The International Monetary Fund has for the first time warned that sub-Saharan African countries are becoming “increasingly vulnerable to global financial shocks” as they intensify their reliance on foreign investors.
The warning in its twice yearly review of the region comes as African frontier markets such as Nigeria, Ghana and Kenya fret about the side-effects of tighter monetary policy in the US.
African countries have benefited over the past three years from investors’ hunger for yield due to ultra-loose monetary policies in the US, Japan and Europe. Governments from the region have raised a record $8bn in global sovereign bonds – including from several debuts – this year, up from just $1bn a decade ago. And foreign investors have for the first time become active players in some domestic bond and equity markets there.