Nusrat Host Seminar on Global Economic Crisis

Students of Nusrat Senior Secondary School in Bundung and their colleagues from different schools in the Greater Banjul Area yesterday attended a one day seminar on the current economic crisis.

Addressing students, Mr. Abdoulie Sowe Financial Controller of the Project Coordination Unit, Department of State for Basic and Secondary Education, dilated on the possible solutions to the global economic crisis.

“Recession is a general slowdown in economic activities over a sustained period of time or a business cycle contraction. During economic recession, many macroeconomic indicators vary in similar ways. Production as measured by Gross Domestic Product (GDP), employment, Investment spending, capacity utilization, household incomes and business profit all fall during recessions”.

He revealed that I.M.F regards periods when global growth is less than 3% to be global recession. They also estimate that global recession seem to occur over a cycle lasting between 8 and 10 years, he added.

He mentions the following as the Possible Predictors of a Recession:

Firstly a significant stock market drop has often preceded the beginning of a recession.

Secondly, three month change in the unemployment rate and initial jobless claims (For example 1.5% rise in unemployment within 12 months).

And Real Estate markets also weaken before a recession. However, real estate declines can last much longer than recession.

“Among the possible solutions to the Global economic recession I could like to share with you are:

1. Government Intervention: Most economists believe that recession are caused by inadequate aggregate demand in the economy, and therefore favour the use of expansionary macroeconomic policy during recessions. Strategies favoured for moving an economy out of a recession vary depending on which economic school the policymakers follow. Monetarists would favour the use of expansionary, while Keynesian economists may advocate increased government spending to spark economic growth. Supply-side economists may suggest tax cuts to promote capital investment. Also laissez faire minded economists may simply recommend that the government not interfere with natural market forces such as demand and supply.

2. Regulating the Financial Sector: Governments have attempted to eliminate or mitigate financial crisis by Regulating the Financial Sector. One major goal of regulation is TRANSPARENCY, making institutions’ financial situation publicly known by requiring regular reporting under standardised accounting procedures. Another goal of regulation is making sure
institutions have sufficient assets to meet their contractual obligation through reserve requirement, capital requirement and other limits on leverage.

Some financial crises have been blamed on insufficient regulation, and have led to changes in regulation in order to avoid a repeat. For example the M.D of the IMF, Dominque, has blamed the financial crisis of 2008 on regulatory failure to guard against excessive risk taking in the financial system especially in the U.S Banking services: Remuneration of CEO in terms of salaries, bonus, other employment benefits.

Central Banks should have strict controls in the day to day operations of the commercial sector, instill confidence such as meeting their reserve requirements, capital requirements, and creating credit rating agency where the banks can share information on borrowers.

3. Setting up revolving funds for households

- Such as the poor during recession

- Creating unemployment benefits packages for those affected

- Buying back mortgages of those who cannot repay.

4. The International Financial Institutions such as the World Bank and , International Monetary Fund, multilateral development banks and other donors to provide financial assistance, through an emergency resources account to nations in financial crisis, in order to stabilize economies and restore the international financial sector” he stated.

In his opening remarks, the Chairman of the occasion Mr. J.S.A. KEMOKAI revealed that when a senior secondary school becomes a learning centre where issues affecting us a nation and the world at large are discussed in the form of seminars and where professional courses beyond secondary school education are pursued, that institution has transcended beyond the academic boundaries of a normal senior secondary school, he said. “At Nusrat I am glad to let you know that we are now operating in the realm of higher institutions of learning. This is in line with our vision which is to transform Nusrat Senior Secondary School into a college.

We’re gathered here again this morning in quest of knowledge on a very worrying issue. The world is said to be a global village. All of us live in this global village. In very recent times, we learn that there is global economic crisis. Major economies in the world like that of the US, has taken a downward trend. This is bound to affect adversely the ‘economies of developing countries in Africa. For example, The Gambian economy because Gambia is a fast developing country. All of us can only better guard or equip ourselves individually and collectively in this difficult time by having quality and adequate knowledge of global economic recession. Just yesterday I heard in the news that if the old failed to fight against global economic crisis, it will very soon turn into global human crisis particularly in developing countries.

Being aware of the fact that many Senior Secondary School students seriously lack knowledge of this topical topic, the commerce club of this great institution has thought it fitting that we leave our individual lessons for a moment and turn our attention to another vital lesson that affects all of us whether one is Science, Arts or Commerce student.

He finally encouraged everyone to listen very attentively to these learned men so that at the end of this seminar we will all be better informed about an issue that affects the very foundation of our lives.

For his part, Mr. Ebrima Sawaneh of Ecobank said that there is evidence of major economic crisis existing, spreading and deepening across the global economy. Effects of this crisis on developing countries cannot be discussed without making references to the Western world where the crisis was created and developed. Developing countries, he continues, depend on the so called developed countries for number of economic activities including, investment, donations, borrowings, tourisms, international trade etc. Presently in the western world, people are losing their jobs; companies are either closing or reducing their productions scale, prices of commodities are falling. These conditions he revealed, have made investors to lose confidence in companies and hence reacted by selling their shares, which further reduces the price of shares in the stock exchange. This also affects the ability of companies listed on the stock exchange to raise capital.

“Accordingly World Bank reports in April 2009, global GDP is projected to decline by 1 .7% in 2009, which would be the first declined in world output on record. The developing countries growth is expected to decelerate to 2.1% in 2009. Unemployment is soaring in many countries. Volume of international trade is also forecasted to decline in 2009 by 6.1% for the first time in 27 years,” he revealed.

Other speakers include President of the Nusrat Commerce club.