In August 2009, the Obama Administration notified Congress that four African countries—Ghana, Liberia, Tanzania, and Zambia—would benefit from funds appropriated by Congress in 2009 for "assistance for vulnerable populations in developing countries severely affected by the global financial crisis," with various eligibility requirements. The International Monetary Fund (IMF) estimated that the global economy would contract by 1.1% in 2009, but that it could rebound to 3.1% growth in 2010. Additional revenue streams such as tourism and remittances from African workers abroad are also expected to fall, and foreign aid is predicted to decrease, particularly if the crisis persists. In its most recent regional economic analysis on Africa, the IMF estimated that average economic growth in Africa would slow from an average of 6.5% per year between 2002 and 2007—a historic high—to 1% in 2009, before recovering to 4% in 2010. Congressional Interest

The impact of the global economic crisis threatens to undermine long-term U.S. foreign policy goals in Africa, including regional stability, increased trade, the alleviation of poverty and hunger, and socioeconomic development. 111-32 ), included $255.6 million in Economic Support Funds (ESF) for "assistance for vulnerable populations in developing countries severely affected by the global financial crisis." How the Crisis Is Affecting Africa

The global recession has affected most African countries through a variety of mechanisms, or channels, including a decline in global trade, a drop in investment, falling remittances from overseas workers, and possible cuts in foreign aid. At the same time, average growth rates for the region largely reflect Africa's largest economies, including oil exporters and middle-income countries (of which South Africa is the largest), where the impact of the crisis has been strongest. This scenario has led some observers to speak of Africa's underlying economic "resilience," pointing toward robust domestic demand and the lasting effects of macroeconomic reforms. Nigeria and Angola have been strongly affected because much of their economies depend on oil exports, while South Africa, by far Africa's largest economy, is already experiencing a recession, its first in 17 years. International Efforts to Address the Impact of the Crisis on Africa

		Developed Countries

At the Group of 20 (G-20) summit in London in April 2009, member states agreed to inject $1 trillion into the world economy in order to combat the effects of the global crisis. This included a commitment to support growth in emerging market and developing countries. Recent loans explicitly linked to fallout from the crisis include a $1.5 billion loan for Botswana designed to help address a budget deficit estimated at 13.5% of GDP, the first such loan to Botswana from the AfDB in 17 years (June 2009); and a $97.18 million grant to the Democratic Republic of Congo to finance the country's Emergency Program to Mitigate the Impacts of the International Financial Crisis (May 2009). Finance ministers and central bank governors have met several times since then to discuss the impact of the crisis and possible policy responses. The Supplemental Appropriations Act, 2009 ( P.L. However, while an initial House report on the legislation provided that five African countries—Ghana, Liberia, Mozambique, Tanzania, and Zambia—should "receive priority consideration," along with several other countries outside the region, the subsequent conference report did not include such specifications. U.S. responses to date have focused on support for multilateral lending and grant initiatives.
Sub-Saharan Africa has been strongly affected by the global recession, despite initial optimism that the global financial system would have few spillover effects on the continent. The International Monetary Fund (IMF) estimated in 2009 that average economic growth in Africa would slow to 1%, from an annual average of over 6% to 1% over the previous five years, before rebounding to 4% in 2010. As a region, Africa is not thought to have undergone a recession in 2009. However, most African countries are thought to require high rates of economic growth in order to outpace population growth and make progress in alleviating poverty.
The mechanisms through which the crisis has affected Africa include a contraction in global trade and a related collapse in primary commodity exports, on which many countries are dependent. Foreign investment and migrant worker remittances are also expected to decrease significantly, and some analysts predict cuts in foreign aid in the medium term if the crisis persists. Africa's most powerful economies have proven particularly vulnerable to the downturn: South Africa has experienced a recession for the first time in nearly two decades, and Nigeria and Angola have reported revenue shortfalls due to the fall in global oil prices. Several countries seen as having solid macroeconomic governance, notably Botswana, have sought international financial assistance to cope with the impact of the crisis. At the same time, a number of low-income African countries are projected to experience relatively robust growth in 2009 and 2010, leading some economists to talk of Africa's underlying economic resilience.
The 111th Congress has monitored the impact of the global economic crisis worldwide. The Supplemental Appropriations Act, 2009 (P.L. 111-32), provided $255.6 million for assistance to vulnerable populations in developing countries affected by the crisis. While an initial House report indicated several countries, including five in Africa, should receive priority consideration, the subsequent conference report did not specify recipients. In August 2009, the Obama Administration notified Congress that four African countries—Ghana, Liberia, Tanzania, and Zambia—would benefit from the funds appropriated in the supplemental. More broadly, U.S. policy responses to the impact of the crisis overseas have focused on supporting the policies of multilateral organizations, including the IMF, the World Bank, and the African Development Bank (AfDB). These organizations have increased their lending commitments and created new facilities to help mitigate the impact of the global crisis on emerging market and developing countries worldwide.
This report analyzes Africa's vulnerability to the global crisis and potential implications for economic growth, poverty alleviation, fiscal balances, and political stability. The report describes channels through which the crisis is affecting Africa, and provides information on international efforts to address the impact, including U.S. policies and those of multilateral institutions in which the United States plays a major role. For further background and analysis, see CRS Report RL34742, The Global Financial Crisis: Analysis and Policy Implications, coordinated by [author name scrubbed].