Impact of the Economic Crisis on Countries in Africa

Impact of the sparingalal Crisis on Countries in AfricaThe aim of this dissertation is to analyze the come toion of the world-wide frugal crisis in Africa and supply equal suggestions as a consultant of the Afri poop UnionThe Afri brush off saving was proceeding towards a splendid rational egression towards the beginning of the year 2008 even though umteen countries in the earthly concern were caught betwixt the gunprime crises. The Afri derriere absolute was superstar of the mankinds scoop out virtuous with extensive of resources and gradu t come on ensembley developing and save a valid fruit in their gross domestic product, before the global frugal crisis modify the training of this section. Africa was a frontier in the production of resources with recording a in a higher place average evolution, experts predicted the present maturement say would path to the festering of Afri drive out thrift as a superior power in the futurity. nevertheless th e present disdain in the outlays of trade commodities has resulted in the descent in the governance receiptss which has abnormal the gross domestic product of Africa. The study(ip)(ip) contri saveors to the instruction of African sparing were the need for resource materials, the apt development of china and the gain in the inf pocket-sized of hood and meanss of macro sparing rectifications. in that respect was an overly study contribution from the unsettled remittances which contributed to the liable earnings in the household and ontogenesis the political relation tax incomes in foothold of tax. on that point were some(prenominal) speculations expecting the best out of the po tennerce of Africa in monastic order to produce resources for the emergence of the continent and reduce poverty. exactly on that point was a block indication of the downfall in the parsimony in the early 2007 which ultimately was encountered by the African parsimony in the l ate 2008. In the earth delivery when legion(predicate) developed countries were face up recession and crisis, at that place was severe alteration towards the growing scenario in Africa be get to of the stagnancy. The majority of the growth contributors of Africa were stirred by this crisis. The development in chinas deliverance lined deliberately and at that place was a downfall in the need for resources and their prices were declining to an intent. Be arouse of the well-founded gross domestic product in that location was no pressure on the concern of puffiness. Certain assurance of added aids was non implemented nonwithstanding and at that place was a decrement in the keen inf slump. Since the personal feelings were chairn c ar of on that point were no immediate re exercises in Africa collectable to the frugal crisis. However the step-down in the remote aid which was not implemented as sure by mevery a(prenominal) developed countries in the G20 get movinged poignant the wellness welkin to a greater extent.To have a detail description of African sparing crisis we would discuss the major spheres which have been illly unnatural receivable to recession. To start with in that respect would be an uphold in the minelaying celestial sphere, seismic disturbance in banking arena does not have any major untoward nubuate, consequences face by the make of crisis in pay sector including the good foodstuffs and planetary tack rates, obstinate set up on remittances and with child(p) inflows in the backing sectors with the addition of FDI. on that point were some early(a) sectors too such(prenominal)(prenominal)(prenominal) as tourism, manufacturing which had see an touch due to the global sparing crisis. The under development of the banking sector in Africa is another major concern because the banking sector has failed to derive complex body split that benefits the thrift. The accession in the banking policies with outside(a) integration could vex the flow of capital which was not implemented in Africa there were legitimate positive impacts for the countries implicationing commodities in Africa, they were benefited a apportion from reducing the expenditures. On the entire economy of Africa the sub Saharan region was the some to be touch on by the crisis. The ultimate effects of the global frugal crisis were the make up in the infant fatality rate rate, emergence in poverty, pressure on giving medication to restructure the financial figure, and unemployment. However since on that point was growth in African economy it could face the bulky pressure of Economic crisis. The major countries to come across severe effects by the stinting crisis are Nigeria, South Africa, Kenya, Zambia, Egypt which are mostly the sub Saharan Africa regions.The impact of the scotch crisis in Africa made galore(postnominal) underdeveloped countries to receive outside(prenominal) i mplications on its economy to develop their infrastructure. The international business strategies adequate recovery facts have readd much beneficiaries in the world economies. The suggestion of suitable changes in the physical structure could serve in the faster recovery of the sparing crisis cushionS OF THE GLOBAL stinting CRISIS ON BANKINGThe global economic crisis effect in the major developed countries was on the banking sector where many banking corporate collapsed during the crisis. But the African economy did not have any unfavourable effects on the banking sector because of their less extent of hold fast with the world economies. The African economy has a relatively low outer financing compared to other continents of the world, the international financing of Africa solitary(prenominal) computes to 4% of the overall masses in the emerging economies. To have a statistical overview the African external financing it only issued bonds worth of hexad million America n dollars and received only three million dollars from private reserves. This comparatively low commercialise capitalization of the world economy has protected the African banking administration from severe disabilitys. The African economy did not report any bankruptcy during the global economic crisis because the African banks could manage reasonable returns from the mortgages. at that place were authorized effects in the African economy due to the presence of foreign banks with assets in some African countries standardised Swaziland, Madagascar who wage oned major losses due to world m bingletary crisis. But the effects of world economic crisis did not affect the banks progress in Africa, the banking systems dominates the finance sector and the role compete by the pecuniary grocery stores are not of greater concern. There is a transmission check of cash borrowed from foreign banks by the government and there is less sensory faculty of off correspondence sheet resu lt to African economy which was the major reasons for the stability of African banking sector. The conversion of many capital resources into foreign assets rescue the African economy to avoid convince rate appreciation. To sum up the impact of global economic crisis did not talk any ominous effect on the banking sector. dissembleS OF THE GLOBAL stinting CRISIS ON THE monetary STRUCTURE OF AFRICA entreeThe African continent was not isolated from the pecuniary crisis, to have a qabalistic overview of the fiscal crisis there were true adverse effects on the economy because of the badly constructed financial systems. There was a reducing in the earnings in many sectors such as there was a reduction in the need of commodities and likewise reduction in the commodity prices, There were reduction in capital inflows, the major affected sector exit be the export where it depart face a reduction of $578 cardinal in the recent years out of which the crude color sector itself pa ss on account to $420 billion reduction in the earnings. This loss in the earnings will account to one 5th of the gross domestic product which is five dollar bill times the avail given to the region. There was an effect of this financial crisis in the growth of the economy and it also ontogeny poverty. To have a deeper analysis of the impact of the financial crisis in Africa permit us account at the causes of transmission of the financial crisis and its effect on the individual factors of the financial sector.Causes of financial crisis is AfricaThe major cause of the financial crisis in Africa was the reduction in the prices and amount of the export commodities because of the global financial crisis. There was a prominent reduction in the prices of commodities in the late 2008 such as oil sector set somewhat a downfall of 69% in their prices, because of the exacerbate in the exports up to 45% there was a huge loss confront by the continent, even the other commodities exclud ing oil accounted to 38% of downfall in their prices. The other major cause of the African financial crisis is the change state in the capital inflow and remittances. These accounted to ebb in the foreign exchange which ultimately guided to poverty in the continent due to the shortfall in income. The developing countries have always depended on foreign direct investment (FDI) for developing the countys economy and infrastructure. Because of the delays in the assured FDI many projects have been delayed or halted terzettoing to gradual stands. Finally there was downfall in the stocks of the foreign reserves and the reduction in the span of import cover contributed to a big pressure in the African economy unable to afford the commodities consequently causing much crisis. Let us have a broader view of the effects in the African economy due to the causes of the global economic crisis.EFFECTS OF THE fiscal CRISIS IN AFRICAEFFECT ON THE FINANCIAL MARKETSThere was a gradual impact in the financial markets because of the subprime crisis. The banking sector did not face any direct impact of the crisis but there were effects due to transmission and dependence on the external economy. There were little(a) rise in the prices of the assets and the risk premium was increased indicating there was some damage in the finance structure in the early 2008. Because of the transmission and dependency, the liquid finance markets where affected more in this region more than the developed countries and lean to the over valuing of stocks. If you have a look at the reports from countries desire Nigeria and Egypt, they confront a loss of more than half of their investment towards late 2008.Increase in the nourish of debts in the international finance markets has caused the rise in debt spreads in the African countries. In order to attract the investors the African countries like Tunisia increased their bias points. The bias points of the developing countries mainly in Africa in the international market reached to 800 points in the late 2008, these indeed inclined the risk premium which forced many countries like Kenya to give notice imploring from international financial markets and circulate the long term resources to local markets.There was a crepuscule in the foreign exchange reserves because of the depreciation of currencies, this happened due to the free fall in the commodity prices. Variations in the notes exchange rate against American dollars and Euros delivered an effect in the African economy. There was a three one-fifth of capitulation in the crap prices due to the global economic crisis. thereof African countries were one of the international reserves of copper and they had faced a chief downfall in their foreign reserves. There was active 50% depreciation of the currency of countries like Zambia against American dollars.Africa is one of the main continents with luxuriant of resources whose exports were one of the major earnings a nd helped in increasing the growth of economy. There have been exasperate in the commodity prices and volume all over the world because of the global economy crisis in the late 2008. This crisis inclined accepted effects in the African economy, there was a three fifth capitulation in the prices of the crude oil which was one of the major reserves of Africa. Some of the other major lifelike resources of Africa such as diamond, copper, flavour etc produced by dig declined by 30%, the development in the African export sector declined by 3% and there was a reduction in the GDP was about 3.5% compared to the fiscal year 2008. There were certain(prenominal) adverse effects because of the reduction in commodity prices which resulted in, reduction in the gain, low realise for high production cost resources, decline in government aids and ultimately the termination of many projects which were supported by FDI incline a huge loss to the African economy. The decline in the price of fo od commodities resulted in restructuring the government budget and agreement of payments. There are certain regions in Africa such as Burundi where the oil is imported would have an positive impact of the cut down prices there are also certain negative impacts in attracting FDI for these countries which would decrease their development.EFFECT OF LONG terminus AND MEDIUM condition TRANSACTIONSThere are certain effects on the throw of goods and go in the world due to the global economic crisis from which Africa is not isolated. According to the reports there is an decrease in the growth of trade in terms of exports and imports, there is a decrease of 5% in the growth of imports and 7% in the growth of exports. Africa will invite a loss of about 45% of its value of exports.The other measurable effect is due to the capital flow within Africa and the world, there was a decline in the FDI about 21% in the African region towards the end of 2008. This effect has only been set forth by certain countries is Africa such as Egypt while other countries have increased the FDI such as South Africa. But there was certain adverse effects of FDI in the production of natural resources which was not availed as assured by international markets due to the economic crisis. The effect of short term capital flows is there was a decline about 50% in the capital flow for emerging counties because of the reduction in the handiness of financial resources, but the African economy only suffered upto a lesser extent because of the limited bonding between the external financial markets and the African financial markets.IMPACT OF GLOBAL economic CRISIS ON submarine SAHARAN AFRICAThe major effects of the global economic crisis in the sub Saharan region were the decline in their trade, decline in the remittances, and reduction in external financing. The major line in the sub Saharan region was their trade was mostly depended on the countries suffered by economic crisis this reduced t he demand in the resources exported. The decline in the prices of the primary commodities in sub Saharan Africa accounted to adverse effects in their economies. The government revenues depend on tourist sector for development infrastructure which suffered a major hit during the crisis. The decline in world trade accounted by one portion accounted to half the share decline in the growth of the sub Saharan region. The prominent causes for the economic crisis in the sub Saharan region was the trade with United States, there was a fifty cardinal portionage decline in the trade between the two regions. The development of the sub Saharan Africa was majorly because of the trade with china, thirteen percent of this regions exports and a comparative ten percent of imports depended on the trade with China. The investors from china were behind the initiative of many projects in the Africa region funded by them. The integration between both the regions decreased after the effect of global economic crisis leading to gain ground impacton the economy of the sub Saharan Africa countries. There was a dramatic decline in the capital inflows in the sub Saharan region compared to other split of Africa. There was a 26.7% drop in the external investments which accounted to the financial crisis of the economy of many countries. The sub Saharan Africa earned reasonable government revenue from migrant remittances who suffered adverse effects because of pleonasm as an effect of the economic crisis, this reduced the government revenues in terms of tax. There were certain assurance given by the developed countries in the G8 delegation tallying regarding the increase in the funding to the African countries which was not implemented due to the economic crisis. knocked out(p) of the impact of the financial crisis on the entire African continent, Southern Africa will be affected the most. Countries like Angola will experience a dramatic downfall in their growth about 20.9%, the econ omy growth of east Africa will be affected by 2%, the Sub Saharan region will have difficulties in fiscal balancing. There will be huge responsibilities for the government to structure their budget to meet the fond needs of the people in Africa. These are the financial issues see by Africa during the global Economic Crisis.IMPACT OF GLOBAL ECONOMIC CRISIS ON REMITTANCES IN AFRICAThe prominent impact of the global economic crisis in Africa was on remittances which indeed resulted in severe harm to the African Economy. Before the economic crisis remittances was one of the way of lifes of earnings in the African economy. Remittances helped in the developing the infrastructure of African Economy and was one of the major sources of external financing.. The remittances of natural resources exporting countries were affected the most, since Africa is one of the prominent exporters of natural resources they faced badly affected by the economic crisis. Remittances in Africa where expect ed to decline about six percent which could damage the economy of remittance leechlike countries. Certain countries in Africa were expecting external financing aid to reduce the decline in remittances. The major regions having effect on remittances are the brotherhood African regions whose economy depends on it.CAUSES AND EFFECTS OF drop IN REMMITANCESThe remittances in the African economy is prominently transferred in informal terms such as friends and relatives, the formal mode of transmission of remittances in Africa is through the banking system. The major remittance in Africa is the workers remittance, the remittance GDP ratio for many countries in the African region was at an average of nine percent . these above calculations explains the contribution of remittances in the growth of African economy. The African economy dependence on remittances was comparatively low to other parts of the world. Another spread of remittances was in terms of migrants, Africa countries face 2 0% of their migration within their continent. Because of the migrants to other continents such as europium and America which were the worst affected continents of the global economic crisis there was a decline in the remittances. North Africa region was affected the most because they had many migrants in Europe and affectionateness East which has faced adverse negative impacts in their economy. The countries like Morocco, Tunisia and Algeria had a decline of about seven to nine percent in their remittances because of the larger proportion of migrants from their country in Europe regions affected by the Global economic crisis. This decline in the remittances has produced an impact on the government revenues in Africa, and also affected fiscal structure of the economy.Because of the global economic crisis which leads to the decline of process in the manufacturing industries accounted to job cuts, this situation lead to the decline in remittances. The decline in remittances damaged t he stop earnings in the households which caused poverty and increased the infant mortality rate. There were some positive impacts due to the increase in remittances in certain regions of Africa such as Kenya because of the decline in the import commodity prices. The major effects of decline in remittances are it decreases the governments revenue in terms of tax. The decline in the revenue can affect the GDP of the economy, and effects on negative growth of GDP increases the IMR. many an(prenominal) countries in Africa such as Ethiopia are about to lose 0.2 to 0.3 percent of their GDP growth. The African country to be majorly affected by the decline in remittances is Morocco, where it faced two to three percent of decline in their GDP growth. The countries in Africa which had immense migration transfer to Europe faced immense damage in their GDP. The ultimate effect on decline in remittances is, redundancy of migrants which will affect their household incomes resulting in poverty. To sum up the ultimate cause of decline in remittances was redundancy of migrants and nationals, decline in the external financing because of economic crisis. Finally the effects of redundancy are decline in house hold incomes, unemployment, and decline in government revenues.THE IMPACT OF GLOBAL ECONOMIC CRISIS ON THE AFRICAN deliveranceEFFECTS OF GLOBAL ECONOMIC CRISIS IN ECONOMY FACTORSAfrica encountered a forceful change in their economy during the economic crisis in the world. Before the economic crisis the African oil exporting countries gained plenty of foreign exchange which they used for projects to develop the infrastructure and repay their debt. During the global economic crisis there was a 60% downfall in the oil prices which had a bad effect on their GDP. The GDP of African countries exporting oil were facing a decline of 5% which had adverse effects on their economy, even oil importers in Africa will face a decline of 2% of their GDP and all these accounted to the de cline in the oil revenue. There were several(prenominal) regions in Africa which preserve a positive growth in their GDP despite the decline in the prices of the commodities such as North Africa, Morocco and certain other countries. There will be a total unbalance in the economy of some countries in Africa because of the decline in the exports sector more than the imports, they will face a bitstock of downfall in a countrys economic structure. Hence the countries will face difficulties to restructure the economy and there would be a reduction in the consumption because of the downfall in revenue.The other effects on the economy of Africa is inflation, this would be a serious problem encountered by the economy of many African countries. The inflation would raise about three percent in the African region because of the decline in the revenue, but the positive impact of the crisis is that there would be a reduction in the commodity prices which might take the pressure on inflation fo r some reasonable time. The countries which import oil will have a positive impact of reduction in the inflation rate in their economy, but it is the opposite for the countries exporting oil and will face an increase in the rate of inflation. There is certain decline in growth prospects of Africa as an impact of the global economic crisis, despite of not being directly affected by the population financial crisis because of the low bonding with external economies, there was some decline in the growth prospects in the African region. The oil exporters in Africa faced a decline of three percent in growth while the oil importing countries faced a decline of one percent in growth. development countries in Africa will face difficulties due to the reduction in the demand of their goods, these effects could halt the Africas development into a superior power.EFFECTS OF GLOBAL ECONOMIC CRISIS ON INDUSTRIESThe other pigment sectors which had a major impact due to the crisis was the tourism s ector, they suffered major damages during the global economic crisis. The revenue in the tourism sector was affected badly in the African region making the functions of the sector miserable. There was a decline in the number of arrivals to the countries like Kenya in Africa. The decline in the arrivals accounted to a decline in the profit for airways. The decline in tourism which is one of the governments revenue from the service sector faced many negative impacts, there was considerable amount of loss due to cancellations. Countries like Egypt and Kenya experienced ten to thirty percent fall in their revenue. There was major losses on the mining sector due to the economic crisis, many projects in the African region were change or postponed because of the paucity of investments. For instance the decline in the copper prices had halted many projects in the African region in countries like Zambia, the leading copper mining industries faced one fourth decline in their supplier contra cts. Many mining projects were terminated because of the falling copper prices. Other natural resources such as cobalt also faced reduction in their prices which halted operations in certain projects in countries like The Democratic country of Congo. There were many employees been laid off because of the termination of the projects, the Democratic Republic of Congo alone recorded two carbon chiliad employees dropped. The decline in the price of other natural resources have caused adverse effects on budget, countries like Gabon in Africa experienced negative impacts. The reduction in the price of iron, atomic number 92 and bauxite which are one of the major exports in many countries experienced decline in the revenue. Since Africa has been one of the major continent with an abundant wealth of natural resources and the fall in the price of natural resources has made Africa suffer severely which indeed resulted in economic crisis. The textile industry was also not isolated from this economic crisis. Because of the decrease in the demand of textile goods from the African region several industries had to face immediate closure. The countries in Africa were facing immense pressure because of the unemployment of people. The termination of an industry at an average caused reduction of four thousand jobs. There was huge pressure from the labor unions to the government regarding unemployment. The impact on the African manufacturing industry by the global economic crisis has resulted in restructuring of the economy and experience serious financial crisis.Finally the global economic crisis has affected the African economy in several sectors. According to reports two third countries of the African continent are affected by the downfall in the price of natural resources. The major decline of the African economy has caused by one ultimate factor which is the reduction in the commodities. The other minor factor like the decline in the foreign investment is also the cause o f African economy crisis.RECOMMENDATIONSThere are certain recommendations suggested as a consultant of the African union in order to increase the growth of the economy. To start with the recommendation process, it would highlight facts on four features which are observation on the financial structure, reduction of crisis impact on health, revival of the policies in the economic structure and derivative such as bail out policies. We shall discuss the impact of these recommendations on the African System.The major recommendation in the health sector is the legal community of the effects of the economic crisis that has not fully affected the house hold regions. Hence requisite orthodox methods should be taken to take caveat of the adverse effects of the crisis. There moldiness be immutable check on the negative effects in the health sector and take necessary actions. chiefly the IMR should be taken care of to a greater extent. Monitoring the growth of infants could help the deve lopment in the health sector. There should be constant negotiation within the health organizations and the population. There should be a drastic increase in the investments in the health sector. The African governments should restructure their fiscal budgets for more allowances to the health sector. Most of the developed countries spent 0.7% of their GDP in the health sector for a split up ample environment. The African economy should make better use of the funds provided by the orb Bank for utile health climate. There should be a constant check in the accessible resources in the health sector and efficient usage of the available resources is recommended. There are several measuring stick concepts in the modern world to measure the expenditure, performance and future projects of a health sector. A better organization can result in better performance in the health sector. The current economic crisis has helped Africa have a view on the current health structure and decide suita ble remedies to overcome this deficiency. The crisis has helped Africa have a check on the IMR, poverty, healthy environments, and causes of the diseases. These checks have recommended Africa to invest on certain suitable regions such as food, medicines etc in the health sector and decide what are the gradual steps to be taken to stir up against deaths. The use of health care vouchers is proved telling in many parts of the world which should be concerned by the African economy. There must be necessary action taken in the organizing and implementing of health programs to perform against the negative impacts. Taking severe actions in the prevention of environmental harms that creates health hazards could prove profitable. The communities in each society should take care of these remedies. The crisis has urged the recommendation of implementation of external aids as soon as possible, governments should derive suitable policies for attracting external financing in the health sector. T here should be a bonding between the donors in the health sector and the health organizations. There are several African developing countries maintaining this bond. However the suitable remedies cannot assure the protection of the health sector in the future because it is difficult to estimate such reactions. To summarize the integration between the government and the beneficiary partners can always develop the growth of health sector in Africa.There are certain suitable recommendations on the financial structure of Africa for suitable developments. The initial recommendation would be that there should be a salutary network of communication between the African finance ministry and senior banking officials to have a check at the financial breakdown of banks, these actions can prevent the bankruptcy of banks. This action could promote the operations of the bank and increase the African regional process to emphasize the growth of small countries taking gain over larger countries. T here must be a day to day surveillance of the finance markets and the changes on exchange rates and stock prices. This could increase the growth of African economy by taking suitable necessary actions to prevent the adverse effects. There could be a design such as when the numbers of exchange rates and stock prices are adverse, defensive actions are taken by the necessary authorities. This could increase the awareness of the government to perform recovery operations. Because of the economy crisis the banks might face a morphologic damage because of the shortage in the liquidity of cash flow. Hence necessary actions by the government on the banks can get market confidence of the customers. This action could indeed trigger the operations of industries by loaning money and operations in household by lending credit, hence a economic balance is created. The African governments can generate these funds with the help of foreign reserves such as bonds in capital markets. The African econ omy can reconstruct their finance structure with the help of international finance organizations. So in order to balance the African economy, frequent check on banks and surveillance of the market is necessary.There are certain long term operations which helps the Africa governments in maintaining economic balance. To maintain balance in the economy regulative policies should be issued by the government on the transparency of operations performed by the banks and their finance system should be supervised regularly. In order to increase boost liquidity there should be regulatory operations performed by the African regional organizations. The African banking structure must be able to meet the capital demands, hence regulatory policies should be improved. The African economy must increase their growth such as their banks start to perform FDI operations in other regions. The network can be further strengthened with the help of legal operations, the legal binding operations can lead to development and growth of the financial structure of the banking sector. The bonding between the legal system and the banking system can result in the growth of African economies. There can be necessary actions performed to increase the disputation between banks for better performance. Hence with the help of these recommendations the African economies can experience development in the banking sectors. An effective incentive shunning should be announced for corporate to decrease the invoImpact of the Economic Crisis on Countries in AfricaImpact of the Economic Crisis on Countries in AfricaThe aim of this dissertation is to analyze the impact of the global economic crisis in Africa and provide suitable suggestions as a consultant of the African UnionThe African economy was proceeding towards a splendid reasonable growth towards the beginning of the year 2008 even though many countries in the world were caught between the subprime crises. The African continent was one of the worlds best continent with abundant of resources and gradually developing and recording a reasonable growth in their GDP, before the global economic crisis affected the development of this region. Africa was a frontier in the production of resources with recording a above average growth, experts predicted the present growth rate would lead to the development of African economy as a superior power in the future. However the present decline in the prices of export commodities has resulted in the decline in the government revenues which has affected the GDP of Africa. The major contributors to the development of African economy were the need for resource materials, the reasonable development of china and the increase in the inflow of capital and factors of macroeconomic rectifications. There was an also major contribution from the migrant remittances which contributed to the reasonable earnings in the household and increase the government revenues in terms of tax. There were many speculations expecting the best out of the potential of Africa in order to produce resources for the growth of the continent and reduce poverty. But there was a close indication of the downfall in the economy in the early 2007 which ultimately was encountered by the African economy in the late 2008. In the world economy when many developed countries were facing recession and crisis, there was severe alteration towards the growth scenario in Africa because of the stagnancy. The majority of the growth contributors of Africa were affected by this crisis. The development in chinas economy declined gradually and there was a downfall in the need for resources and their prices were declining to an extent. Because of the reasonable GDP there was no pressure on the concern of inflation. Certain assurance of added aids was not implemented yet and there was a reduction in the capital inflow. Since the effects were taken care of there were no immediate reactions in Africa due to the economic crisis. Howeve r the reduction in the external aid which was not implemented as assured by many developed countries in the G20 started affecting the health sector to a greater extent.To have a detail description of African economic crisis we would discuss the major sectors which have been adversely affected due to recession. To start with there would be an impact in the mining sector, impact in banking sector does not have any major adverse effects, consequences faced by the effects of crisis in finance sector including the commodity markets and international exchange rates, adverse effects on remittances and capital inflows in the trade sectors with the addition of FDI. There were other sectors too such as tourism, manufacturing which had experienced an impact due to the global economic crisis. The under development of the banking sector in Africa is another major concern because the banking sector has failed to derive structures that benefits the economy. The increase in the banking policies wit h external integration could generate the flow of capital which was not implemented in Africa There were certain positive impacts for the countries importing commodities in Africa, they were benefited a lot from reducing the expenditures. On the entire economy of Africa the sub Saharan region was the most to be affected by the crisis. The ultimate effects of the global economic crisis were the increase in the infant mortality rate, increase in poverty, pressure on government to restructure the fiscal budget, and unemployment. However since there was growth in African economy it could face the immense pressure of Economic crisis. The major countries to experience severe effects by the economic crisis are Nigeria, South Africa, Kenya, Zambia, Egypt which are mostly the sub Saharan Africa regions.The impact of the economic crisis in Africa made many underdeveloped countries to receive international implications on its economy to develop their infrastructure. The international business strategies suitable recovery facts have proved more beneficiaries in the world economies. The suggestion of suitable changes in the physical structure could help in the faster recovery of the economic crisisIMPACTS OF THE GLOBAL ECONOMIC CRISIS ON BANKINGThe global economic crisis effect in the major developed countries was on the banking sector where many banking corporate collapsed during the crisis. But the African economy did not have any adverse effects on the banking sector because of their less extent of bonding with the world economies. The African economy has a comparatively low external financing compared to other continents of the world, the external financing of Africa only accounts to 4% of the overall volume in the emerging economies. To have a statistical overview the African external financing it only issued bonds worth of six million American dollars and received only three million dollars from private reserves. This comparatively low market capitalization of the wo rld economy has protected the African banking system from severe damages. The African economy did not report any bankruptcy during the global economic crisis because the African banks could manage reasonable returns from the mortgages. There were certain effects in the African economy due to the presence of foreign banks with assets in some African countries like Swaziland, Madagascar who suffered major losses due to world financial crisis. But the effects of world economic crisis did not affect the banks progress in Africa, the banking systems dominates the finance sector and the role played by the financial markets are not of greater concern. There is a transmission check of funds borrowed from foreign banks by the government and there is less awareness of off balance sheet procedure to African economy which was the major reasons for the stability of African banking sector. The conversion of many capital resources into foreign assets saved the African economy to avoid exchange rat e appreciation. To sum up the impact of global economic crisis did not deliver any adverse effect on the banking sector.IMPACTS OF THE GLOBAL ECONOMIC CRISIS ON THE FINANCIAL STRUCTURE OF AFRICAINTRODUCTIONThe African continent was not isolated from the financial crisis, to have a deep overview of the financial crisis there were certain adverse effects on the economy because of the badly constructed financial systems. There was a reduction in the earnings in many sectors such as there was a reduction in the need of commodities and also reduction in the commodity prices, There were reduction in capital inflows, the major affected sector will be the export where it will face a reduction of $578 billion in the recent years out of which the oil sector itself will account to $420 billion reduction in the earnings. This loss in the earnings will account to one fifth of the GDP which is five times the avail given to the region. There was an effect of this financial crisis in the growth of the economy and it also increased poverty. To have a deeper analysis of the impact of the financial crisis in Africa let us look at the causes of transmission of the financial crisis and its effect on the individual factors of the financial sector.Causes of financial crisis is AfricaThe major cause of the financial crisis in Africa was the reduction in the prices and amount of the export commodities because of the global financial crisis. There was a prominent reduction in the prices of commodities in the late 2008 such as oil sector faced a downfall of 69% in their prices, because of the decline in the exports up to 45% there was a huge loss faced by the continent, even the other commodities excluding oil accounted to 38% of downfall in their prices. The other major cause of the African financial crisis is the decline in the capital inflow and remittances. These accounted to decline in the foreign exchange which ultimately guided to poverty in the continent due to the shortage in i ncome. The developing countries have always depended on foreign direct investment (FDI) for developing the countys economy and infrastructure. Because of the delays in the assured FDI many projects have been delayed or halted leading to gradual loses. Finally there was downfall in the stocks of the foreign reserves and the reduction in the span of import cover contributed to a larger pressure in the African economy unable to afford the commodities hence causing more crisis. Let us have a broader view of the effects in the African economy due to the causes of the global economic crisis.EFFECTS OF THE FINANCIAL CRISIS IN AFRICAEFFECT ON THE FINANCIAL MARKETSThere was a gradual impact in the financial markets because of the subprime crisis. The banking sector did not face any direct impact of the crisis but there were effects due to transmission and dependence on the external economy. There were slight rise in the prices of the assets and the risk premium was increased indicating there was some damage in the finance structure in the early 2008. Because of the transmission and dependency, the liquid finance markets where affected more in this region more than the developed countries and inclined to the over valuing of stocks. If you have a look at the reports from countries like Nigeria and Egypt, they faced a loss of more than half of their investment towards late 2008.Increase in the value of debts in the international finance markets has caused the rise in debt spreads in the African countries. In order to attract the investors the African countries like Tunisia increased their bias points. The bias points of the developing countries mainly in Africa in the international market reached to 800 points in the late 2008, these indeed inclined the risk premium which forced many countries like Kenya to stop imploring from international financial markets and circulate the long term resources to local markets.There was a decline in the foreign exchange reserves because of the depreciation of currencies, this happened due to the decline in the commodity prices. Variations in the currency exchange rate against American dollars and Euros delivered an effect in the African economy. There was a three fifth of drop in the copper prices due to the global economic crisis. Hence African countries were one of the international reserves of copper and they had faced a chief downfall in their foreign reserves. There was about 50% depreciation of the currency of countries like Zambia against American dollars.Africa is one of the main continents with abundant of resources whose exports were one of the major earnings and helped in increasing the growth of economy. There have been decline in the commodity prices and volume all over the world because of the global economy crisis in the late 2008. This crisis inclined certain effects in the African economy, there was a three fifth decline in the prices of the crude oil which was one of the major reserves of Africa. Some of the other major natural resources of Africa such as diamond, copper, timber etc produced by mining declined by 30%, the development in the African export sector declined by 3% and there was a reduction in the GDP was about 3.5% compared to the fiscal year 2008. There were certain adverse effects because of the reduction in commodity prices which resulted in, reduction in the gain, low profit for high production cost resources, decline in government aids and finally the termination of many projects which were supported by FDI incline a huge loss to the African economy. The decline in the price of food commodities resulted in restructuring the government budget and balance of payments. There are certain regions in Africa such as Burundi where the oil is imported would have an positive impact of the reduced prices there are also certain negative impacts in attracting FDI for these countries which would decrease their development.EFFECT OF LONG TERM AND MEDIUM TERM TRANSACTIONS There are certain effects on the trade of goods and services in the world due to the global economic crisis from which Africa is not isolated. According to the reports there is an decrease in the growth of trade in terms of exports and imports, there is a decrease of 5% in the growth of imports and 7% in the growth of exports. Africa will experience a loss of about 45% of its value of exports.The other important effect is due to the capital flow within Africa and the world, there was a decline in the FDI about 21% in the African region towards the end of 2008. This effect has only been described by certain countries is Africa such as Egypt while other countries have increased the FDI such as South Africa. But there was certain adverse effects of FDI in the production of natural resources which was not availed as assured by international markets due to the economic crisis. The effect of short term capital flows is there was a decline about 50% in the capital flow for emerging countie s because of the reduction in the availability of financial resources, but the African economy only suffered upto a lesser extent because of the limited bonding between the external financial markets and the African financial markets.IMPACT OF GLOBAL ECONOMIC CRISIS ON SUB SAHARAN AFRICAThe major effects of the global economic crisis in the sub Saharan region were the decline in their trade, decline in the remittances, and reduction in external financing. The major problem in the sub Saharan region was their trade was mostly depended on the countries suffered by economic crisis this reduced the demand in the resources exported. The decline in the prices of the primary commodities in sub Saharan Africa accounted to adverse effects in their economies. The government revenues depend on tourist sector for development infrastructure which suffered a major hit during the crisis. The decline in world trade accounted by one percent accounted to half the percent decline in the growth of the sub Saharan region. The prominent causes for the economic crisis in the sub Saharan region was the trade with United States, there was a fifty seven percent decline in the trade between the two regions. The development of the sub Saharan Africa was majorly because of the trade with china, thirteen percent of this regions exports and a comparative ten percent of imports depended on the trade with China. The investors from china were behind the initiative of many projects in the Africa region funded by them. The integration between both the regions decreased after the effect of global economic crisis leading to further impacton the economy of the sub Saharan Africa countries. There was a dramatic decline in the capital inflows in the sub Saharan region compared to other parts of Africa. There was a 26.7% drop in the external investments which accounted to the financial crisis of the economy of many countries. The sub Saharan Africa earned reasonable government revenue from migrant rem ittances who suffered adverse effects because of redundancy as an effect of the economic crisis, this reduced the government revenues in terms of tax. There were certain assurance given by the developed countries in the G8 committee meeting regarding the increase in the funding to the African countries which was not implemented due to the economic crisis.Out of the impact of the financial crisis on the entire African continent, Southern Africa will be affected the most. Countries like Angola will experience a dramatic downfall in their growth about 20.9%, the economy growth of east Africa will be affected by 2%, the Sub Saharan region will have difficulties in fiscal balancing. There will be huge responsibilities for the government to structure their budget to meet the social needs of the people in Africa. These are the financial issues experienced by Africa during the Global Economic Crisis.IMPACT OF GLOBAL ECONOMIC CRISIS ON REMITTANCES IN AFRICAThe prominent impact of the global economic crisis in Africa was on remittances which indeed resulted in severe harm to the African Economy. Before the economic crisis remittances was one of the modes of earnings in the African economy. Remittances helped in the developing the infrastructure of African Economy and was one of the major sources of external financing.. The remittances of natural resources exporting countries were affected the most, since Africa is one of the prominent exporters of natural resources they faced badly affected by the economic crisis. Remittances in Africa where expected to decline about six percent which could damage the economy of remittance dependent countries. Certain countries in Africa were expecting external financing aid to overcome the decline in remittances. The major regions having effect on remittances are the North African regions whose economy depends on it.CAUSES AND EFFECTS OF DECLINE IN REMMITANCESThe remittances in the African economy is prominently transferred in informal terms such as friends and relatives, the formal mode of transmission of remittances in Africa is through the banking system. The major remittance in Africa is the workers remittance, the remittance GDP ratio for many countries in the African region was at an average of nine percent . these above calculations explains the contribution of remittances in the growth of African economy. The African economy dependence on remittances was comparatively low to other parts of the world. Another spread of remittances was in terms of migrants, Africa countries face 20% of their migration within their continent. Because of the migrants to other continents such as Europe and America which were the worst affected continents of the global economic crisis there was a decline in the remittances. North Africa region was affected the most because they had many migrants in Europe and Middle East which has faced adverse negative impacts in their economy. The countries like Morocco, Tunisia and Algeria h ad a decline of about seven to nine percent in their remittances because of the larger proportion of migrants from their country in Europe regions affected by the Global economic crisis. This decline in the remittances has produced an impact on the government revenues in Africa, and also affected fiscal structure of the economy.Because of the global economic crisis which leads to the decline of process in the manufacturing industries accounted to job cuts, this situation lead to the decline in remittances. The decline in remittances damaged the better earnings in the households which caused poverty and increased the infant mortality rate. There were some positive impacts due to the increase in remittances in certain regions of Africa such as Kenya because of the decline in the import commodity prices. The major effects of decline in remittances are it decreases the governments revenue in terms of tax. The decline in the revenue can affect the GDP of the economy, and effects on negat ive growth of GDP increases the IMR.Many countries in Africa such as Ethiopia are about to lose 0.2 to 0.3 percent of their GDP growth. The African country to be majorly affected by the decline in remittances is Morocco, where it faced two to three percent of decline in their GDP growth. The countries in Africa which had immense migration transfer to Europe faced immense damage in their GDP. The ultimate effect on decline in remittances is, redundancy of migrants which will affect their household incomes resulting in poverty. To sum up the ultimate cause of decline in remittances was redundancy of migrants and nationals, decline in the external financing because of economic crisis. Finally the effects of redundancy are decline in house hold incomes, unemployment, and decline in government revenues.THE IMPACT OF GLOBAL ECONOMIC CRISIS ON THE AFRICAN ECONOMYEFFECTS OF GLOBAL ECONOMIC CRISIS IN ECONOMY FACTORSAfrica encountered a drastic change in their economy during the economic cris is in the world. Before the economic crisis the African oil exporting countries gained plenty of foreign exchange which they used for projects to develop the infrastructure and repay their debt. During the global economic crisis there was a 60% downfall in the oil prices which had a bad effect on their GDP. The GDP of African countries exporting oil were facing a decline of 5% which had adverse effects on their economy, even oil importers in Africa will face a decline of 2% of their GDP and all these accounted to the decline in the oil revenue. There were several regions in Africa which recorded a positive growth in their GDP despite the decline in the prices of the commodities such as North Africa, Morocco and certain other countries. There will be a total unbalance in the economy of some countries in Africa because of the decline in the exports sector more than the imports, they will face a couple of downfall in a countrys economic structure. Hence the countries will face difficul ties to restructure the economy and there would be a reduction in the consumption because of the downfall in revenue.The other effects on the economy of Africa is inflation, this would be a serious problem encountered by the economy of many African countries. The inflation would raise about three percent in the African region because of the decline in the revenue, but the positive impact of the crisis is that there would be a reduction in the commodity prices which might take the pressure on inflation for some reasonable time. The countries which import oil will have a positive impact of reduction in the inflation rate in their economy, but it is the opposite for the countries exporting oil and will face an increase in the rate of inflation. There is certain decline in growth prospects of Africa as an impact of the global economic crisis, despite of not being directly affected by theWorld financial crisis because of the low bonding with external economies, there was some decline in the growth prospects in the African region. The oil exporters in Africa faced a decline of three percent in growth while the oil importing countries faced a decline of one percent in growth. Developing countries in Africa will face difficulties due to the reduction in the demand of their goods, these effects could halt the Africas development into a superior power.EFFECTS OF GLOBAL ECONOMIC CRISIS ON INDUSTRIESThe other key sectors which had a major impact due to the crisis was the tourism sector, they suffered major damages during the global economic crisis. The revenue in the tourism sector was affected badly in the African region making the functions of the sector miserable. There was a decline in the number of arrivals to the countries like Kenya in Africa. The decline in the arrivals accounted to a decline in the profit for airways. The decline in tourism which is one of the governments revenue from the service sector faced many negative impacts, there was considerable amount o f loss due to cancellations. Countries like Egypt and Kenya experienced ten to thirty percent fall in their revenue. There was major losses on the mining sector due to the economic crisis, many projects in the African region were terminated or postponed because of the shortage of investments. For instance the decline in the copper prices had halted many projects in the African region in countries like Zambia, the leading copper mining industries faced one fourth decline in their supplier contracts. Many mining projects were terminated because of the falling copper prices. Other natural resources such as cobalt also faced reduction in their prices which halted operations in certain projects in countries like The Democratic Republic of Congo. There were many employees been laid off because of the termination of the projects, the Democratic Republic of Congo alone recorded two hundred thousand employees dropped. The decline in the price of other natural resources have caused adverse ef fects on budget, countries like Gabon in Africa experienced negative impacts. The reduction in the price of iron, uranium and bauxite which are one of the major exports in many countries experienced decline in the revenue. Since Africa has been one of the major continent with an abundant wealth of natural resources and the fall in the price of natural resources has made Africa suffer severely which indeed resulted in economic crisis. The textile industry was also not isolated from this economic crisis. Because of the decrease in the demand of textile goods from the African region several industries had to face immediate closure. The countries in Africa were facing immense pressure because of the unemployment of people. The termination of an industry at an average caused reduction of four thousand jobs. There was huge pressure from the labor unions to the government regarding unemployment. The impact on the African manufacturing industry by the global economic crisis has resulted in restructuring of the economy and experience serious financial crisis.Finally the global economic crisis has affected the African economy in several sectors. According to reports two third countries of the African continent are affected by the downfall in the price of natural resources. The major decline of the African economy has caused by one ultimate factor which is the reduction in the commodities. The other minor factor like the decline in the foreign investment is also the cause of African economy crisis.RECOMMENDATIONSThere are certain recommendations suggested as a consultant of the African union in order to increase the growth of the economy. To start with the recommendation process, it would highlight facts on four features which are observation on the financial structure, reduction of crisis impact on health, revival of the policies in the economic structure and derivative such as bail out policies. We shall discuss the impact of these recommendations on the African System .The major recommendation in the health sector is the prevention of the effects of the economic crisis that has not fully affected the house hold regions. Hence necessary conservative methods should be taken to take care of the adverse effects of the crisis. There must be constant check on the negative effects in the health sector and take necessary actions. Mainly the IMR should be taken care of to a greater extent. Monitoring the growth of infants could help the development in the health sector. There should be constant negotiation within the health organizations and the population. There should be a drastic increase in the investments in the health sector. The African governments should restructure their fiscal budgets for more allowances to the health sector. Most of the developed countries spent 0.7% of their GDP in the health sector for a better healthy environment. The African economy should make better use of the funds provided by the World Bank for effective health climate. There should be a constant check in the available resources in the health sector and efficient usage of the available resources is recommended. There are several measuring concepts in the current world to measure the expenditure, performance and future projects of a health sector. A better organization can result in better performance in the health sector. The current economic crisis has helped Africa have a view on the current health structure and decide suitable remedies to overcome this deficiency. The crisis has helped Africa have a check on the IMR, poverty, healthy environments, and causes of the diseases. These checks have recommended Africa to invest on certain suitable regions such as food, medicines etc in the health sector and decide what are the gradual steps to be taken to fight against deaths. The use of health care vouchers is proved effective in many parts of the world which should be concerned by the African economy. There must be necessary action taken in the orga nizing and implementing of health programs to perform against the negative impacts. Taking severe actions in the prevention of environmental harms that creates health hazards could prove profitable. The communities in each society should take care of these remedies. The crisis has urged the recommendation of implementation of external aids as soon as possible, governments should derive suitable policies for attracting external financing in the health sector. There should be a bonding between the donors in the health sector and the health organizations. There are several African developing countries maintaining this bond. However the suitable remedies cannot assure the protection of the health sector in the future because it is difficult to estimate such reactions. To summarize the integration between the government and the beneficiary partners can always develop the growth of health sector in Africa.There are certain suitable recommendations on the financial structure of Africa for suitable developments. The initial recommendation would be that there should be a strong network of communication between the African finance ministry and senior banking officials to have a check at the financial breakdown of banks, these actions can prevent the bankruptcy of banks. This action could promote the operations of the bank and increase the African regional process to emphasize the growth of small countries taking advantage over larger countries. There must be a day to day surveillance of the finance markets and the changes on exchange rates and stock prices. This could increase the growth of African economy by taking suitable necessary actions to prevent the adverse effects. There could be a design such as when the numbers of exchange rates and stock prices are adverse, defensive actions are taken by the necessary authorities. This could increase the awareness of the government to perform recovery operations. Because of the economy crisis the banks might face a structura l damage because of the shortage in the liquidity of cash flow. Hence necessary actions by the government on the banks can regain market confidence of the customers. This action could indeed trigger the operations of industries by lending money and operations in household by lending credit, hence a economic balance is created. The African governments can generate these funds with the help of foreign reserves such as bonds in capital markets. The African economy can reconstruct their finance structure with the help of international finance organizations. So in order to balance the African economy, frequent check on banks and surveillance of the market is necessary.There are certain long term operations which helps the Africa governments in maintaining economic balance. To maintain balance in the economy regulatory policies should be issued by the government on the transparency of operations performed by the banks and their finance system should be supervised regularly. In order to in crease further liquidity there should be regulatory operations performed by the African regional organizations. The African banking structure must be able to meet the capital demands, hence regulatory policies should be improved. The African economy must increase their growth such as their banks start to perform FDI operations in other regions. The network can be further strengthened with the help of legal operations, the legal binding operations can lead to development and growth of the financial structure of the banking sector. The bonding between the legal system and the banking system can result in the growth of African economies. There can be necessary actions performed to increase the competition between banks for better performance. Hence with the help of these recommendations the African economies can experience development in the banking sectors. An effective incentive scheme should be announced for corporate to decrease the invo