The direct financial effects of the global financial crisis have so far been limited due to Zambia’s reliance in domestic funding and limited exposure to external credit lines. However, the central bank has increased interest rates sharply as a result of portfolio outflows.
Agriculture and Rural Development
At a recent AERC research workshop in Nairobi, I made a comment about African governments’ not spending enough money on public goods, and spending too much on private goods such as fertilizers. The comment seemed to have struck a nerve. Several people in the audience pointed out that, in Malawi, fertilizer subsidies have increased cereal production, so government spending on fertilizers was not such a bad thing. Going beyond the general arguments that these fertilizer subsidies often don’t reach farmers (they’re
I gave the Jerome A.Chazen lecture at Columbia Business School the other day. The gist of my talk was that:
There is widespread consensus that financial development is critical to economic growth, globally, and in Africa. Yet Mozambique, a country with very low levels of financial development (in a recent survey, only 13 percent of firms had obtained credit from the banking sector, rural credit is almost nonexistent), registered a GDP growth rate of over 8 percent a year over the last decade.