Thursday, March 12, 2009

No Confidence in South Africa’s Businesses; African Countries Seek to Have Voice Heard

BBC News

According to Rand Merchant Bank, business confidence in South Africa has dropped to its lowest level in over a decade. The business confidence index is at 27, and marks the 10th consecutive quarterly decline. The recessions in the US, Europe and Japan has hit South Africa’s exporters particularly hard (these countries represent 60% of South Africa’s exports). Officials at the Rand Merchant Bank said that “the poor state of the global economy will continue to stifle the manufacturing sector for some time. There is also a risk that rising job losses could dampen retail sales.” The South African economy is set to contract for the first time in a decade, as well.

South Africa can take some comfort in the fact that it will be the only African country that will attend the upcoming G20 meeting with the world’s 20 leading economies. Unlike every other country on the continent, South Africa will at least have its voice heard as the G20 meets to discuss a way out of the world-wide recession caused for the credit crisis. In order to allow other African countries an opportunity to offer their views, English Prime Minister Gordon Brown is set to meet with African leaders on March 16.

The World Bank, on the other hand, is attempting to find a way to make the bank more representative of its members. The World Bank announced its intention to form a high level committee, chaired by former Mexican President Ernetso Zedillo that will look at ways to give poorer countries a greater voice in the World Bank governance. World Bank managing director Ngozi Okonjo-Iweala said that reforms need to be made or many African nations risk being “innocent bystanders” in the credit crisis.

1) Should the G20 allow more countries a seat at their table? Does it make sense to invite countries that do not have as much clout as the G20 countries have? What type of input could poorer countries contribute?
2) What effect does business confidence have on the economy. Does it effect the economy or is it just a reflection of attitudes in the economy? Is it both?

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