The meeting of the G20 leaders in London in April resulted in a financial package being put together by the most powerful nations on the planet. In total, $1.1 trillion is to be injected into the International Monetary Fund and World Bank, aimed at stemming a global financial recession that threatens to plunge into depression.

While these packages are heralded by some as good news for developing economies, far more conspicuous by its absence was Africa as an agenda in its own right. In the past, at Gleneagles specifically, Africa has virtually been the forum itself. At that Summit in 2005, the G8 met in Scotland and agreement was made to drop debts owed by ‘heavily indebted poor countries’ to the World Bank, the IMF and the African Development Fund.

In London in 2009, various pledges were re-affirmed, almost as an afterthought as lip service was paid to the Millennium Goals. Africa was represented at this conglomeration of powers only through Meles Zenawi, Prime Minister of Ethiopia (representing NEPAD) and South African President Kgalema Motlanthe. Was it neglectful to dismiss Africa’s needs here, or is Africa now lumped with those ‘emerging economies’ constantly referred to throughout the days briefings?

Whatever, the agenda here was delivery of a design to avert deeper global economic crisis. The reform of banks, regulation of hedge funds, restructuring of the IMF, eradication of tax havens, and solvent injections to boost international trade are all anticipated catalysts of this. In a way, they seem scapegoats. Tax havens for the rich to stow their money into are hardly the cause of global economic problems, which really began with the mortgage crisis in the US. But these leaders were consolidated in their united front with a joint resolve to overcome global problems as a collective.

President Barack Obama of the USA measured an observation that the world could never have foreseen all nations co-ordinating together like this in agreement 30 years previously underlined that point.

However, he stopped short of declaring the event a complete success: “This is not a panacea, but a critical step”.

The G20 package is not only there to strengthen financial institutions, but to bolster trade as Obama highlighted: “People who want to trade and export can access funds that aren’t available now through the $250 billion plan.” The World Bank trade facility of $40billion will be the initial part of the package, but more will be released. This will be further supported by the sale of IMF gold reserves. The rhetoric of the Summit, the language of Obama at least, signals something of a new era, as he implied: “the future markets are the future drivers of economic growth.”

Ban-Ki Moon, Secretary General of the United Nations: “This downturn has exacerbated the food crisis that raised the number of hungry to nearly one billion.”

So, for Africa’s poorest, or the emerging economies of the world, a $1 trillion bundle has been allotted to the IMF to help insulate against the worldwide slump. Ban-Ki Moon, Secretary General of the United Nations, declared that during this crisis “the worst hurt are the poor, especially those from the world’s most vulnerable nations.

This downturn has exacerbated the food crisis that raised the number of hungry to nearly one billion.”

The support offered here comes, as ever, from liquidity provided by the IMF, long term lending through the World Bank and other multilateral development banks. Moon adds: “I intend to mobilize the entire UN system to monitor the impact of the crisis on the poor and vulnerable so that the international response will be appropriate”, and insists on renewal of the Doha trade round, to deliver real benefits for developing countries.

This constitutes a safety net with nearly $300 billions of drawing funds to be made available from the IMF, and with it Obama declared that reaching out to it will no longer have a stigma attached to it. Douglas Alexander of the UK Government’s Department of International Development (DFID), however, alluded to the lot of African countries in his briefing, by describing going to the IMF as ‘like going to the dentist’. He suggested that rising food prices, aligned with an increase in the global population demanded something akin to the Green Revolution in South Asia of the sixties. This period and practice led to increased wheat and rice yields and crop strains which ultimately benefited the farmers and consumers of some of Asia’s poorest countries. Replicating those practices today in Africa with its varying climates and dire needs can be an insurmountable challenge, without investment assistance.

In contrast to this simplistic approach, the UK Junior Finance Minister Stephen Timms remarked that promoting growth in emerging markets was vital as it has accounted for 70 per cent of global growth in the last ten years. He insisted that protectionism should be rejected and countries that have set up trade barriers should be named and shamed.

Activist Bob Geldof broke this down further, “We need an injection immediately of $50 billion into poor areas, which will translate into about one per cent of global stimulus,” and stating: “Aid is investment.” |