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Aid to Africa could fall due to global crisis - AU

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By Barry Malone

ADDIS ABABA, Oct 29 (Reuters) - Developed countries are planning to cut aid to Africa due to the global financial crisis, a senior African Union (AU) commissioner said on Wednesday.

While Africa is relatively protected from the global turmoil as African banks are less exposed to credit risk, analysts believe there could be a reduction of aid flows as well as foreign direct investment and remittances.

"I have had informal discussions with representatives of our development partners and the message that I'm getting is that this could affect development aid to Africa," said Maxwell Mkwezalamba, the AU commissioner for economic affairs.

"There are not yet any clear indications as to the magnitude, but this is what is expected."

Parts of the continent have been hit by drought and Africa has also felt the effects of high food and fuel prices this year.

"Trade and investment flows are likely to be negatively affected because of the looming consequences of growing recession in the developed countries," Mkwezalamba told reporters.

He said that more than 100 million people had been pushed deeper into poverty because of the food prices and the situation would get worse with less aid flowing.

Africa will have to find ways to help itself if aid amounts fall, he said.

"We should move towards being self-sufficient. We cannot depend on aid forever," he said. "We could look at widening the tax base in Africa, for example, and we should look at what we can do to increase trade between our own countries."

Mkwezalamba criticised the International Monetary Fund's bailout packages to Hungary and Ukraine.

"These are the same resources that we are competing for," he said. "If an African country was to experience these kinds of difficulties, would the IMF be able to come up with a similar amount of money?"

Reuters - Thomson Reuters Foundation
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