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Friday 27 April 2018

Finance in Africa: Banks, debt and development

Conference, 25 April 2018

On 25 April PEFM hosted a conference on finance in Africa.Several strands of thinking led us to focus on Africa. First, having looked at the impact of the global financial crisis on developed country economies, particularly the UK and Europe more broadly, it was a natural step to look at the impact on other regions. The impact on Africa has been significant, through several channels, resulting on the banking side for instance in disintermediation from the global banking system as weakened banks from developed countries, including the United Kingdom, retrenched towards their homelands, and because the low interest rates that have prevailed have driven investors to “search for yield” and enabled more borrowing by governments and companies in the continent, with results good and bad: infrastructure investment on the one hand, but also the accumulation of debt on the other.

And there are other strands that have led this conference to be particularly timely. Earlier this year a breakthrough agreement was signed in Addis Ababa in which 41 countries committed to establishing a regional free trade agreement amongst themselves. Meanwhile, finance in Africa has been highly innovative in recent years. In mobile banking, for instance, the countries of East Africa lead the world.