Europe crisis 'threatens Africa'

Euro Notes
Image caption What happens in Europe is having an influence on Africa's economies

The finance ministers of Nigeria and South Africa have strongly criticised the European Union for failing to stop the spread of the Eurozone debt crisis.

Pravin Gordhan of South Africa and Nigeria's Ngozi Okonjo-Iweala said market volatility was threatening Africa's economic prospects.

Mr Gordhan said Europe's financial problems were reducing global trade.

Mrs Okonjo-Iweala said the EU could learn from the developing world on how to manage debt and promote growth.

African economies were hit in the post-Lehman Brothers collapse in 2008, and history is repeating itself, Mr Gordhan told the BBC.

"The new epicentre of the crisis in the eurozone is having a damaging effect on our economies."

He said that was partly due to Europe states being major trading partners for Africa.

He also alleged that European leaders did not take the rest of the world into consideration.

Dictating trends

Speaking on the BBC World Service's Business Daily programme, Mr Gordhan said that Europe was dictating the investment mind-set.

"When European leaders are unable to make the right decisions, we have money moving out of our economies into so-called safe havens," he said.

"This has a major effect on our economies and the volatility of our currencies is not useful."

"They do not have the capacity to manage their own back yard on the one hand, and ensure that they don't damage the rest of the world on the other."

Falling demand

Meanwhile, Mrs Okonjo-Iweala said the global crisis was translating into volatility in prices for the commodities and products that Nigeria exports, and also volatility in the currency and the stock market.

"Sixty per cent of demand for Nigeria's products comes from Europe and the US," she said, although the country was trying to diversify its markets.

She said that whenever she talked about economies in Africa, she prefaced her comments with reference to what is happening globally.

"What needs to be recognised when these decisions are being made in Europe, is how they can make more use of the dynamism of the developing world," she said.

Role reversal

According to Mr Gordhan, the developed world debt crisis is pulling down the rest of the world.

"All of our economies are now sliding, whether we are in Brazil or India or China or wherever," he said, adding "that is going to have massive consequences in terms of the overall global outlook."

Ms Okonjo-Iweala said that developed countries could look at some of the lessons that come from the work that developing countries have done, and ask why these economies are now rebounding and sustaining growth.

"It is because many of our economies, even in Africa, have gone through some of the challenges the developed world is now going through," she said.

"We have learnt lessons, we have learnt how to manage our economies to produce sustained growth," she said.

"Africa has learnt to keep its debt at a sustainable level and is consistent when managing the macro-economy."

These are lessons, she feels, that would benefit the developed world.