Currency War: The Stakes for Africa
Wednesday, November 24, 2010
By Sanou Mbaye
As a result of chronically deficient demand in the aftermath of the 2008-09 financial and economic crises, global imbalances are on the rise again, as is the risk of protectionism. The US thinks China is undervaluing its currency to support its industry. The situation could lead to an “international currency war”. What does this herald for African countries?
If history is any guide, we might look into previous currency conflicts to gauge the future. In the 1930s, currency wars led to competitive devaluations, protectionism, high inflation, economic collapse, the rise of Hitler in Germany, and eventually the second world war.
Africans were drafted in their thousands to fight alongside the allied forces against the axis armies. Many of them died. Africa’s consolation prize came with the political awakening, the fight for freedom, and the independence that followed.