Supporters of the free market crow that foreign investment in sub-Saharan Africa has grown more than 30-fold since 1980. This, they say, proves market deregulation works.
But the increase in social divisions and child mortality within countries tells another story – that the growth in foreign investment has rarely benefited the majority of the population.
The economic meltdown will increase these divisions and threaten people across the continent with further impoverishment.
Eric Toussaint of the Committee for the Cancellation of Third World Debt wrote last week, “As a result of the crisis affecting advanced industrial countries, loan conditions will certainly tighten for developing countries.”
Much of the continent’s recent economic growth has been based on the exploitation of natural resources, rather than development of infrastructure or local industry.
Almost all African countries are highly dependent on the sale of raw materials and agricultural products, both of which are very vulnerable to dips in world commodity prices.
If exports weaken and consumer demand is reduced, Africa will suffer.
The laying off of workers in the West will cause hardship but in many sub-Saharan countries it can lead to starvation.
Outside of South Africa and Nigeria, African central banks do not have the funds to even consider bailing out banks that collapse in the way that the British and US states have.
Supporters of the market continue to blame the lack of “pro-business” reforms for the condition Africa is in. These are precisely the kind of deregulations that have made the problems worse in Britain and the US.
In a recent discussion of the Millennium Goals to reduce global poverty, the United Nations (UN) concluded that the goal of reducing absolute poverty by half is within reach for the world as a whole – but not in sub-Saharan Africa.
Furthermore, the UN says that in the past year rising food costs have meant an additional 75 million people are suffering from hunger.
One official pointed out that even if food prices were to start falling, it would not immediately help, saying, “Many households in distress have already sold assets that are difficult to build up, leaving them more vulnerable.”