Business & Economy

Europe’s Pain Hurts Africa

  • PublishedFebruary 19, 2012

These are very uncertain times in Europe. While the situation is relatively calm in the UK where we are based, the Eurozone is in a precarious position. Germany is the only country in the bloc that is economically sound and even registering growth.

Perhaps predictions of the imminent demise of the Eurozone, the dismantling of the euro common currency and throwing to the wolves the weaker members – Greece, Ireland, Portugal and even Spain, Italy, Austria and several of the smaller countries – are exaggerated. Perhaps the stronger members will rally around and prop up the Eurozone but the signs are not very encouraging.

This is bad news for Africa. Europe and the rest of the Western world are very important trading partners for most of us. We send them the bulk of our exports and buy the bulk of our imports from them.

The West is a crucial source of capital, investment funds and aid. We have very strong and intimate cultural and historical links, especially with Europe, and millions of Africans study, live and work in the West. The West is by far the largest source of remittances sent home by diaspora Africans.

Our business connections with the West go back hundreds of years. Our political and economic models, like it or not, are based largely on Western precepts and our business models are Western in structure and spirit.

In short, although we are prone to pointing accusing fingers at the West and blaming it for most of our ills (justifiably in many cases), in truth, we are wedded to the West. Perhaps this is why we get so hot under the collar when the West ignores us or does not treat us with the respect we deserve but care little what other countries, including our new-found trading ‘soul mate’, China, really think about us.

But even leaving all that aside, we cannot afford a severely hamstrung Europe, especially at this point in our history. As a continent, the last decade has seen the most sustained period of growth virtually across the continental board.

Some African countries, termed the African Lions, are showing a clean pair of heels to the much-vaunted BRICS emerging markets. For instance, 10 African countries have per capita incomes greater than China; 17 enjoy a greater per capita GDP than India. Life expectancy in the African Lions countries is higher than the average in the BRICS – 75 years compared to 69 in the latter. The number of years children spend in full-time education in African Lion nations is the same as it is in the BRICS. Political stability and ease of doing business in both camps is about the same.

But in terms of realisable potential, Africa is out there on its own. With its treasure house of natural resources, its young and energetic population, its diversity of peoples and languages and its vast spaces on which to grow, build and live, Africa is incomparable. Consider: While the population of the entire continent of Africa, the second largest in the world, is around one billion, more than a billion Indians have to jostle for breathing space in just one country which is only 1.4 times bigger than Africa’s biggest country, Algeria.

Spreading the risk

Africa has everything going for it; especially now that most of the countries are at peace with themselves, there has been considerable political maturity and economies are growing apace. But Africa is also firmly part of the global economy and is becoming more integrated by the day.

Fortunately for us, the economic slump in the West, which might have completely floored us 15 years ago, has been more than cushioned by the insatiable appetite for growth in the BRICS, especially China and, to some extent, India and other Asian countries.

But Asia and Latin America too need an economically strong Europe to realise their own growth plans. At times, the global economy is like an elaborate house of cards – pull one out and the whole structure could collapse.

Our cover story this issue is precisely on the impact of the European crisis on perhaps the most lucrative and fastest-growing industry in Africa – floriculture. This vast enterprise employs millions and provides steady business for a host of other support services. Elsewhere in the magazine, we discuss how the crisis in Europe is affecting the CFA franc, which is pegged to the euro, and thus the economies of Francophone Africa.

There is very little we can do to help the Eurozone resolve its crisis but we can wish for its speedy recovery and thank our lucky stars that over the last decade or so, we have not kept all our eggs in one basket. Spreading your risks has always been a wise dictum; the Eurozone crisis has provided a valuable lesson to keep in mind for the future.

Written By
Anver Versi

Award-winning journalist Anver Versi is the editor of New African magazine. He was born in Kenya and is currently based in London, UK.

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