RPT-Q+A - Eurasia Group on crisis impact in southern Africa
LONDON, Dec 19 (Reuters) - African countries are likely to suffer from the global financial crisis as a result of tumbling prices for commodity exports and diminishing investment.
Mike Davies of the New York-based consultancy Eurasia Group answered Reuters' questions in an e-mail interview on the economic and political risk impact the crisis might have in southern Africa.
Davies covers South Africa and other countries in southern Africa for Eurasia Group.
Q - Which countries in southern Africa will face the greatest increase in political risk as a result of the global economic slowdown and why?
A - Like the majority of countries in sub-Saharan Africa, the countries in southern Africa (apart from South Africa), are less integrated in global financial markets than many other regions. However, they are not immune to the negative impact of the crisis. All countries in the region will suffer due to falling exports, remittance flows, foreign direct investment and international aid, but those countries that are reliant on commodity exports are likely to bear the brunt of the global slowdown. Rising unemployment and slowing GDP will increase pressure on governments and likely lead to increased political risk. Zambia is among the most vulnerable, though its political institutions are better equipped to withstand the shock than some other resource-rich countries on the continent.
2009 will see a number of elections in southern Africa, with general elections in Botswana, Malawi, Mozambique, Namibia and South Africa. It is also likely that a presidential election will be held in Angola. Opposition parties will look to capitalise on the various government response to the global economic slowdown. Populist promises made during election campaigns could also raise political risk.
Q - Investors had cited an improvement in governance, political and economic openness as reasons for taking a more positive attitude to Africa generally in recent years. What prospect is there that such changes could be reversed? Continued...
