I would like to comment on the narrative on the financial crisis impact on Africa. The narrative which seems to be agreed is that the crisis is having a huge impact on Africa. Africa, which contributed least to the crisis, will be impacted most as poorest countries are the most vulnerable. This is the same as the narrative on the climate change crisis which Simon Maxwell speaks so eloquently about.

An alternative narrative might be that the crisis has had a massive impact on the export earnings of the oil producers, most notably Nigeria and Angola. These impacts are large enough to reduce the estimates of aggregate growth of Africa quite substantially. Estimates of increased numbers in poverty may not be very accurate because much of this oil revenue would not have gone into poverty reduction anyway (remember the curse?). But other countries in Africa have much smaller impacts – and for quite a few the impacts are positive because the fall in oil import costs and food import prices is greater than the loss of other financial flows. (Earlier in 2008 we heard a lot about how terrible the impact of the rise in food and fuel prices was for Africa, but we are not hearing much about how great it is that this problem has been reversed).

A variant on the above storyline is that whilst the non oil producers have not seen much impact yet, the second round effects will be significant and negative, driven by falls in remittances, foreign investment, aid and demand for exports. We don’t yet have very good information on these second round effects – the timeframe or the depth of the impacts. If we act quickly to compensate, we may be able to offset the worst impacts.

Which narrative is best?