The IMF and Aid to Africa

Currently, 65% of the world is in recession, an amount greater than at any time since 1960. The International Monetary Fund [IMF] recently stated that the downturn is likely to be “unusually severe and long-lasting.” The recession is likely to starve developing countries of their resources and the Fund predicts that these fledgling economies may face shortages of investments for many years to come.

The IMF also stated that effective and internationally coordinated actions would be necessary for any improvement in the global economic situation. A report explained: “Shrinking economic activity has put further pressure on banks’ balance sheets as asset values continue to downgrade, threatening their capital adequacy and further discouraging fresh lending. Thus, credit growth is slowing, and even turning negative, adding even more downward pressure on economic activity.”

The effects of the economic crisis are already felt on a global scale but it is especially harsh on charities and organizations catering to sub-Saharan Africa, due to the fact that a large number depend on donations made by their members. If the individual donors have no money to give to philanthropic causes, these nonprofits will be unable to fund their programs. The IMF has made warnings regarding foreign aid decreases in the region and already many of these organizations are going out of business.

The Fund’s Managing Director Dominique Strauss-Kahn said, “According to the World Bank, over 50 million people in low income countries, many of whom live in Africa, could be thrown back into absolute poverty – with obvious consequences for other social ills, like sickness and infant mortality. The economic and political challenges facing Africa are clearly enormous.”

In an effort to help curb these challenges, the United States has pledged to double development aid to the area by next year. As a result of a pledge that was made by the members of the G-8 in 2005, the nation will double funds previously allocated to sub-Saharan Africa with the goal of $8.7 billion by 2010.

At the G-20 meeting in London this month, Geithner emphasized President Obama’s intentions to work with Congress to boost U.S. aid. He explained that the administration plans to “provide nearly half a billion dollars in immediate assistance to vulnerable populations and double support for agricultural development to more than one billion dollars in 2010 so that we can give people the tools they need to life themselves out of poverty.”

Without the help of those who are able to provide them with assistance, the fragile economic status of nations in sub-Saharan Africa will continue to worsen. It is necessary for governments and organizations to collectively prevent a domino-effect of countries falling as casualties to the global economic crisis.