Financial Crisis-Interview with of Mr. Taoufik Rajhi, Assistant to the ADB Chief Economist-«AfDB Conducts Daily Monitoring of Major Financial Crisis Indicators»

19/11/2008
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In order to closely monitor the global financial crisis, the African Development Bank Group is providing daily updated statistical tools to the public. These monitoring tools, designed and updated by the AfDB Chief Economist’s Complex, comprise the following indicators: financial market analysis; exchange rates; commodity prices. The 31 July 2008 is the reference date for the three indicators. Mr. Taoufik Rajhi, Assistant to the AfDB Chief Economist, sheds more light on this.

Question: The African Development Bank is an innovator with regard to global crisis monitoring. What tools have you designed to monitor this crisis?

Answer: I believe there are two main elements that have been introduced: firstly, the crisis monitoring group appointed by the AfDB President, Donald Kaberuka, which meets regularly and monitors trends on the financial market, exchange rates and all other aspects that are globally and specifically relevant to Africa. The second element comes to support the efforts of this working group: it is a tool for the daily monitoring of financial markets, commodity prices and exchange rates across the world as well as on the continent.

Question: What is the purpose of such indicators?

Answer: They constitute a daily bulletin; it is very important and also very rare to have this type of reporting and regular monitoring. As a development bank, we can not go much further than that. Concerning financial markets, we regularly monitor major African markets: Côte d’Ivoire, Egypt, Morocco, Kenya, Mauritius, Nigeria, South Africa and Tunisia. We also monitor markets in the Americas, such as in Canada, the United States, Brazil or Argentina. Our survey also includes emerging markets such as Asian and Chinese markets, and, of course, certain European markets. Regarding exchange rates, we cover all  African currencies, analyzing them in relation to the Dollar, as well as certain major currencies like the Euro. 

However, that is not enough to effectively monitor the crisis: commodity prices can affect American growth and African growth, which is why we have set up a system to monitor leading export commodities such as cotton, coffee, cocoa, gold, silver, oil and platinum.

Our monitoring tool also contains graphics, allowing for a quick understanding of American, African, Asian and European markets trends.

The reference date used in assessing the trends is  July 31, 2008.

Question: What is the trend on African markets?

Answer: It is a downward trend - you will not be surprised to hear that- in line with what is happening in the USA, mainly concerning key indices such the Dow Jones average, which has declined by 27% since  July 31 and, more so, the key technology stock index, the NASDAQ, which has fallen by 37%. Africa has followed this downturn. While it is generalized, the trend, in fact, differs from country to country. There are countries, such as Egypt, that have been hard hit by the financial market contagion. This also applies to South Africa, which has declined by 31%. Others have been affected to lesser extents, like Tunisia, which has recorded a decline of only 3%. 

Question: Regarding exchange rates, what is the trend?

Answer: African currencies fluctuations reflect that the Euro vis a vis the Dollar and vice versa. We are noticing the appreciation of the dollar and a depreciation of the Euro. Compared to the dollar, the Euro has fallen by 19% and this has resulted in a decline of all major African currencies vis a vis the dollar. There are enormous differences from one country to another: some show very steep trends, while others such as Algeria are experiencing rather slight declines.

Question: Lastly, what about the commodity markets?

Answer: Amongst the key levers of growth in Africa, this is the most significant for African countries. For example, oil has, since  July 31, 2008, declined by 57%. This reflects the effect of the financial crisis on key African economic growth levers. All the other products have suffered similar declines: cotton has fallen by 15% from July 2008, cocoa by 31 %, coffee 18 %. Most commodities have suffered substantial declines, which is impacting African economies in terms of  balances of payment and budgetary deficits.

Question: Where can one find this information?

Answer: All this information is published and it is available at


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Speaker

Name: Taoufik Rajhi Title: Assistant to the ADB Chief Economist