Whilst non-performing loans in the banking sector rose from around 5% in July 2008 to their current levels of around 10%, they remain within the prudential ceilings above which concerns of systemic risks would be warranted. The increase in non-performing loans thus reflects the deterioration in the real sector of the economy. It is in this sense, i.e. the absence of a significant volume of impaired assets in the financial system, that I describe “financial markets” rather than the “financial system” as bearing the brunt of the crisis. The weight of adjustment was reflected in exchange rates and the Balance of Payments – reflected in a marked draw down of international reserves. However, the ramifications of the crisis on the real sector of many sub-Saharan African economies are real and potentially far reaching, and it is to these that I now turn. In my reflections on the impact and implications of the global economic crisis on Africa, I wish to emphasize four key points: The first and perhaps the most significant effect of the global financial and economic crisis has been the marked slow-down in real GDP growth in SSA, to a projected 1.5% in 2009 from an estimated 5.5% in 2008. This slow-down in growth has occurred after a significant period of strong economic growth and investment that had laid the platform for sustained and significant reductions in poverty across the continent.
Caleb M Fundanga: Africa and the global financial and economic crisis – an opportunity or a curse? Speech by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the Forum “Developing Africa – an opportunity for Europe, Italy and Sicily”, Taormina, Sicily, 1-2 October 2009. *  *  *  Chairperson, Distinguished Participants, Today we gather at a time when the world economy has gone through a tremendous economic and financial shock, which may well have long lasting social consequences. When we met last year, we were on the eve of disaster although we did not, and perhaps could not, appreciate the depth and severity of the crisis that we faced. In many ways we were in the calm before the storm. What subsequently transpired in September and October 2008, when financial markets froze and stock markets collapsed, was the greatest macroeconomic challenge that many of us, as practicing economists, are likely to face in our lifetime. As we all know, trade and output contracted sharply across the globe particularly in the fourth quarter of 2008 and first quarter of 2009, the downward trend in commodity prices witnessed since the historic highs of July 2008 accelerated, and perhaps most significantly confidence and trust in the market economy was severely impaired. In this regard, estimates from the International Monetary Fund (IMF) are that in the fourth quarter of 2008 global exports contracted by an average of 15.1%, whilst global output contracted by 6.5%.