Africa and global recessions: Options for reducing vulnerability in future
Global recessions have devastating effects on economies. The most recent crisis in 2007/2008 led to declining output, rising unemployment and falling incomes in Africa. The paper specifically aims to explore sustainable long-term strategies which could reduce the vulnerability of African economies to similar recessions in future. Its specific objectives are: (i) to critically review theoretical perspectives which explain the causes of global recessions and how to prevent them; (ii) to examine the evidence on the effectiveness of the dominant responses to such crises; and (iii) to identify feasible and sustainable long-term strategies to minimise negative impacts in future. The paper applies a qualitative research methodology, which is based on review and analysis of secondary information. It concludes that traditional or conventional, market-based approaches do not adequately explain the root causes of global recessions and that the dominant counter-cyclical Keynesian-type fiscal and monetary policies that characterised the responses of many African countries do not actually provide a lasting solution to the problem. Given the structurally, politically and socially based root causes of the crisis, it is imperative that African states should prioritise and adopt more sustainable and transformative long-term strategies. These should centre on reducing wealth and income inequality, rapid implementation of the continent’s structural transformation and industrialisation agenda, promoting intra-African trade, intensification of the diversification drive – both in terms of products as well as markets – massive investments in technical and other skills needed for industry and trade development, and finally, tapping into emerging opportunities through South-South cooperation.