Africa’s future prosperity lies in individual countries on the continent – like European Union member states – pooling their markets, development resources and efforts to create a new good governance regime.

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It is time to overhaul both the role and management of the World Bank and the International Monetary Fund. When doing so, the heads of both institutions must be selected from developing countries, and the headquarters of both institutions must be moved to developing countries.

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The world is indeed very much tied to American financial decisions. Bad or good ones can be felt in faraway markets. This latest round of financial market jitters is mostly the result of bad American investment decisions, yet the spillover effects are felt across the globe.

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The Current Discussion:The global economy is quaking. Are we heading toward a global recession? Who's to blame?

Most developing economic managers spend the past week reassuring worried local markets that their countries’ will survive the financial problems that caused U.S. investment bank Bear Stearns to go belly-up. Although the brunt of the credit crunch so far has only affected developed markets – the U.S., European Union countries, the UK and Japan – developing markets feel the ripples, too. In fact, a delayed reaction may yet hit those markets. A case in point is South Africa. Although the country’s financial system is relatively strong, a global slowdown caused by this financial crisis will hit the country’s high economic growth rates. The South African Treasury has already revised its growth prospects down to 4% from the 5 % average levels for the past four years, partly in anticipation of a global downturn. Emerging market economies are very much tied to global economic tremors. The combination of risk aversion, lending freeze and lower confidence associated with the current financial crisis may cause capital outflows from some emerging markets. It is remarkable how a crisis that started with a local U.S. home loan market problem has, because of the interconnectedness of the global financial system, spilled-over globally. If anything, this financial crisis must lead to decisive reform, in the same active way the U.S. Federal Reserve intervened to prevent the country’s financial system from free-fall, when it took guarantee of US $30 billion of Bear Stearns assets in the biggest central bank bailout in American history.

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