Amid signs that the global economy is emerging from the worldwide recession of late 2008 and 2009, African economies appear to be recovering from the crisis with the potential to significantly increase growth rates in the coming year. IMF Director Dominique Strauss-Kahn stated in March 2010 that African economies were recovering faster than expected from the global downturn. Africa's apparent economic resilience can be explained by a variety of complex factors. Many African governments, particularly those of resource-rich and middle-income countries, lessened the economic blow of the recession by implementing economic stimulus and/or financial sector rescue packages. Sizable assistance by international financial institutions, with U.S. support, also played an important stabilizing role. Still, the drop in economic growth experienced in most African countries in 2008 and 2009 is thought to have significantly negatively affected African countries' ability to make progress in reducing poverty. Moreover, Africa's continued reliance on commodity exports could blunt the expected recovery. Many investors reportedly view Africa's growth in 2010 as stemming from an expected rise in mining activity following its collapse in late 2008, combined with recent gains in communications infrastructure and political stability. African economies also appear to be benefiting anew from investment and trade with large emerging economies such as China, India, Russia, and Brazil, which appear to have recovered more quickly from the global recession than traditional industrialized nations. 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. A total of $255.6 million in Economic Support Funds (ESF) were appropriated for this "crisis fund" in the Supplemental Appropriations Act, 2009 ( P.L. 111-32 ). As of early 2010, $32.5 million had been obligated for programs in Ghana, $25.2 million for Liberia, $37.9 million for Tanzania, and $25 million for Zambia. Amid signs that the crisis has peaked, policymakers' attention has again shifted toward emphasizing longer-term policies to ensure that growth increases and contributes to broad socio-economic development. In November 2009, U.N. Secretary-General Ban Ki-moon stated that Africa's future economic prosperity would require industrialization, improved access to global markets, and a "green agricultural revolution." International attention has also focused on stemming Africa's illicit economies, including bribery, theft, money laundering, and trafficking in people, narcotics, and weaponry. A March 2010 study by Global Financial Integrity showed illicit capital outflows from Africa totaled $854 billion between 1970 and 2008, creating a "staggering" negative economic impact. What began as a bursting of the U.S. housing market bubble has ballooned into a global financial and economic crisis, leading to the most severe global recession since the Great Depression of the 1930s. Starting in September 2008, credit flows froze, lender confidence dropped, and economies around the world dipped toward recession. Having begun in industrialized countries, this financial crisis quickly spread to emerging market and developing economies. Investors pulled capital from countries, even those with small levels of perceived risk, and caused values of stocks and domestic currencies to plunge. Slumping exports and commodity prices have added to developing countries' woes. 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. Developing economies may not have played a major role in the onset of the crisis, but they may have less resilient economic systems that can be highly affected by actions in global markets. Most industrialized countries have been able to finance their own rescue packages by borrowing domestically and in international capital markets, but many emerging market and developing economies have insufficient sources of capital and have turned to help from regional development banks, the IMF, the World Bank, and traditional donors such as the Group of Eight (G-8). Many analysts were initially optimistic that the impact of the global financial crisis on Sub-Saharan Africa (henceforth, "Africa") would be negligible. African economies are among the least exposed to the global financial system of any world region, and African banks hold few of the "toxic assets" that helped spark the crisis. However, as the financial crisis has deepened into a global economic recession, African economies are experiencing strong negative effects due to a contraction in global trade, including reduced demand for African commodity exports, tighter financing conditions overseas, and a drop in foreign direct investment and other capital inflows. 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. The crisis is expected to dampen prospects for reducing African poverty, as at least 7% annual growth is generally considered necessary for outpacing population growth and making significant progress in alleviating the toll of hunger, unemployment, and disease. Anticipated negative growth in some countries, including in Africa's largest economy by far, South Africa, may have further ripple effects for smaller neighboring economies who depend on regional powerhouses for trade, remittances, and employment. Unemployment—already high in all African countries—is expected to rise, with potential implications for political stability. The Obama Administration has emphasized African economic growth as a foreign policy goal. Secretary of State Hillary Clinton stated in October 2009 that the Administration seeks to "help create the right conditions" for growth through improvements in trade, development and agriculture aid, energy security, public private partnerships, and good governance. 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. In August 2009, Congressman Gregory Meeks led a congressional delegation to Africa focusing on the impact of the economic crisis. One participant, Congresswoman Marcia L. Fudge, stated that the delegation spent significant time examining the effect of the global economic crisis on local economies. We were especially interested in how the multilateral development banks and the United States supports, particularly the African Development Bank, are helping countries to obtain grants, loans and technical assistance. We also explored the role and impact of the IMF on the region during this period of economic crisis. While Congress has acted to address the impact of the economic crisis on poor countries, legislators have not specifically targeted this assistance at African countries. The Supplemental Appropriations Act, 2009 ( P.L. 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." The Africa region experienced strong economic growth in recent years, averaging 6.5% per year between 2002 and 2007. Growth was facilitated by macroeconomic reforms and driven by high external demand for primary commodities, notably oil and minerals. Trade was bolstered by steady growth in industrialized countries and explosive growth in emerging economic powerhouses such as China and India. Demand for African commodities drove an investment surge in many countries, with foreign direct investment (FDI) stocks nearly doubling between 2003 and 2007. Net private capital inflows—including FDI, remittances, portfolio flows, and other sources—are thought to have quadrupled between 2000 and 2008. These changes followed decades of post-independence economic stagnation. While Africa's recent growth was driven by the global commodity boom, many other factors contributed as well. Both net oil exporters and oil importers experienced growth of over 5% between 2004 and 2008 ( Figure 2 ), and investment extended beyond traditional foreign interests in extractive industries. The IMF reported in 2008 that Africa's "fast growers are a diverse group, including resource-rich and landlocked countries and resource-poor countries that have not had large gains in their terms of trade." In many countries, productivity increased and domestic investment improved, in part due to remittances from African workers overseas. Domestic demand also grew, notably in telecommunications as mobile phone and internet use spread rapidly. Recent growth has been aided by policy reforms, as many African governments have improved economic governance through better banking regulations, oversight mechanisms, and fiscal restraint, which brought down inflation, encouraged private investment, and instilled greater macroeconomic stability. Some believe international debt relief programs contributed to these trends. The rate of armed conflict has also declined since the start of the decade, making some countries and the region more attractive to foreign investment. Despite these positive trends, economic growth has failed to raise incomes sufficiently to trigger significant progress in meeting the Millennium Development Goals (MDGs) and other anti-poverty benchmarks. Progress on the MDGs has been slower in Africa than in any other region: according to the World Bank, the rate in Africa of those living on less than $1.25 per day has hovered around 50% since 1981, while the number of poor people, in absolute terms, has nearly doubled, from 200 million in 1981 to 380 million in 2005. Economic development is constrained in many countries by numerous structural factors, including a lack of technological investment in agriculture; limited communications and transportation infrastructure; high population growth; high ratios of foreign debt to national income; and the burden of disease. Many countries rely on external aid to balance their budgets and provide basic services. Unrest and instability continue in many areas, and few states constitute transparent and representative democratic regimes. African exports are the least diversified of all developing regions. Many African economies remain reliant on primary commodity exports, which has rendered them vulnerable to external shocks. Natural resource extraction, while effective at creating growth and drawing foreign investment, is also associated with high levels of corruption, labor exploitation, environmental degradation, and internal displacement. During recent periods of high resource revenues, oil- and mineral-producing countries failed to use such revenues to further increase productivity, significantly diversify their economies, or improve social services. Simultaneously, windfall profits may have contributed to already endemic corruption in some countries. Many analysts argue that despite recent economic reforms, growth and development are limited in many African countries by policy choices that restrict competitiveness. According to the World Bank, Africa is the world's second most trade-restrictive region (after South Asia), and African countries have among the world's fewest and weakest services trade liberalization commitments. The region, on average, also displays "the worst rankings in business environment, governance, logistics, and other trade facilitation indicators." Labor productivity is the lowest, on average, of any world region. Due to low levels of regional integration, Africa has consistently had considerably lower rates of intraregional trade than other world regions. Service provision, such as electricity, is severely limited in many countries, impacting individual household consumption as well as the economic feasibility of private firms. In addition, African economies continue to be affected by the lingering impact of the 2008 food crisis. In 2008, already rising global food prices spiked to record heights, partly due to high oil prices but also to other complex factors. Those most affected by the crisis were impoverished populations in developing countries, many of whom already suffer from chronic hunger. The crisis strained household budgets and compromised individual resilience to further economic hardship. While African oil exporters benefited from higher oil prices, most oil importers ran fiscal deficits as governments subsidized food imports, fertilizer, and other agricultural inputs. The crisis fed high inflation and sparked food riots and political unrest in several countries. The fiscal costs of African policy responses to the crisis doubled between 2007 and 2008, to an average of 1% of GDP, according to the IMF. Many additionally argue that the broader geopolitical environment poses challenges to Africa's development. Some contend that neocolonial relationships continue to dominate Africa's trade ties, while African countries have a limited voice in international trade regulatory bodies. While oil and mineral exporters face low tariffs overseas, exporters of other commodities, such as cotton or sugar, face much higher export barriers. 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. These channels are largely connected to Africa's "real" economy, rather than its financial sector. World trade was projected to shrink by 11% in 2009, its first decline since 1982 and reportedly the biggest drop since the mid-1940s. Advanced economies are expected to be the hardest hit, with exports projected to drop by over 13%, but poorer nations are nonetheless expected to see exports fall by over 6%. Since the United States, the European Union, and China cumulatively count for nearly 70% of African trade, African exporters are suffering from the decrease in global demand. For example, total exports to the United States from all 41 countries eligible for trade benefits under the African Growth and Opportunity Act (AGOA) declined by 63% in the first half of 2009, compared to the same period of 2008. While Africa accounts for less than 2% of global trade, many African economies depend on exports of primary commodities, whose prices on the world market have declined drastically due to the global crisis. The price slump in oil and many mineral commodities, combined with decreased external demand, dealt a severe blow to the region: oil and other mineral fuels represented 68% of African exports to the world by value in 2008; ores, slag and ash about 14%; and precious stones about 4%. African countries are thus exporting less on average, and at lower prices, than a year ago. Investor perceptions of risk have exacerbated the impact of falling commodity prices for resource-rich African countries that are also fragile or post-conflict states. Several other countries depend in part on international tourist arrivals (understood as trade in services), which declined worldwide by about 8% in the first four months of 2009 compared to 2008. Overall, African countries' export exposure to advanced economies—the degree to which economic shifts in developed countries may impact African economies through decreased demand for African exports—has increased in recent years. According to the IMF, on average, a 1-percentage-point decline in world growth (trade-weighted) is associated with a roughly 0.5-percentage-point drop in GDP growth in Africa. Global trade could drop even further if countries react to the economic crisis by enacting additional trade barriers. African economies face the further risk that the global recession will spark new attempts by developed countries to restrict imports and protect local producers. Some analysts fear that policies aimed at encouraging trade with Africa—such as AGOA, the European Union's "Everything But Arms" program, or the Doha Development Round of the World Trade Organization—could be threatened by political pressures to become more isolationist. The tightening of international credit markets is also expected to render it more difficult for African countries to access trade finance. In prior financial crises, a drop in the availability of trade finance negatively impacted the operations of private firms in developing countries. However, it is unclear whether the current crisis will have a similar impact. In its October 2009 Regional Economic Outlook , the IMF praised African governments for refraining from responding to the crisis with trade restrictions and other policies that could deter future growth. Indeed, the trade picture for Africa is not without its bright spots, particularly for countries that have made recent significant investments in infrastructure and resource development. For example, Burkina Faso's export performance is expected to expand rapidly in 2009-2010 due to a recovery in the country's cotton sector, combined with a surge in gold exports as four new mines begin full production. Djibouti, a major cargo transportation hub, is also expected to see rapid growth in export volumes as a new shipping terminal in Doraleh (about 4 miles south of Djibouti's existing port) comes online. In Liberia, revitalization of mineral, timber, rubber, and palm oil production is forecasted to drive export growth, with increased exports of coffee and cocoa also contributing. Export growth in Malawi is expected to be boosted by the expansion of a uranium mine in Kayelekera. The value of total U.S. trade with Africa increased by about 29% between 2007 and 2008. After at least three years of continuous growth, however, the value of Africa's exports to the United States decreased in value by about 57% in the first six months of 2009 in comparison to the same period in 2008. U.S. exports to Africa decreased in value by about 9%. The decline in the value of U.S. imports from Africa largely reflects the decline in oil prices from late 2008 through early 2009, as oil and mineral fuels account for about 80% of all U.S. imports from Africa, and 92% of all U.S. imports under AGOA. Petroleum imports did not decrease in volume as dramatically as they did in value. However, decreases in U.S. and global consumption are likely to continue to have a negative effect on most exports from the region. Because recent growth in Africa was driven in part by commodity exports to China, Africa is particularly vulnerable to fluctuations in China's economic growth. In 2007, China was the destination for some 13% of Africa's exports and the source of roughly 10% of Africa's imports. These figures represent a long trend of increased Chinese trade and commercial ties with Africa, particularly with countries rich in natural resources. China's trade with Africa greatly increased in recent years, reportedly growing to $74 billion in the first eight months of 2008, a 62% increase over the previous year. Even with the impact of the crisis in the second half of 2008, total Sino-African trade for the year was reportedly $106.8 billion, a significant increase from 2007. This trade has spurred Chinese investment in large infrastructure projects in Africa, which in some cases are thought to have helped alleviate constraints on economic competitiveness. Analysts suggest that China is reevaluating some resource extraction agreements, particularly in countries perceived as politically unstable, in light of the global slump. At the same time, recent statistics on China's growth in the first months of 2009 showed robust, if somewhat reduced, economic growth. Furthermore, China's domestic economic stimulus package reportedly relies heavily on infrastructure construction, which has kept demand steady for some primary inputs, such as oil, copper, tin, and lumber. Indeed, while Chinese private-sector engagement with Africa has apparently decreased as a result of the crisis, some Chinese firms and the Chinese government have continued to negotiate economic and resource-acquisition agreements with African countries. Chinese diplomatic outreach to African governments has also continued. Capital flows—which include foreign direct investment (FDI), portfolio investment flows, worker remittances, private charity, and foreign aid—are thought to have helped fuel Africa's recent economic growth. Between 2000 and 2007, private capital inflows were the most important source of external finance for the region, growing from an estimated $8.9 billion in 2000 to $54.8 billion in 2007—or 6.5 times global foreign aid of $8.5 billion. FDI peaked in 2008 at $32.6 billion, and accounted for between 2.5% and 5% of annual GDP between 2001 and 2007. At the same time, flows of FDI and portfolio investment are clustered among Africa's oil-exporting economies and South Africa ( Figure 5 ), and may have little impact in many African countries. The contraction of capital flows to Africa has been sharp. The IMF estimated that FDI in Africa would drop by roughly 26.7% in 2009, compared to 2008 ( Figure 4 ). Between the second quarter of 2008 and year's end, Africa saw the sharpest contraction in cross-border lending of all emerging regions—over 50%—compared with less than 20% for emerging market countries in other regions. Portfolio investment flows were initially the most impacted by the crisis, reversing from inflows of $18.7 billion in 2006 to outflows of $16.7 billion in 2008 ( Figure 4 ). These outflows have hit Africa's "frontier economies" the hardest as foreign investors fled the region's stock markets for safer, more liquid investments at home. However, limited available research suggests that while portfolio investment declines will have significant impacts on the financial sectors of affected countries, the impact on regional growth is expected to be minimal. FDI remains the largest share of inward capital flows for the region as a whole, and is expected to be a key driver of future growth. Of all forms of international capital flows, remittances—or monies sent home by foreign workers overseas—are thought to be the most stable, reacting least to international politics or events. While Africa receives smaller amounts of remittances than other regions, their impact is thought to be relatively large compared to the size of African economies and due to the fact that Africa's extractive industries often provide little economic trickle-down into the local economy. Recorded remittances to Africa totaled $18.59 billion in 2007, nearly rivaling foreign aid flows; the actual amount is likely higher, since the region receives a large share through informal transfers and unofficial mechanisms and networks. Within the region, remittances are thought to account for 3.7% of GDP on average, although there is significant variation among countries. Remittances in Lesotho, for example, were reported to be 29% of GDP in 2007, according to the World Bank. By total recorded flows, Nigeria and Kenya receive the highest value of remittances. Global remittance levels were projected to fall 5-8% in 2009, from an estimated $305 billion in 2008, according to the World Bank. In Africa, remittance levels were projected to fall by 4.4% in 2009; while significant, this is a slightly smaller drop in percentage terms than the worldwide average for low- and middle-income countries. Remittance levels could fall further if continuing economic troubles cause destination countries to tighten immigration restrictions. The long-term implications are difficult to assess, as they depend on complex factors such as the share of unskilled jobs in destination countries and the relative value of local currencies compared to currencies in which remittances are earned. While only a small handful of donors to date—including Italy, France, and Iceland—have reduced bilateral foreign assistance to Africa due to the crisis, the global flow of foreign aid could suffer in the medium term if the global downturn continues. A more significant decline in aid flows, if it occurs, is expected to lag behind other economic indicators due to the long-term planning process in donor countries. Some observers predicted that while aid levels in 2009 and 2010 would be largely unaffected by the crisis, they could drop in 2011 and 2012 as developed countries experience continued fiscal strains and political pressures to balance budgets. Nonetheless, African governments have requested donors to increase aid flows in order to help offset the impact of the crisis on their domestic economies. Analysts continue to debate whether foreign aid has helped or hindered Africa's socioeconomic development in the long run. Many African economies are vulnerable to a downturn in foreign aid flows, particularly those that are not natural resource exporters; many rely on donors for budget support. Compared to other regions, Africa receives the highest total amount of overseas development assistance (including international debt relief), according to the Organization for Economic Cooperation and Development (OECD). In 2006-2007, Africa received the equivalent of nearly $27.19 billion in bilateral overseas development assistance as defined by the OECD, far greater than the next largest recipient, the Middle East and North Africa, which received $14.03 billion. During the 2005 Group of Eight (G-8) Summit in Gleneagles, Scotland, members pledged to roughly double annual aid to Africa by 2010. Some countries—such as the United States—committed to a dollar-figure increase, while European countries committed to raising the percentage of national income spent on aid to Africa. According to the organization ONE, which monitors aid commitments and disbursements to Africa, the G-8 Gleneagles commitments amount to raising annual overseas development aid to Africa by $21.48 billion (in 2008 dollars) on top of what was already being spent in 2005, by 2010. The commitment by the United States was to raise annual aid to Africa to a total of $8.8 billion. Most observers believe G-8 aid to Africa will not reach the levels promised at Gleneagles. This may be attributed mainly to shortfalls by France, Italy, and Germany; other G-8 members, including the United States, are believed to be on track to meet their commitments. In addition, reductions in projected national income in donor countries have negatively affected the real value of European commitments based on a percentage of GDP. Economic growth in Africa began to decrease in the second half of 2008, with average growth falling from nearly 7% in 2007 to just under 5.5% in 2008, according to the IMF. African countries with relatively developed financial markets—such as South Africa and Nigeria—were the first to feel the effects of the crisis. The IMF projected average economic growth in Africa would plunge from 6.5% per year between 2002 and 2007 to 1% in 2009. 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. Median annual economic growth was expected to decelerate from 4.75% on average between 2002 and 2007 to 2.5% in 2009. While some observers argue that merely sustaining positive average growth (as opposed to a recession) means the impact of the crisis on Africa will be relatively minor compared to other regions, others contend that Africa's developing economies require high levels of growth to outpace demographic trends and translate into significant poverty alleviation. For example, per-capita average GDP in Africa was projected to decline by nearly 1% in 2009. The IMF reported in mid-October that most African economies "nonetheless seem to be responding to this storm better than those of the past," having "generally avoided the major macroeconomic stabilities that followed previous global slowdowns." According to the IMF, Africa is projected to experience an economic recovery in 2010, rebounding to 4% growth on average. Such an outcome would represent a rapid bounce-back compared to sluggish recoveries following previous global recessions. 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. In late September 2009, World Bank President Robert Zoellick stated, "Over time, Africa can also become a pole of growth… Coming out of the crisis, there could be a new opportunity." Regional averages of economic growth are heavily weighted toward Africa's largest economies, and do not necessarily reflect the expected impact of the crisis on any given country. Because South Africa, Nigeria, and Angola represented over 60% of Africa's combined gross domestic product (GDP) in 2008, regional aggregated statistics disproportionately reflect the impact of the crisis on these countries. 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. Middle-income countries (a relatively small category in Africa; see Note, Figure 6 ) and oil exporters are experiencing the strongest negative impact from the global crisis. The impact on middle-income countries is reflected by South Africa, where GDP was projected to decline by 2.25% in 2009, due largely to South Africa's close integration into global financial markets and tight trade links with the rest of the world. South Africa's neighbors are expected to experience negative spill-over effects due to trade, investment, and financial linkages to the regional economic giant. Another example of a middle-income country experiencing economic distress due to the crisis is Botswana, whose economy is highly dependent on diamond exports. On the other hand, many low-income countries that do not rely on oil or mineral exports—such as Ethiopia, Ghana, Rwanda, and Uganda—were projected to experience relatively strong economic growth in 2009, albeit at lower levels than before the crisis. Average GDP in low-income countries is expected to contract by 2.5 percentage points between 2008 and 2009, to relatively strong 4.5% growth. Many of Africa's low-income countries are expected to benefit from positive terms-of-trade movements, as prices of food and fuel imports have fallen. Fragile and post-conflict states, particularly those that rely on primary commodity exports, will be negatively affected by the crisis, but many are also expected to rebound in 2010 if peace and stability gains are consolidated. Idiosyncratic factors unrelated to the global crisis are further expected to exert strong influence in many African countries, including rainfall, declining oil production in some Gulf of Guinea countries, labor strikes, and political instability. The economic crisis is already having a deep impact on fiscal and trade balances throughout the region ( Figure 8 and Figure 9 ). In recent years, debt forgiveness and improved fiscal discipline contributed to greater economic stability: between 2004 and 2008, the region's governments maintained a budget surplus of 1.75% on average. During those four years, the surplus in African oil exporters averaged 6.5% of GDP. Fiscal positions have already turned negative due to the crisis: the IMF has projected deficits of 4.75% of GDP in 2009 and 2.72% of GDP in 2010. Fiscal deficits in oil exporters were expected to average over 6% in 2009. Current account positions—the difference between a nation's total exports of goods, services, and transfers, and its total imports of them—were also expected to decline, from a surplus of 1.22% of GDP in 2008 to a deficit of 6.23% of GDP in 2009. Weakened commodity prices are exacerbating these effects in oil-producing states. Fiscal deficits reflect both increased government spending aimed at expanding social safety nets and declining government revenues due to decreases in the collection of taxes and royalties on natural resource extraction, customs and tariffs on trade, and taxes and fees on tourist activity and other consumption. While these effects will vary on a country-by-country basis, many countries are expected to have difficulty financing their deficits. Several African governments had planned to raise long-term financing through the issuance of sovereign bonds, as Gabon successfully did in late 2007. Because of the impact of the crisis on global liquidity, these plans have reportedly either been unsuccessful (South Africa), canceled (Ghana), or delayed (Kenya, Nigeria, Tanzania, and Uganda). While some oil exporters and middle-income countries have enacted fiscal stimulus packages, the capacity to do so is expected to be restrained in most African countries, even with international assistance. Combined with the difficulty of raising financing and abating investor risk aversion, budgetary pressures have reportedly caused some major infrastructure projects, including government-funded projects and public-private partnerships, to come under strain. The crisis is expected to set back or reverse efforts to alleviate poverty in Africa, the world's poorest region. Multilateral organizations project that the economic crisis could increase poverty worldwide by at least 45 million people. In Africa, the IMF estimated that the crisis would add 7 million people to the ranks of those living below US$1.25 a day in 2009, and a further 3 million in 2010. Indeed, while average GDP growth in Africa was expected to remain positive in 2009, per capita GDP was expected to contract in many African countries ( Figure 10 ). The impact on poverty in Africa may be further compounded by the effects of the 2008 food crisis, which made many African families more vulnerable to sudden economic shocks, especially as domestic prices for fuel and food remain relatively high in many countries. Many African households teeter just above the international poverty line, and a small impact on average household income could translate into a large jump in poverty as measured by international standards. Additionally, already insufficient social safety nets are expected to be further strained by a reduction in budget allocations for public services as government revenues drop. Some predict that the human costs of the economic crisis will be dire: for example, one World Bank analysis estimates that the crisis will directly cause 30,000-50,000 excess infant deaths in Africa, with most of these additional deaths likely to be poorer children, and overwhelmingly female. The economic crisis is expected to compound existing challenges for African food security. The United Nations estimated last year that the proportion of undernourished people in Africa's population rose to 29% in 2008, compared to 28% in 2004-2006, and that it would rise further in 2009; progress in eradicating hunger had already stalled or reversed in 2008 due to the global food crisis. While inflation declined throughout Africa in the second half of 2008 with the slump in oil and food prices on the world market, global food prices have remained higher than they have been in a decade, nearly double historical levels. Moreover, Africa's insulated markets and factors such as poor transportation infrastructure have limited the pass-through of lower global prices to domestic markets. According to the Food and Agriculture Organization (FAO), food crises persist in at least 20 African countries. While high food prices may serve as an incentive for some crop producers, most analysts believe that they have a net negative effect on Africa's poor. Many believe fallout from the global economic crisis could have implications for Africa's political stability. The Economist Intelligence Unit recently contended that "as people lose confidence in the ability of government to restore [economic] stability, protests look increasingly likely…. There is growing concern about a possible global pandemic of unrest." This may be particularly pertinent for post-conflict and "fragile" states, where institutions are especially weak, investors wary, and donors under pressure to pare down financial commitments as their own economies suffer. Analysts' assumptions are based in part on observations from mid-2008, when rising food prices sparked food riots across the continent and were thought to have played a role in political unrest in several countries. As the crisis pushes up the number of impoverished and unemployed individuals, long-standing potential instability may be ignited—particularly if local populations identify their governments as the culprits of economic hardship, if political or military contenders for power use the economic crisis as a weapon against incumbents, or if observation of unrest in neighboring countries acts as a vector of contagion. Tensions from the crisis may exacerbate preexisting sources of instability in many African countries, including ongoing or recently resolved conflicts, fragile institutions, xenophobia, and income inequality. At the same time, widespread economically driven protests such as those seen in 2008 have not been repeated in 2009, and some believe the threat may be overstated. 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. For example, the G-20 committed to increase lending resources available to the IMF by $250 billion through immediate contributions from some IMF member countries, and to use additional resources from agreed sales of IMF gold to provide $6 billion in additional financing (including concessional lending) for poor countries over the next two to three years. At the same time, some observers contend that "the legitimate concerns of LICs [low-income countries] in general, and Africa in particular, have not featured prominently in international rescue efforts." At the July 2009 G-8 summit in L'Aquila, Italy, members declared that they were "determined to assist developing countries in coping with the impact of the [economic] crisis" and committed to fulfilling the Gleneagles commitments on aid (discussed earlier) and improving aid effectiveness, and strengthening global initiatives to achieve the MDGs and other anti-poverty goals. Led by the United States, the G-8 agreed to mobilize $20 billion over the next three years for agricultural development assistance in additional to prior commitments of emergency and humanitarian food aid. The United States committed to doubling U.S. agricultural development assistance to more than $1 billion in 2010, providing at least $3.5 billion over the next three years. Significant portions of any increase in agricultural assistance may be directed toward African countries. However, some observers view these pledges as unlikely to be fully upheld. The World Bank, African Development Bank (AfDB), and the IMF have all stepped up lending to the region since the onset of the financial crisis. These institutions have also reformed several of their existing loan and assistance programs, or created new facilities, to target their efforts to the current crisis. These include, for example, the IMF's Exogenous Shocks Facility, the World Bank's new Financial Crisis Response Fast-Track Facility and Infrastructure Crisis Facility, and the AfDB's new Emergency Liquidity Facility and Trade Finance Initiative. These are aimed at offsetting budget shortfalls, increasing liquidity, and providing financing for infrastructure and trade finance—all of which are considered by many analysts to be crucial to Africa's eventual economic recovery. The World Bank and the AfDB share a development focus, and provide financing for projects as wide-ranging as heavy infrastructure, education and health policies, financial sector development, and natural resource management. World Bank lending to Africa in its 2009 fiscal year (July 1, 2008-June 30, 2009) was $9.9 billion, up 36% from $7.3 billion in FY2008. The AfDB, according to its president Donald Kabaruka, is on target to commit $11 billion in 2009, doubling its 2008 commitments. Much of this assistance is at highly discounted interest rates. To ramp up assistance to the World Bank's poorest member countries, World Bank member countries approved the Financial Crisis Response Fast-Track Facility. This facility will allow the Bank to front-load $2 billion of the $42 billion of assistance available under its International Development Association's 2007 financial replenishment (known as IDA-15). A total of 15 African countries had benefitted from front-loading of IDA resources by August 2009. The Democratic Republic of Congo was one of the first countries to take advantage of this new facility, receiving Bank approval for a package totaling $100 million in February 2009. The World Bank's private sector arm, the International Finance Corporation (IFC), has expanded or launched five new facilities aimed at supporting the private sector in affected emerging market and developing countries worldwide. The IFC expects financing for these new facilities to total roughly $31 billion between 2009 and 2011. The World Bank has also initiated several policies aimed at mitigating the impacts of the crisis on Africa in particular, including scaling up its lending and policy advice with a focus on poverty-reducing activities, safety nets, infrastructure support, and budget support to compensate for the loss in private capital flows. Beneficiary countries of World Bank targeted lending include South Africa, Mauritius, the Democratic Republic of Congo, Comoros, Ghana, Kenya, and Zambia. In addition, the World Bank's new Infrastructure Crisis Facility (IFC) is making $300 million available to provide top-up financing for viable, privately funded infrastructure projects experiencing financial distress, or which are no longer able to reach financial closure. The Bank is also stepping up knowledge assistance to help countries prepare contingency plans for responding to the crisis. This package of assistance supplements the Bank's $1.2 billion Global Food Crisis Response Program (GFRP), launched in response to the 2008 food crisis. As of January 2009, 10 African countries had received a total of $83 million in GFRP resources to fund seed and fertilizer purchases, safety net programs, and budget support for governments whose fiscal balances were hurt by high fuel costs. The Bank also increased its lending to projects supporting African agriculture, from $800 million in 2008 to $1 billion in 2009. The Bank also plans to expand infrastructure investments through a $45 billion Infrastructure Recovery and Assets Platform (INFRA), about one-third of whose resources will be spent in Africa, depending on country demand. The African Development Bank Group (AfDB) announced four new crisis-response initiatives in March 2009: a $1.5 billion Emergency Liquidity Facility (ELF); a $1 billion Trade Finance Initiative (TFI); a framework for accelerated transfer of African Development Fund resources to eligible countries; and enhanced policy advisory support. The newly created ELF aims to provide financing to eligible African beneficiaries to support a broad range of obligations, including underpinning a fiscal stimulus and supporting public-private partnerships at risk. The ELF has a fast-tracked application process, with proposals considered by the AfDB Board within 10 working days. The TFI plans to launch a new line of credit of $500 million designed to enable commercial banks and development institutions in Africa to use Bank resources to support trade financing. Accelerated African Development Fund transfers—concessional loans and grants—are expected to provide budget support and infrastructure financing. In addition to various ongoing and new projects addressing infrastructure, governance, macroeconomic policy, skills development, humanitarian relief, and other areas, the AfDB has approved several loans in recent months designed primarily to offset the impact of the global economic crisis. The Bank reportedly saw its lending nearly double to $11 billion between mid-2008 and mid-2009, with funds going largely to budgetary support, trade finance, and infrastructure projects (notably ports and airports in Tunisia, Senegal, and Djibouti, where investors had withdrawn). 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). Unlike the AfDB and the World Bank, which fund specific development projects, the IMF provides loans to help countries that cannot meet their international payments and are unable to borrow money from other governments or raise capital on the financial markets at affordable terms. The IMF is often called the international lender of last resort. The Fund is increasing its financial assistance to Africa in response to the crisis, doubling "access limits"—the ceiling amount that countries may borrow—for low-income countries. IMF lending to low-income countries in response to the economic crisis is expected to reach $8 billion by the end of 2010. In Africa, new IMF lending commitments from January to mid-July 2009 were $2.7 billion, an increase from $1.1 billion in 2008. The amount of IMF credit available to the region fell sharply following implementation of the Multilateral Debt Relief Initiative (MDRI) agreed on at the June 2005 G-8 summit in Gleneagles, Scotland; the total amount of IMF credit available to African countries totals about $4.7 billion, $2 billion of which remains undrawn. Cote D'Ivoire ($581 million) and Zambia ($342 million) have the largest loan programs in the region. With the exception of one loan (to Gabon), all IMF financial assistance to Africa is provided through the IMF's concessional lending facilities, the Poverty Reduction and Growth Facility (PRGF) and the Exogenous Shocks Facility (ESF). The IMF has also accelerated long-standing efforts to revamp its lending and policy support programs for African borrowers and other low-income countries. Among recent reforms, the creation of $250 billion worth of IMF special drawing rights (SDRs) and their equi-proportional (all countries receive an amount relative to their IMF quota share) allocation to all member countries is of particular interest, as is the approval of a second SDR allocation (around $33.9 billion) specifically for under-represented countries, many in Africa. African countries are expected to receive around $11 billion in SDRs from the two allocations, which will be helpful for countries in the region that have seen their foreign exchange reserves drop sharply in an effort to avoid defaulting on their foreign financial obligations. African governments established a Committee of Ten African Finance Ministers and Central and Regional Bank Governors (C-10) at an AfDB-organized meeting in Tunis in November 2008. Finance ministers and central bank governors have met several times since then to discuss the impact of the crisis and possible policy responses. Some countries have set up economic monitoring units and deployed limited fiscal and monetary resources. Steps taken by some African governments have reportedly included fiscal stimulus packages (e.g. Mauritius, South Africa), targeted assistance to certain sectors (Nigeria, Uganda), expansionary monetary policy (Botswana, Namibia, South Africa), and bond financing of public expenditures (Cape Verde, Kenya). Nevertheless, most African governments have little capacity to fund policy interventions to address the crisis. Effective economic governance continues to be lacking in many countries, and responses are projected to be restrained by the relative unavailability of foreign reserves, insufficient budgetary margins for enacting fiscal stimulus packages, and restrictions on incurring further external debt in countries that have benefited from international debt relief. While multilateral institutions have urged African governments to focus spending on social security nets and infrastructure projects—which have the potential to stimulate the economy while addressing some of the long-term obstacles to economic growth—regional expenditures on infrastructure fell far short of World Bank recommendations even before the crisis hit. Some believe high levels of corruption could additionally impede the effectiveness of government responses to the crisis. There is strong congressional interest in African socioeconomic development and regional stability. Congressional interest in fostering U.S. economic ties with African countries is evidenced in recent hearings, such as that held in June 2009 by the House Committee on Energy and Commerce, Subcommittee on Commerce, Trade, and Consumer Protection and the House Committee on Foreign Affairs, Subcommittee on Africa and Global Health, on "U.S.-Africa Trade Relations: Creating a Platform for Economic Growth"; in pending legislation, such as H.Con.Res. 128 , "Expressing the sense of Congress that Africa is of significant strategic, political, economic, and humanitarian importance to the United States" (referred to the House Foreign Affairs Committee in May 2009); and in existing laws and programs such as the African Growth and Opportunity Act (AGOA). A consideration of the impact of the crisis may affect bilateral and regional aid levels and programs, U.S. trade policy toward Africa, and analyses of regional and country-level political trends, among other areas. The U.S. government has announced several new policies to aid developing countries affected by the crisis, though it has not, to date, formulated a policy specifically aimed at addressing the impact on Africa. The Supplemental Appropriations Act, 2009 ( P.L. 111-32 , passed into law on June 24, 2009), includes $255.6 million in Economic Support Funds (ESF) for "assistance for vulnerable populations in developing countries severely affected by the global financial crisis," with certain eligibility criteria. 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. In July 2009, the Obama Administration noted the impact of the economic crisis on developing countries in announcing its commitment to double U.S. agricultural development assistance to more than $1 billion in 2010, and to provide at least $3.5 billion over the next three years. The initiative is global, not uniquely focused on Africa, though the Administration cited the U.S. Comprehensive Africa Agriculture Development Program (CAADP) as a "model." U.S. responses to date have focused on support for multilateral lending and grant initiatives. Moving forward, this may include increased financial support to the international financial institutions to which African countries are expected to apply for economic support during the crisis. In the 2009 Supplemental ( P.L. 111-32 ), Congress approved U.S. participation in a range of measures designed to increase the amount of financial assistance the IMF may provide to its member states in the wake of the economic crisis. The AfDB has also requested an increase in financing by the G-20. Relevant legislation includes S. 955 , the African Development Fund Replenishment Act of 2009.

Summary: 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].