Global crisis may hit Africa aid: US official

"It’s a question that’s concerning many of us who work on Africa," said Jendayi Frazer, U.S. Assistant Secretary of State for African Affairs, who is in Beijing for meetings with Chinese academics and officials on cooperation in Africa.

"The question is whether the next team… will reauthorise the Millenium Challenge programme for future years.

Pledges through 2010, including grants made through the Millenium Challenge Account programme, are unlikely to change, but commitments by the U.S. after that could be vulnerable — even as Chinese investment and trade ties continue to grow.

Sub-Saharan Africa saw GDP growth of 6.5 percent last year, the highest rate in decades, thanks in part to investment in natural resources attracted by surging commodity prices.

But metals prices have fallen to levels last seen almost three years ago, as the outlook for the global economy weakens, and Western banks are increasingly risk averse as they struggle to weather the crisis.


Aid monies for 2008 are already set, and Millenium Challenge grants wre funded upfront, Frazer said. The U.S. has committed to $3.9 billion in compacts with ten sub-Saharan African countries.

The Bush administration would present the incoming administration with a budget that goes from 2009 to 2014.

"They can change that budget and there are certain indications they may have to rethink foreign assistance after that," Frazer said.

"But our belief is that for the next two years, from 2008 to 2010, the money is already in the pipeline."

The U.S. has also tried to stimulate investment in Africa, even as many Western corporations say they are outbid by Chinese firms willing to provide financing and construct dams, roads and rail as part of bids to develop resource projects.

The U.S.’s Overseas Private Investment Corp, or OPIC, last year pledged $1.6 billion in several funds designed to support private sector investment in Africa. A $250 million facility was launched this summer, doubling the amount made available through three earlier funds.

A portion of the OPIC funds "could I think be affected by the financial crisis, definitely," Frazer said.

"The continent is perceived as one of instability and crisis and so it’s hard to get private investment interested in the region… I do believe the financial crisis could impact private, foreign direct investment flows into Africa."