- Title: VARIOUS: West Africa fears contagion from rich world's money woes
- Date: 23rd October 2008
- Summary: (AD1) SAN PEDRO, IVORY COAST (OCTOBER 16, 2008) (REUTERS) EXTERIOR OF COCOA CO-OPERATIVE VARIOUS OF WEIGH AND CONTROL THE QUALITY OF THE COCOA BAGS (SOUNDBITE) (French) COCOA FARMER, BELLY KOUAME, SAYING: "We are afraid because today the cocoa price is decided by the London stock exchange. We don't know very well, but we tell ourselves if they have financial problems, and everything is being decided over there, so if the market drops, people won't be able to get their orders, and won't be able to finance their multinational companies to buy the cocoa, so effectively the Ivorian cocoa will be hit." VARIOUS OF WORKERS IN SAF CACAO STORAGE FACTORY VARIOUS OF DIRECTOR, SAF CACAO, ALY LAKISS WORKING IN OFFICE (SOUNDBITE) (French) DIRECTOR, SAF CACAO, ALY LAKISS, SAYING: "Of course we will feel the impact in the cocoa industry, because today the cocoa is bought with liquidity, today if the European or world industry is affected, it's sure that we will be affected too because they won't have the liquidity needed to buy our cocoa, the banks won't be able to give them the credit they need. It's a real impact on us."
- Embargoed: 7th November 2008 12:00
- Keywords:
- Topics: Economic News
- Reuters ID: LVA3PBPPIPGUVU5FFNLEUXNS28HU
- Story Text: Aid workers fear Africa's food crisis is being overshadowed by the world's financial crisis, as the rich world's money woes filters through to West Africa's poor.
A lot of people living in this poor neighbourhood of Dakar don't have a bank account, a car or a house of their own, let alone a mortgage.
Many haven't even heard of the global financial crisis that has sent markets tumbling and forced governments in the rich developed world to divvy up hundreds of billions of dollars to bail out collapsed banks and try to calm anguished homeowners and savers.
The only crisis they know of is surviving day by day in their native Senegal, where most people barely earn enough to feed their family or rent a room.
But aid workers in the West African city say the financial crisis in the West now overshadows the immediate pressing reality of the food crisis on the continent.
"Big, industrialised rich nations have shown that they were more eager to bail out banks, to support a solution to the (financial) crisis, than really addressing the issues of vulnerability and hunger in the world,"
said Mamadou Biteye, Oxfam International's representative for West Africa.
In Senegal and across the world's poorest continent, millions in overcrowded cities and the remote bush eke out an existence on one or two dollars a day. Death, hunger and disease are the daily lot of many, especially in conflict zones like Darfur, Somalia, eastern Chad and Democratic Republic of Congo, as well as some of the poorest countries in the region, like Mauritania.
Oxfam GB has drawn up figures showing just how far 700 billion US dollars earmarked by the U.S government for a financial rescue plan could go in helping to solve the poor world's problems.
It says this is enough to eradicate all world poverty for over two years, based on a United Nations Development Programme (UNDP) calculation that it would take 300 billion US dollars to get the entire global population over the one US dollar a day poverty line.
The 700 billion US dollars could clear -- almost twice over -- the 375 billion US dollars accumulated debt of the world's 49 poorest nations.
But Biteye says even the money pledged before the financial crisis hit the West, almost half a year ago hasn't come through.
"The developed nations have pledged 12.3 billion USD in contrast to the 25 billion USD needed to address this crisis, according to the United Nations. And five months later, right now, barely 1 billion USD was actually mobilised towards that fund," Biteye said.
"It is a problem of justice, a problem of equity and solidarity.
If the problem is not solved, you will see all our kids taking the boats and going to the Canary Islands or Europe," said Vore Gana Seck, the president of a council of charities supporting development in West Africa.
Major charities like Oxfam GB are expecting a fall off in aid donations. The British group is trimming its budgets by between 10 and 15 percent for next year, based on projections.
While African governments and educated elites are following the global banking crisis closely, the vast majority of their people have little grasp of sub-prime mortgages, toxic assets, bank bailouts and trillion dollar financial rescue plans.
But many do understand that when the rich world catches a financial fever, the planet's poorest may end up hurting too.
The debate is open on just how much Africa and its people will feel the pain of the financial turmoil in the rich world at a time the continent's economies had been growing at their fastest pace in decades.
And in some of Dakar's richest neighbourhoods, big villas mushroom on the city's beautiful coast, there's certainly no sign of a slowdown in luxury apartments being build or up for sale.
And there are those like Senegalese President Abdoulaye Wade who believe the crisis will be "limited" for Africa, where banking systems and markets are poorly developed in many countries.
But whilst the few feel protected, the majority of the population lives a different reality.
In Ivory Coast's, the world's top cocoa producer, where farmers' livelihoods depend on the ability to sell their cocoa crops, there's certainly a high level of uncertainty.
"We are afraid because today the cocoa price is decided by the London stock exchange. we don't know very well, but we tell ourselves if they have financial problems, and everything is being decided over there, so if the market drops, people won't be able to get their orders, and won't be able to finance their multinational companies to buy the cocoa, so effectively the Ivorian cocoa will be hit," said cocoa farmer And Aly Lakiss, director of SAF cocoa company in the country's second port, San Pedro, agrees.
"Today, the cocoa is bought with liquidity, today if the European or world industry is affected, it's sure that we will be affected too because they won't have the liquidity needed to buy our cocoa, the banks won't be able to give them the credit they need. It's a real impact on us," said Lakiss.
Some analysts believe the predicted slowdown in world demand may cool off rocketing high food and fuel prices which have been throttling many poor food and fuel-importing African economies.
But many, from the International Monetary Fund to the African Union, fear the developed world's credit crunch may choke aid, trade and investment to Africa, straining vulnerable economies already hurting from high food and fuel prices. - Copyright Holder: REUTERS
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