1. Africa's Growth and Resilience in a Volatile World
- Author:
- Ngozi Okonjo-Iweala
- Publication Date:
- 06-2009
- Content Type:
- Journal Article
- Journal:
- Journal of International Affairs
- Institution:
- School of International and Public Affairs, Columbia University
- Abstract:
- Until 2008, thanks to domestic policy reforms, external assistance and high commodity prices, most of the economies of sub-Saharan Africa experienced sustained and accelerating growth for over a decade. Poverty was declining, health and education indicators were improving—albeit from a low base—and there were signs that Africa's HIV/AIDS prevalence rate had begun to decline. Then, in 2008, the continent was subjected to three major global shocks: a 50 percent increase in food prices, a surge in world oil prices that reached $140 a barrel and the financial meltdown and worldwide recession that is still running its course. The initial impact of these shocks was devastating, but African policymakers and the international community responded quickly and effectively, preventing a far worse outcome. Using external assistance, they scaled up existing safety net programs to cushion the poor from the food price shock, and for the most part avoided unproductive but politically compelling policies, such as price controls and export bans. Leaders of the affected countries also increased the share of high food prices accruing to Africa's farmers. Similarly, many oil-importing countries passed on higher fuel prices to consumers, avoiding the temptation to increase poorly targeted and often regressive subsidies. Finally, when the price of oil plummeted, Africa's largest oil exporters were able to withstand the shock because they had been using a conservative reference price per barrel in their budgets and saving the rest. As the global recession worsens, the coming months or years will be extremely difficult for Africa. However, the combination of domestic policy reforms and prudent foreign assistance that enabled Africa to experience economic growth over the past decade and manage the food, fuel and financial shocks thus far, can, if replicated, enable the continent to minimize the impact on its poor and return to a path of self-sustaining growth.
- Topic:
- Education and Health
- Political Geography:
- Africa