Just When Africa’s Luck Was Changing

Contrary to the initial belief that Africa would escape the impact of the credit crisis because of its little to no investment in the global subprime market, the continent is feeling the pinch. According to the World Bank, African economies will grow at a meager 3 percent this year compared to 6 percent from 2004 to 2008. What the credit crisis has done is to force investors around the world to tighten their belts. African countries at the receiving end of investment flows are taking the unfortunate hit. Faced with a lower budget, Dubai World scaled back the planned $230 million investment in Rwandan tourism, announced in 2007. The inadvertent results of this decision for Rwandans are shattered hopes for new jobs and better standards of living. Rwanda is not alone. Many other countries in Sub-Saharan Africa have suffered the consequences of the IMF-estimated 18 percent drop in foreign direct investment between 2008 and 2009. In spite of these discouraging figures, all is not lost and Africa can still look to the ray of light that shines from China and the few bullish American private equity firms that continue to find African investments attractive. – YaleGlobal