Speaking in an SABC broadcast, Malcolm Damon, EJN executive director, said there was an urgent need for international financial institutions to be reformed. Power currently lies in the hands of Europe and the United States, and “Africa has little say”. He said the system “has little credibility and legitimacy”, and called for a strong African leadership to address the impact the financial crisis has on the continent’s poor and vulnerable people. 

Damon said it was particularly alarming that the IMF should get a stronger mandate to resolve the crisis, despite its “disastrous track record” in this regard.

Sofia Svarfvar, Project Officer at EJN, said the upcoming United Nations conference on the financial crisis and development, to be held 24-26 June 2009, is “crucial for the formation of a new economic era based on transparency and representatively. Africa needs to strengthen its voice to make sure that the outcome of the UN meeting has concrete action points for radically reformed and more representative and transparent International Financing Institutions.”

Africa did not create the financial crisis, Svarfvar said, yet the consequences of the global financial crisis for sustainable development and poverty reduction are severe in this region.

“The financial crisis has led to a decline in global demand for goods followed by unemployment and a global recession. Africa is facing an economic crisis from a decline in export revenues and foreign investment. We already see businesses closing down and an increased unemployment rate. The mining, manufacturing and construction industries are hard-hit on the continent.

“Africa already sees a decline in remittances (money sent home from expatriates) since the financial crisis has increased unemployment in the US and in Europe.

“It is also a big concern that the international aid flows will be decreasing. The impact of a scenario will be especially prominent in countries highly dependent on aid.

“Many countries in Africa have during the last years experienced debt reliefs and made progress in stabilising the external debt. With increased borrowing for coping with the current economic crisis it is time for caution. We face a threat of a new debt burden.

“It is now important that the African leaders are on the forefront to strengthen the efforts for global principles for responsible lending and borrowing, to establish a fair and transparent debt arbitration mechanism, and to cancel illegitimate debt.

“Almost all African countries have limited government funds to manage large scale crisis-responses. Yet national responsibility is crucial in order to avoid to deepening the economic crisis and reducing more people to poverty.

“Leaders must not forget the poor in this crisis,” she said. “Policies need to be analysed from a poverty-reduction perspective. Domestic mobilisation of recourses such as taxes, along with fair income distribution, need to be on top on the agenda.”