Business
European banks hesitant towards Africa trade
Africa’s trade with Europe was the only affected route, Ncube said, with the resource-rich continent’s exports of minerals and hydrocarbons to the likes of China, India and North America flowing as normal.
He was unable to quantify the extent of the impact on European trade, but any sort of financing hiccup is likely to hit countries such as South Africa and Kenya, for whom Europe is the biggest trading partner.
A European economic slowdown is already hitting demand for African exports. South Africa, the continent’s biggest economy, sends a third of its exports to Europe, and Kenya more than 25 percent.
In 2008, Africa was largely insulated from the first round of the credit crisis triggered by a collapse in the U.S. housing market, but felt the heat subsequently as commodity prices fell, direct investment dried up and Western aid budgets were trimmed.
Ncube said those latter situations were likely to happen again, while remittances from Africans abroad, which totalled US$40 billion a year before the crisis, could drop if Europe slid into recession.
“As the economic slowdown continues, Africans working abroad will lose their jobs or become less secure, and so will send less home,” he said.
