodity price changes, which is not their fault. This way you stabilize their incomes. This has not happened.

Secondly, developed countries reduced their aid flows. Developing nations got less money from international aid and less money from foreign direct investment. This is why Africa's economy declined so steeply. In a sense, it is among the most unfair behavior of developed countries. First you create a real problem for the poorest people, than you do little to compensate them for it.

Given this situation, what push is needed to reach the Millennium Development Goals by 2015?

Well, we have to push at many levels. At the level of African countries, they have to do more to mobilize domestic resources. They have to make their tax systems work. They have to get their elite to pay their taxes. They have to spend that money properly. Civil society has to be mobilized to reduce corruption and ensure that this money is spent well to reach the Millennium Development Goals. That is the African government's side.

But on the side of the northern and rich countries, they must fulfill their promises. European countries, including Germany, promised that by 2010 they would have raised their aid disbursement as a percentage of GDP to 0.56 percent, and in the case of Germany, 0.51 percent. They have failed in this promise.

You mentioned the responsibility of African politicians. What is the responsibility of the African elite, including the business community or the growing middle class in certain African countries?

For the African elite, there is one frightening thing happening. The growing middle classes have also developed very rapacious consumption behavior. They buy the most expensive cars. They fuel and import intensive consumption. This is a way of spending money abroad rather than putting it in creating businesses to create employment. African elites and the African business environment must learn prudence and put all profits into reinvestment in order to generate jobs. They must also pay their taxes.

Interview: Daniel Pelz
Editor: Sabina Casagrande