Africa's annual economic growth rate, which reached an all- time peak of 6.8% in 2007, is expected to slow from 5.5% in 2008 to just over 5% this year. This is in line with the rest of the developing world but much higher than in advanced economies, which will do very well not to dip into recession. Oil prices are already only a third of what they were a few months ago, thereby confounding virtually all budgetary plans by producer nations. The danger is that without the oil revenue windfalls, social issues such as education, health, provision of clean water and so on will now be neglected. This means that it will be even more difficult for many African countries to reach anywhere near their Millennium Development Goals. Strong growth in countries like Botswana, Kenya, Ghana, Nigeria, Mozambique, Tanzania, Uganda, Zambia and Malawi in Sub- Saharan Africa was generated by both a growth in exports and in private consumption. Data indicates that private consumption has been the main engine of growth for these economies. With the global slowdown, orders for exports are slowing. As a result, domestic consumption is falling and a drop in production could lead to rising inflation. BUSINESS 122 able to ride out the storm and hang in there until better times reappeared. Planners in both Africa and the advanced economies hoped that the financial storm would blow over fairly rapidly, especially as Western governments were prepared to pour billions into shoring up tottering finance houses. When it became clear that the rot had spread more deeply and widely than had first been anticipated, Western governments went further. Many nationalised their banks and other lending institutions and urged the rest to make credits available to businesses and homebuyers. Most central banks also slashed interest rates. The expectation was that the extra income in household pockets would be spent on the high street rather than put into savings ( the low interest rates would act as a disincentive to save) thereby energising the market and keeping economies afloat. In such a scenario, demand would fall – but not too drastically, and Africa, which depends on the export of commodities for 60% of its income, would not be too badly affected. There was also speculation that capital would flow to the ' safer havens' in Africa, particularly portfolio capital into stock markets and bonds. In addition, it was hoped that the Asian region, including China and India, would continue their upward growth curve and absorb any surplus commodity output from Africa. It was also expected that the demand for African gold and gemstones would rise as increasing numbers of people looked for tangible assets in a period of financial turmoil. It now appears that these projections were too optimistic. Despite all kinds of incentives and stimuli, the global economy remains sluggish at best and people just cannot be persuaded to go out and ' spend, spend, spend'. ... it was hoped that the asian region would continue their upward growth curve and absorb any surplus commodity output from africa What does this mean for Africa? msafiri One of the most serious fall- outs of the economic crisis is that official development aid ( ODI) is likely to be slashed just at a time when Africa needs all the support it can get. In 2007, Africa received US$ 37.7 billion in aid and according to pledges made at the Gleneagles G8 Summit, would have received an additional US$ 25 billion a year by 2010 thus doubling aid to Africa compared to 2004. This is now unlikely to happen and, in fact, aid volumes are already shrinking. In October, the UN's Food and Agriculture Organisation reported that only 10% of the US$ 22 billion pledged earlier last year to help ease food shortages has so far been handed over.