The Global Economic and Financial Crisis: An Overview of the Effects on African Countries

"In the wake of the current global financial crisis, experts and analysts agreed that the initial effects on African financial sectors will be minimal because of the limited exposure to the international financial markets. However, African countries are more integrated than before with the world economy through the following transmission channels: international trade, foreign direct and portfolio investments, foreign aid flows, private remittances, and tourism; and since they are predominantly primary commodity exporters, their economies will be negatively affected by the current recession in many developed countries due to the sharp decline in world demand for commodities and in their prices. This paper takes the view that African countries are more susceptible to external shocks than other developing regions of the world because of their flawed macroeconomic fundamentals, but more importantly, the transmission channels emphasize the extent of the region‟s vulnerabilities."