The Daily Nation reports that Oxfam says the $700 billion being spent by the US on its financial rescue plan is more than seven times current annual global aid levels, and it is sufficient to eradicate all world poverty for two years. However, the global economic crisis is likely to make things worse for those who live in the world’s poorest countries, rather than better. It is expected that foreign aid contributions will decline, and wealthy countries will look to their own interests rather than the interests of others.
Foreign investors are withdrawing their investment dollars from developing markets, which drives down the value of local currencies and pushes up the cost of vital imported goods, including fuel and fertilisers. Falling demand will make it less profitable for developing countries to export goods. Thus, although developing countries have generally not been directly affected by the global credit crunch, they are being indirectly affected by the economic fallout.
In Kenya, the economic situtation is grim. Inflation stands at 26%. The main economic activity is agriculture, and this has been adversely affected by persistent drought. Imported inputs to farming – particularly fuel and fertiliser – have increased sharply in price, resulting in reduced profitability. The post-election crisis had an enormous economic cost which is still being paid off.