China cooling to weigh on African exporters
The African Development Bank (AfDB) expects mineral exporting countries to suffer from China’s slowdown, whose full effects may not yet be felt, its president said on Tuesday.
Africa, the world’s poorest continent, depends mostly on the export of raw commodities for its foreign exchange earnings.
“What happens in Chinese demand is important. It’s very important,” AfDB president Donald Kaberuka told journalists in Geneva, where he attended a World Trade Organisation meeting on poor countries’ aid needs.
“Until the existing stocks are absorbed by some recovery in Chinese growth, which now will be 7%, I think the short-term recovery could be quite limited,” he said, adding the impact of China’s cooling may take some time to trickle through.
“The lag period is quite long and we have not seen the bottom in some countries,” he said.
Southern Africa has been highly exposed to the world’s downturn, triggered by financial turmoil in the United States, but East and North African countries have been coping well so far, according to Kaberuka, a Rwandan national.
The world’s recession that has dampened high-end retail spending has also weighed on Africa, Kaberuka said.
“As for diamonds, the collapse has been truly phenomenal,” he said.
Competition from diamond producers in other regions has also been a factor, he said.
Kaberuka also raised concerns about a drying-up of trade financing for African exporters, as has been seen across the developing world as a result of the credit crisis.
“Farmers have harvested the cotton. It is building up. Nobody is buying it,” he said, citing concerns about “a potentially hugh problem of non-performing loans.”
“It’s true for cotton, it’s true for sugar,” he said.
The AfDB’s shareholders include Africa’s 53 nations and 24 non-African donor countries. It lends commercially to Africa’s richest nations and at concessionary rates to poor ones. - Reuters
