By Kwabena Boohene and Sylvia Engmann
In the year 2008 the world faced one of the greatest financial catastrophes in history, the global financial crisis. This event had a nasty impact on the world’s economies. The world super power, America had detonated a time bomb on the nations of the world. Qualities such as corruption, deceit, lies and others that they associate with the African continent had reared its head in their day to day activities. Everyone was crying of the loss of market share, prices falling, individuals losing their jobs. It felt as though the western world and foreign nations were hanging by a thread, and any little movement would cause it to snap. CNN reporting this and BBC reporting that, but interestingly we don’t really remember how it really affected Ghana at that time (maybe it is because we weren’t reading the news. Or?).
It seemed so far from us, but little did I know of the impact it would have. First and foremost, the crises did not affect only America, and Europe but actually a larger part of the world, China to be more specific. It is very clear, the relationship that Africa has with China was a deciding factor in the economy of Africa regarding trade arrangements . The amount of products imported from the Chinese market on the streets of Ghana for example is of a huge sum. Even the construction of roads, hospitals, bridges are all being done by Chinese workers (not our fellow African or even Ghanaian engineers). The country has more than $20bn (£13bn) in investments, in the African nation. This relationship has grown and grown over the past years. Thus the fall in prices in 2008 meant a likely devaluation of the Yen. This meant less loans granted by the Chinese government, increase in the prices of goods imported from the nation and many other effects.
The issue of exports is one of great significance to the continent. The major African banks do not really have a strong hold in the international financial market, but trade is one of the only factors that keeps the continent alive. This volume of trade and export prices were estimated to decline rapidly. During 2008 non-energy prices plunged by 38 percent, oil prices fell below 69 percent. A country like Angola which is really is dependent on oil suffered so drastically that the country posted a deficit in 2009.
Another example was South Africa. Like many of its counterpart African countries, South Africa was heavily dependent on foreign trade and the use of foreign savings to prop up domestic investment and was the most talked about whenever the topic of Africa and the recession came up. It was said that they handled the crisis pretty well, though it was said that most of the companies went into survival mode, to try and ‘live through’ the crisis. But in May 2009, it was reported that their Gross Domestic Product went into a negative mode in the final quarter of 2008 (at -1.8) and an even more negative figure in the first quarter of 2009 (at -6.4).
Africa was generally on the down low during the recession period.Or maybe, it’s because the international media was busy fighting their own battles to think of an insignificant continent like Africa, because well they don’t care. Its also likely that the effects of the global recession was not felt initially, and is slowly being felt in Africa now. Anyway,we really don’t know what was really happening in Africa during the global recession. But we do want to know, don’t we?