African Entrepreneurship Record

Chapter 1437: Chapter 15: Economic Winter

At a time when the Kitwe city government, led by Deberne, ambitiously aimed to perform an aggressive overhaul of the local economy, the situation nationwide in East Africa was rather unfavorable.

As time went on, the European flu in East Africa completely evolved into a nationwide health issue. In response to the flu, measures were taken across East Africa: workers were given leave, factories halted operations, and businesses closed, leaving the market desolate.

East Africa’s economy faced its first ”winter,” and the citizens experienced the stress of an economic crisis deeply for the first time.

By June, industrial production activities in East Africa were severely impacted. Taking steel enterprises as an example, sixty percent of the nation’s steel enterprises were forced to reduce production or temporarily cease operations due to the pandemic and economic crisis.

The East African Minister of Industry pessimistically reported to Ernst: ”This year, the national steel output might be cut in half due to this. Certain steel enterprises are seeing concentrated outbreaks among infected workers and have had to give workers leave to prevent the spread of the pandemic.”

”Meanwhile, the market downturn is leading to insufficient orders, causing even those factories not affected by the pandemic to reduce production.”

”According to the current trend, our country’s steel output might fall just over 30 million tons this year. If the pandemic and market continue to worsen, it might even drop below 30 million tons.”

In fact, since 1918, influenced by the trajectory of European warfare, East Africa’s steel output had already begun showing a declining trend. At this time, the demand from the European market for East African steel and related products was decreasing due to the rapidly expanding production capacity of the United States.

Nevertheless, this decline was relatively slow. Over the past three years, East Africa’s steel production capacity had consistently maintained above 37 million tons.

Now, due to the European flu and the economic downturn it triggered, East Africa’s steel output might directly decrease by six to seven million tons, which is almost equivalent to directly reducing an entire year’s steel output of the United Kingdom. Here, it’s only counting the UK’s domestic steel output.

Ernst furrowed his brow and said: ”Although the trend of post-war industrial decline was anticipated, the impact caused by the European flu has greatly exceeded our expectations.”

”Now, the global economic situation should be unfavorable. If we’re suffering this much, presumably the United States, Europe, and Russia aren’t much better off!”

Indeed, as Ernst mentioned, due to the war, it is hard to estimate the specific losses in Europe. Regardless of how severe the pandemic, the situation for European countries likely wouldn’t be worse than the destruction of the war, but Europe surely isn’t in a good state.

The United States, however, can be described as being in a state of joy turning to sorrow. Americans weren’t satisfied with the benefits Willson secured for the nation post-war.

Still, it can’t be denied that during the war, the U.S. economy experienced high prosperity, and near the end of the war even surpassed East Africa again. The five years of the war were among the best economic periods in U.S. history, which is why Wilson could continue to sit in the presidential seat.

But ever since the European flu broke out globally, Americans haven’t been able to celebrate.

North America is the second-largest pandemic zone after Europe, and the unrestrained industrial expansion in the U.S. during the war is now showing its negative consequences.

Indeed, during the war, East Africa’s economic development was also quite aggressive, but the East African Government continuously intervened in its domestic economy.

In contrast, the U.S., a completely liberal market nation, saw its enterprises and factories expand and develop greedily without any restraint, like wild horses freed from their reins under the catalyst of war.

Again discussing steel output, at the end of the war, the U.S. steel output surpassed 40 million tons, reaching levels similar to the prewar world.

Yet this is clearly irrational. After all, in this timeline, with the emergence of East Africa as a new player, global steel production capacity increased by nearly 40 million tons compared to the prewar world.

In the past, the African Continent was entirely a colony, and affected by the war, Germany and the United Kingdom fought extensively on the African Continent. This made Africa’s already negligible economy even more devastated.

With East Africa as an unexpected factor, East Africa not only integrated nearly half of the African Continent’s resources but also became the leading industrial power in the world. Meanwhile, global industrial capacity was further inflated.

The world market was only so vast, and with East Africa emerging as a prominent industrial power, the U.S. industrial capacity approached the levels the U.S. reached during World War I prewar, yet this excess capacity lacked sufficient market to be absorbed.

Due to the pandemic in the United States, the East African Government is unaware that U.S. industry’s output has nearly been cut in half. In the steel sector, this means U.S. steel capacity has directly dropped by half.

It’s already mid-1920. If the U.S. economic situation doesn’t improve, U.S. steel capacity this year might fall to around 20 million tons, possibly even below its prewar annual steel production.

It’s understandable, given the unrestrained market conditions during the war. U.S. steel companies variously obtained loans from banks, stock markets, and other financial institutions to expand production scale while the European market was almost like a glutton, accepting virtually everything.