15 <mark>A deceleration in banking activity in Africa would negatively impact the rate of economic growth—whose current level cannot significantly help reduce poverty. The World Bank (2009) predicts that the GDP growth rate in Saharan Africa will drop from 4.9 percent in 2008 to 1.7 percent in 2009. Taking an average population growth rate of 2.5 percent, this would represent a negative growth rate of GDP per capita. This will also mean a drop in tax revenues as well as other forms of government revenue, notwithstanding the fact that such revenues are needed to finance public expenditure, especially in social sectors like education, health and social protection.</mark> That negative spiral could be aggravated by the drop in African exports, which constitute the main source of growth for all the small open economies of the continent. Recession in the west—the main customer for African economies—certainly implies weaker demand for African oil, diamond, copper, cotton, coffee, cocoa, wood, and other commodities. Moreover, Africa’s share of the world exports has declined during the last half-century, sliding from about 6 percent in 1960 to 3 percent in 2006.

<mark>The loss of foreign exchange will be compounded by the decline of private transfers (funds flow of nongovernmental organizations for example) and of remittances from migrant workers, which constitute an important funding source for household consumption and public investment across the continent. In 2008, Africa had approximately 15 million migrant workers (of whom two-thirds were on the continent), who contributed about 20 billion dollars of transfers to their countries of origin.</mark> Another transmission channel of the effects of the crisis is the likely decrease in development assistance, on which many countries depend for their investments and their welfare expenditures. Admittedly, recent statistics indicate that the total net volume of government aid to development increased by more than 10 percent in real terms in 2008, amounting to 119.8 billion dollars. But these figures, which take into account foreign debt reductions, fall short of the targets set in 2005 by the industrialized countries at their G-8 summit in Gleneagles (Scotland).

Last but not least, direct foreign investment, which is a good funding source for balance of payments deficits, will decrease considerably in the years to come. Already, net private capital flows to developing countries fell almost 50 percent, slipping from 1,200 billion dollars in 2007 to 686.4 billion dollars in 2008 (World Bank, 2009).

The crisis will also generate social and political costs which are difficult to predict or estimate for the time being. An average growth rate lower than the population growth rate means a negative per capita rate; this would imply an aggravation of poverty, which already affects more than 51 percent of the African population or 390.6 million people.<sup>10</sup> Even though poverty does not inevitably result in conflicts, one could expect more uncertain and unstable times in many African countries.

> 10 <mark>Source : Chen and Ravallion (2008, Table 6, p. 32). The poverty line here is $ 1.25 per day based on statistical data collected in 2005.</mark>