The following article from the East African Business Week (Kampala) by Cedric Lumiti indicates that the slump will impact the East African Community by reducing economic growth this year by 2%. Significantly, the WTO suggested to African nations to resist the easy path to increased donor aid, instead to “look more on trade than on donations and grants”. This echoes Dambisa Moyo’s messages from her Dead Aid book, and might seem counter development, but with Africa’s banking system being relatively inured from the slump, now might be the time to seize the initiaitve and venure into international trade finance while the rest of the world stalls. As unlikely as it sounds, might African economists hold the key to relieving the world’s slump?

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“Africa: Trade Will Save Continent, Says Development Bank” by Cedric Lumiti, 2/5/09: The global recession will see East African Community economies’ growth recede by an estimated 2% this year. This was stated by African Development Bank (AFDB) President, Donald Kaberuka at the heads of state summit in Arusha, Tanzania.

The World Trade Organisation (WTO) has warned developing countries to tread carefully with donor funded projects. WTO Director for Economic Research, Patrick Low has cautioned developing economies in Africa which rely mostly on donor funds to look more on trade than on donations and grants.

African economies have equally been advised against employing protectionist measures that will hinder trade as this will only prolong the effects of the global recession with all signs showing that the crunch has come home to roost.

The Federation of Kenya Employers (FKE), a private sector umbrella body for employers, has already attested to the fact that no more hiring should be expected and nor will salary increments be affected in the near future. This announcement will only fuel increasing unemployment figures in the country currently estimated at 71 percent.

To the extent that we can do about it, it is important not to make the mistake of turning inwards and forgetting about the contribution that trade can make.

That’s the message that many people are trying to convey, don’t start restricting trade,” warned Low. While appreciating that majority of the countries in the world were grappling with fragile economies, the Geneva-based adviser pointed out that states need to urgently address the emerging issue of the absence of trade finance which is projected to lead to a nine percent contraction of the global trade volumes this year.

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