August 2, 2009

African economies hit by global slowdown

Investments in Africa are drying up because global economic woes have hit the continent hard, economists say.

In one example, plans announced last year by Dubai World to invest $230 million in Rwandan tourism have been scaled back to include only two of eight proposed projects, with a luxury hotel in Kigali hotel and an ecolodge in Akagera among the portions being dropped, The New York Times reported Sunday.

The scaling back of foreign investments like Dubai World certainly impacts the things that the government of Rwanda wants to do in terms of raising the standards of living for all Rwandans, Clare Akamanzi, an executive with the Rwanda Development Board, told the newspaper.

The crisis could not have come at a worse time, added Jose Gijon, chief Africa economist at the Organization of Economic Cooperation and Development. Before the meltdown, many African countries had made significant progress in attracting foreign investment and private capital, and this could derail those efforts.

The Times said World Bank estimates indicate Africa's economies will post average growth of only 3 percent this year, compared with 6 percent growth averages from 2004 to 2008.