The global financial crisis : impact, responses and way forward

Abstract

The global financial and economic crisis presents significant challenges for African countries. It has also exposed weaknesses in the functioning of the global economy and led to calls for the reform of the international financial architecture. Although the crisis was triggered by events in the United States housing market, it has spread to all regions of the world with dire consequences for global trade, investment and growth. The crisis represents a serious setback for Africa because it is taking place at a time when the region is making progress in economic performance and management. Since 2000, the Africa region has had an average growth rate of real output above 5 per cent and inflation has declined to single digits. There have also been significant improvements in governance and a reduction in armed conflicts, making the region more attractive for private capital flows. Net private capital flows to Africa increased from $17.1 billion dollars in 2002 to $81 billion dollars in 2007 (ECA and APF, 2008). The global financial and economic crisis threatens to reverse these gains in economic performance and management.