Managing Volatile Capital Flows: Experiences and Lessons for Sub-Saharan African Frontier Markets

ByCheikh A. Gueye, Javier Arze del Granado, Rodrigo Garcia-Verdu, Mumtaz Hussain, B. Jang, Sebastian Weber, Juan S Corrales

March 26, 2014

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Disclaimer: The views expressed herein are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

During the past three years the frontier markets of sub-Saharan Africa have received growing amounts of portfolio capital flows, with heightened interest from foreign investors. Compared with foreign direct investment, portfolio capital flows tend to be more volatile, and thus pose challenges for sub-Saharan African frontier markets. This study examines the evolution of capital flows since 2010 and discusses the policies these countries have designed to reduce risks from the inherent volatility of these flows.

Subject: Balance of payments, Capital flows, Capital inflows, Emerging and frontier financial markets, Financial markets, Foreign direct investment, Private capital flows

Keywords: Africa, capital, capital flow, Capital flows, Capital inflows, central bank, DP, DPPP, Emerging and frontier financial markets, exchange rate, Foreign direct investment, frontier market, Global, government bond, market, Private capital flows, Sub-Saharan Africa, U.S. dollar

Pages:
39
Volume:
2014
DOI:
https://doi.org/10.5089/9781616358440.087
Issue:
002
Series:
Departmental Paper No. 2014/002
Stock No:
MVCFEA
ISBN:
9781616358440
ISSN:
2616-5333

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