Africa did not make any of these bad loans how come she has to pay for the mistake of the west? I get this questions often.Here is a quick list. Next time I get one of these questions I’d send them this entry.
1. A slump in external demand affects exports and remittances.
2. A slump in external demand lowers commodity prices. Oil producing nations such as Nigeria are particularly vulnerable.
3. Lack of credit is stifling capital inflows and trade finance in the more advanced markets – such as Nigeria, Botswana, Ghana, Kenya, Mozambique, Tanzania, Uganda, and Zambia.
4 The region is not immune to financial problems of its own. Credit has ballooned in many countries. Banks’ loan books are often concentrated in commodity-related industries.
5. Some retail investors borrowed heavily to punt on local stock markets.
6. Some US and European banks withdrew funds from local subsidiaries. A big bank that rhymes with ‘pity’ is particularly guilty of this.
Feel free to add yours to the list. FT was sampled on this one.
Please add -
Failure to properly invest in industry and infrastructure means Nigeria will have to become a recessionista like everyone else.