Focus on Private Sector: Make firms revive local economies
China’s economic slowdown is proving especially painful for countries that depend on Chinese investment. The Chinese are set to invest less in foreign countries this year, as their government takes steps to reduce the flow of its currency into overseas markets. Resource-rich countries in Sub-Saharan Africa, like Zambia, are suffering as a result. This pattern calls for urgent action to diversify and bolster local economies against the impact of corporate retreat. And foreign companies are duty-bound to help here.
Resource-producing countries are having a rough year. The news agency Bloomberg reports that 18 of the 22 commodities it tracks are down over 20 per cent from their recent highs. Glencore has announced an 8-month shutdown of its copper mines in the Democratic Republic of Congo and Zambia, while South Africa’s platinum producers are all expected to lay off workers this year. This crisis isn’t just about jobs. The nature of resource extraction is that companies cluster around oil reserves or mineral deposits, creating an environmental impact that squeezes out other economic activity. They become one-shop mining or oil towns — and so a slowdown can cripple a whole region. As a result, not only will individuals lose their jobs but local authorities, deprived of tax revenue, will cut state services. If the decline is prolonged, people will migrate elsewhere, leaving behind ghost towns.
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