•  Slow economic recovery  •  Unemployment still rising (youth unemployment – social strife in some African cities) as companies in real sector still shedding jobs  •  Entering international capital markets via sovereign bonds has been postponed to a later date when economic performance at the global level improves – postponed infrastructure projects  •  Inflationary pressures have eased in most SSA economies but the challenge is being compounded by weather conditions that have seen a rise in food prices  •  Excess capacity exists in export industries across sectors  •  Drop in immigrant remittances which has become a key source of finance  •  Penetration of China and India to African region at a period when the western countries are at their weak economic position – changing trade and FDI flows (China has pledged $ billion in economic cooperation with Africa)  •  Key banks in the business of lending, which fuels investment and job creation, are not yet lending at pre-crisis levels, as such hurting the economy as a whole  •  Banks remain reluctant to lend, and tight credit especially for small businesses, stands in the way of the strong recovery we need – but more driven by slowdown of economic activity  •  Government borrowing has increased and it will be important that this crowds-in the private sector with the amounts borrowed going to production activities – the best as we have seen are the infrastructure bonds  •  Ongoing efforts to re-build foreign reserves to pre-crisis level or regional convergence criteria – ESF  BIS Review 159/2009  3  Prospects for Africa in the post crisis period •  Africa’s prospects in the post-crisis period is contingent on the behavior of policymakers both in Treasury and central banks  •  The first issue at the moment in most countries is to do as much as possible to support economic recovery through job creation and protect the wage good  •  Fiscal policy in post-crisis Africa – Sustaining domestic demand in the post-crisis period critical – Countercyclical fiscal policy to sustain demand through supporting jobs is important at the initial recovery period – In the medium term, fiscal policy should be directed firmly towards growth and long term development objectives – Adequate capital spending should be a top priority to address large deficits in infrastructure and human capital  •  Central banking in post-crisis Africa – Inflation in most countries has reverted to single digits, and the likelihood of a significant liquidity overhang is minimal – In many countries exchange rates have also been strengthening towards the precrisis level.
2  T. Padoa-Schioppa, T. (2003), Central Banks and Financial Stability: Exploring a Land in Between, in V. Gaspar, P. Hartmann and O. Sleijpen (eds. ), The Transformation of the European Financial System, Proceedings of the Second ECB Central Banking Conference, Frankfurt, May, 269–310.