Should africa worry about the Euro crisis?

posted in: Poverty in Africa | 0

 

You have probably by now heard about the crisis in the European Community specifically the Euro  zone. If you haven’t the basics of it are some of the economies of the Euro zone these are the countries that use the euro as their currency are struggling, namely Spain, Italy, Ireland and Greece! The worst hit of these is Greece, which needs to be bailed out financially, but like any other financial Aid, the bail out comes with, conditions.
In development speak this is what  is called economic conditionality – adjust your balance sheet according to our rules and we will give you financial assistance. In countries where governance is poor, political conditionality is applied too. Typically countries will be required to improve their human rights, observe international law of aid will be withdrawn as well as trade agreements.
Things have gotten so bad in the Euro zone that eight european union governments  have fallen since the crisis started.  EU heads of states have imposed tough measure to mitigate the crisis but citizens have fought back which partly the reason Greece failed to form a government following its most recent elections.
A question has been asked whether the design of the Euro is fundamentally flawed, but that a topic for another blog post.
 Why should this matter to Africa?
The EU – Africa relationship is as old as the EU itself and forms part of the common positions adopted by the European union during the Treaty of Rome at which the Union was founded. For more than fifty years now, the European Union has opened up its markets ( mostly tariff free) and assisted African countries financially , got involved in humanitarian relief in African countries, provided other forms of assistance such as Food Aid, technical training etc. Indeed the  EU is the largest multilateral provider of both development and humanitarian aid.
How might the crisis impact africa
As the Euro crisis deepens the spending  power of eu citizens is reduced and this impacts demand for African products as well as the financial assistance that is available from the EU
This is a big deal  because EuropeAid is derived from the development and this is made up of up contributions  by member states. countries like Uganda that receive 54% budget support from the EU should indeed be concerned about this. Both Aid and Trade are crucial to the development of Africa, therefore africa should worry about the Euro crisis . Furthermore about impact  as the  recession deepens unemployment increases, this impacts African diaspora too, the reduced  disposable income means reduced or no remittances at all. The families back home that rely on this money for food and healthcare will be left in dire straights to say the least
Finally some EU  citizens that cant access jobs have hit the road to Africa and are competing with Africans for a limited number of jobs!
If you can think of anymore reasons to add to list please do or simply share your thoughts below
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