Africa to be hit hard by credit crisis, says IMF

Thursday November 6 2008

By ZEPHANIA UBWANI in Arusha

Africa will be hard hit by the current global financial crisis, a senior official of the International Monetary Fund has warned.\

Ms Antoinette Sayeh, IMF director for the Africa region, said sub-Saharan Africa was more vulnerable since the food and fuel price shock had already caused higher inflation and rising current account deficits.

“The global financial crisis is also being felt in the region’s capital and foreign exchange markets,” she told the 14th Conference of Financial Institutions in Tanzania, whose opening was attended by that country’s President Jakaya Kikwete.

She said exchange rates in many states on the continent, including those in the East African region, had come under severe pressure in recent weeks.

Equity markets have fallen sharply in some countries, including Kenya, Côte d’Ivoire, Nigeria and Mauritius, she told about 200 financial experts drawn from Tanzanian banks and other local and regional financial institutions.

IMF’s Regional Economic Outlook for sub-Saharan Africa, published early last month, predicted a slowdown in real GDP growth.

“Based on continued weaknesses in international financial markets and weak data from developed and emerging market countries — including South Africa — it is highly likely that this forecast will need to be revised downwards,” she said.

She said Africa would be affected in three main areas: lower global economic growth, tightening of global credit conditions and weakening of the banking systems.