Home | Business News | Browse by Publication | A | African Business

African economies - bowed but not broken.

Article Excerpt
FINANCIAL INSTITUTIONS IN Africa's emerging economies have so far proved fairly resilient to the global financial turmoil. Most African banks - with just a few exceptions - have been conducting their business in a conservative manner. Importantly, they avoided investments in complex derivative instruments and other toxic assets such as collateralised debt obligations (CDO) and structured investment vehicles (SIV).

[ILLUSTRATION OMITTED]

It was these complex toxic assets that brought Western banking giants, such as Citigroup, UBS and Royal Bank of Scotland, to their knees and led to the bankruptcy of Lehman Brothers and Bear Stearns.

Ngozi Okonjo-Iweala, managing director at the World Bank and co-chair of the World Economic Forum on Africa, said: "This continent has been hit by a number of crises in recent years - the food and fuel crises, then this financial crisis - and the continent has been surprisingly resilient in being able to withstand this in the past, because of a legacy of 10 years of reforms."

But no emerging region is immune to a severe recession in developed markets as recession increases investors' risk aversion and leads to deleveraging, i.e. a sharp...

View this article FREE - Now for a Limited Time, try Goliath Business News
Free for 3 Days!