International bank and securities financing in Africa

Abstract

Improvements in Africa’s macroeconomic performance and prospects have in recent years led to a modest turnaround in private capital flows to the continent (Graph 1). Privatisation, financial sector reforms and macroeconomic stabilisation programmes contributed to an increase in international investment beginning in the mid-1990s. Foreign direct investment accounted for the bulk of the increase, rising to $9 billion in 1999 from less than $2 billion annually during the first half of the 1990s. Securities financing also picked up, exceeding $1 billion in most years since 1994. Bank lending has yet to turn positive, but net repayments to banks in the BIS reporting area slowed substantially in the late 1990s.