More on the Impact on Africa
World Bank financial specialist Samuel Munzele Maimbo paints a dire picture for Africa's financial sector in a just-published article:
"As the immediate crisis faced in the last couple of months subsides, and policymakers begin to consider the longer term impact of the crisis in Africa, an emerging view is that the impact on the financial sector in Africa may actually be more significant and longer lasting than first assumed, and the impact on the non-financial sector in Africa will be more notable than has been the case in developed countries."
-- read more in "The Impact of the Financial Crisis on African Financial Systems", AccessFinance newsletter (World Bank/IFC)
Comments (5)
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I think it's premature to size up the implications for the African financial sector given the fact that less than 2% of world comerce passes through Africa. As a net importer African financial institutions may suffer cut back on trade finance lines from western countries. But over the long term I don't think it is serious enough to surpass what is happening in the more developed world. Over the last few years , African countries have built significant reserves over the last few years due to hgh commodity prices. Average economc growth in the region will exceed average global economic growth.
Posted by: Michael Magaji | Dec 1, 2008 3:08:27 PM
May I ask why when there is a crisis, the World Bank immediately starts talking about Africa in very negative language? Yes, Africa is going to be affected, but be advised that the continent will not be hit like other regions of the world as its economy was not fully integrated into the global economy. Africans do not get involved in the type of speculation we see in North America. Sub-prime mortgages are not a feature of the continent's economy. I think the continent is doing fine, although its commodity prices could suffer in the long run.
Posted by: Joachim Arrey | Dec 2, 2008 6:18:45 AM
Both comments on the article have some merit. There are African countries on the continent that will be able to weather the global crisis better than others on account of being less integrated with the rest of the world, less commodity export dependent, and with adequate reserves. And certainly, Africa is better prepared today to weather a financial crisis than it would have been a decade ago. The improvements in the quality of banking supervision are notable.
However, I remain concerned for the many countries on the continent whose banking systems are dominated by foreign banks (which are already exercising caution in growing their loan books), and countries which are dependent on commodity prices. The real sector impacts on the financial system, the article argues, will be more notable than currently argued.
The primary purpose of the article is to highlight the fact that the impact on the continent of the current crisis(the scale of which can only be speculattive at the moment) will be in ways other than through direct sub-prime market contangion.
Posted by: Samuel Munzele Maimbo | Dec 2, 2008 10:54:33 AM
I'd also point to a conversation on the PSD blog I had with Kainvestor, a blogger who follows the Kenyan stock market, concerning the financial crisis and regional market integration in east Africa. Kainvestor has a nuanced take on the issue (see both the post and Kavinestor's comment): http://psdblog.worldbank.org/psdblog/2008/11/east-african-se.html
Posted by: Ryan Hahn | Dec 2, 2008 1:26:17 PM
I would like to know in detail about the impact of the recent world crisis on banks in developing countries.
Posted by: HELEN | Jul 17, 2009 8:54:57 AM