The effects of the financial crisis on Sub-Saharan Africa

Crisis Periods, Contagion and Integration Effects in the Major African Equity Markets During the 2007-2009 Global Financial Crisis

“…Egypt, Jordan, Morocco, Tunisia, Kuwait, Saudi Arabia, and the UAE) experienced significant financial and economic slowdowns. Allen and Giovannetti (2011) presented the effects of the GFC on Sub-Saharan Africa (SSA). They investigated the channels through which the economic and financial crisis was transmitted to SSA, with a special focus on counties in situation of fragility.…”

Global economic and financial crisis: Exploring the transmission channels and impacts on sub-saharan african economies

“…In particular, the FDI inflows to tourism or traditional manufacturing sectors promote domestic employment, consumption and economic growth (see Bonassi et al, 2006;Allen and Giovannetti, 2011). Unlike other developing countries, FDI to the region is unevenly distributed across countries and highly concentrated in the countries with rich natural resource endowment (Allen and Giovannetti, 2011). For instance, four resource rich countries, namely, Angola, Chad, Nigeria and Sudan had accounted for 70 percent of the total FDI during the period of 2000 to 2005(OECD, 2008.…”

“…It was because the developed donor countries, which experienced adverse macroeconomic conditions, need to finance billions on financial sector bailouts and their fiscal stimulus packages to sustain internal demand. As a result, they might be less likely to honor their commitments in their aid budgets to the developing countries (see Allen and Giovannetti, 2011;Esser, 2013). In the similar argument, empirical studies showed that official aid was pro-cyclical with both donor and recipient incomes (Bulíř and Hamann, 2008).…”

Low-Income Countries and an SDR-based International Monetary System

“…The recent 3 F (food, fuel and financial) crisis has once again made this point clear (Deaton 1999;Easterly et al 1993;Rodrik 2006;Raddatz 2007;Allen and Giovannetti 2011;Berg et al 2011). Financial globalization has further increased macroeconomic and capital flows volatility, especially in poor countries with underdeveloped financial markets (Prasad et al 2007;Dell'Ariccia et al 2008;IMF 2011c).…”

“…In this context, monetary and exchange rate conditions play a major role for several reasons. First, the trade balance is strongly dependent on the exchange rate vis-a-vis the US dollar, given that the fragility of many LICs, at least those in Sub-Saharan Africa, depends on the concentration of export revenues in no more than three commodities and on their proclivity to import natural resources (Allen and Giovannetti 2011). Second, LICs, at least before the recent multilateral debt relief initiatives, tend to be heavily indebted, while the value of the stock of their foreign currency-denominated external public debt and debt service are sensitive to the exchange rate.…”