$130bn shortfall in SSA: report

Published:  29 December, 2009

ECONOMY

Sub-Saharan Africa is facing a $130bn shortfall in financial flows in 2009 due to the impact of the global economic slowdown, according to new research by the Overseas Development Institute, a London-based think tank. The fall is attributable to declines in trade, international bank lending, remittances, portfolio flows and foreign direct investment to the region.

The report estimates that ten countries in the region are experiencing a drop in real GDP of more than 5 percent this year compared with forecasts made before the crisis. “The biggest change in terms of balance of payments effects has so far come from trade,” says Dr Dirk Willem te Velde, a research fellow at ODI and author of the report.

Import levels from the EU, the US and Japan from sub-Saharan Africa in the quarter leading up to August 2009 were down $25bn over the previous year, says Mr te Velde, adding that “if you annualise that, you get to $100bn.”

The strongest impact has been felt in the area of hydrocardbon and mineral exports. Oil exporters such as Angola and copper producers such as the Democratic Republic of Congo have seen demand and prices fall over the past year. In contrast, the impact of the shortfall is more limited in countries such as Uganda and Tanzania, says Mr te Velde, due to better macroeconomic management prior to the crisis.