Crisis 'will cost Africa $49bn'

The financial crisis and global recession will see African economies lose up to to $49bn by the end of this year, research by ActionAid suggests.

• About $27bn of this was a fall in aid, export earnings and income from richer recession-hit nations said the charity.
• The lost income is equivalent to a 10% pay cut for the continent, it added.
• The report comes as African leaders prepared to meet UK prime minister Gordon Brown to discuss the effect of the recession on their economies.
• Those talks are ahead of the G20 summit in London – where just one African country – South Africa – will be represented.
• The ActionAid report found that countries which liberalised their markets, and were large enough to attract significant investment would be most affected by the financial crisis.
• South Africa would be among the hardest hit, as it was likely to see income from abroad plunge to around a fifth of the country’s economic output.
• “Although developing countries didn’t make this crisis, it has become all too clear that they are in the firing line when it comes to suffering its worst effects,” said ActionAid’s head of policy, Claire Melamed.
• “There is a real risk that development will start to go backwards in many countries as the money dries up and that the recession will lead to worsening poverty and terrible consequences for the men, women and children caught in its grip.”
• Dr Melamed added that that the global financial system “hasn’t been working for development for a long time”.
• “Countries that have opened up their economies to global finance subjected themselves to massive risks but didn’t get much of a pay-off in development terms.
• “But developing countries do need finance from somewhere and we need a system that can give them what they need without running the huge risk of another financial crisis.”