African markets more vulnerable to financial crises, says IMF

Nov 08, 2013

The influx of foreign investment in sub-Saharan Africa makes the continent more vulnerable to shocks on the international financial scene, according to the IMF.

The warning comes as the
"Boundary Markets" such as Nigeria, Ghana and Kenya expressed concerns about the side effects of the adjustment of monetary policy in the United States, Ecofin news agency reports.

African countries are increasingly popular with investors. With the exception of South Africa, sub-Saharan countries have been completely absent from international financial markets until 2007. Since then, a dozen of them - including Ivory Coast, Senegal and Tunisia - mobilised a total of more than €5 billion in bonds.

This enthusiasm is linked to investors seeking an alternative to the low rates paid by developed countries.

According to the International Monetary Fund (IMF), the successive emissions represent an acknowledgment of the strong potential of sub-Saharan Africa, thanks "to the abundance of natural resources, improved macroeconomic policies and good development prospects".

However, assistant director of the African department at the IMF Abebe Selassie said that African markets must remain vigilant and anticipate volatility and rising costs on markets, as central banks in Europe and North America will phase out their policy adjustments.ADNFCR-2976-ID-801657954-ADNFCR