IMF says Ghana, others becoming more vulnerable to global financial shocks

Ghana and six other emerging economies in Africa have been warned by the IMF that they are becoming increasingly vulnerable to global financial shocks due to their high dependence on foreign investors, according to the Fund’s Economic Outlook for Sub-Saharan Africa released end October 2013.

The countries being cautioned by the IMF include Ghana, Nigeria, Kenya, Mozambique, Senegal, Uganda and Zambia.

Ghana in particular has in recent years been a favourite investment destination. In 2012, the country attracted approximately $ 4.9billion in registered foreign direct investment projects and was also ranked number 5 by UNCTAD’s World Investment Report 2012 for being the largest destination of investment in Africa.

Ghana’s gradual integration into the global financial system has seen it raise additional development funding from the international capital markets. In 2007, the country issued its first bond on the international market raising some $750million with a ten-year maturity period at an interest of 8.5%. Its second bond the Eurobond was issued in July 2013 and targeted $1 billion, but was oversubscribed by 120%.

Generally, the IMF report is upbeat about African economies outlook which is being spurred by strong domestic demand, and public and private investments.

The IMF warning comes in the face of economic crisis in the Eurozone and monetary tightening in the US as well as economic slowdown in China; which represents regions with a growing number of international investors in frontier markets in Africa.

By Dode Seidu
Founder of TradeGAP Africa, an international trade and investment facilitation consultancy
Email: [email protected]