Global Financial Crisis – Don't cut aid to Africa, AU head pleads to world

DAR ES SALAAM (Reuters) – The chairman of the African Union (AU) urged the world on Thursday not to row back on aid to the world's poorest continent due to the financial crisis.

"Our appeal to our development partners is that they should not cut aid to the developing countries," Jakaya Kikwete, who is also president of Tanzania, told reporters.

"Our expectation is that the financial crisis in Europe and America, and now the huge sums of money that are being spent to bail out the banks, would not impact negatively on development assistance to Africa."

Experts say that while Africa is relatively insulated from the global credit crisis, there could well be a negative effect on investment, remittances and aid flows from abroad.

The United States and Europe have pumped hundreds of billions of dollars into their markets to save banks from collapse and cushion their economies. Those amounts dwarf the annual budgets of many developing countries, such as Tanzania.

Kikwete, speaking at the end of a three-day state visit by Madagascar’s president, Marc Ravalomanana, said his east African nation was analysing how best to respond if it is eventually affected by the financial turmoil.

Tanzania is not alone in worrying about the crisis.

In Burundi, think-tank researcher Alain Niyubahwe said aid would most probably be affected.

"Most donor countries are undergoing an economic recession, this can lead them to cut down the amount allocated to bilateral aid," he said in an interview.

"Those countries could also set up hard loan conditions, and this can reduce foreign investments which finance development in most African countries," added Niyubahwe, of the Economic Development Institute.