Africa’s Immunity

ACCRA – The United States suffers rising job losses. Britain nationalizes its banks. Once high-flying small economies like Ireland, Hungary, and Iceland break down. Even robust China and India are experiencing slower growth, curtailed ambitions, and broken dreams.

Yet, in sub-Saharan Africa, there are few hints of the global financial crisis that is consuming the capitalist world.

In fashionable African cities, residential home prices remain stratospheric. A typical Western-style house in Kampala or Accra, for example, now costs an astonishing two to three times the price of a comparable home in, say, Cleveland or other cities in the American heartland. While home prices are crashing from Madrid to Dublin and Miami to Los Angeles, African prices remain near or at record-high levels.

African banks, meanwhile, are rock-solid compared to their debt-heavy counterparts in the US and Europe. While international bankers went bust by making legions of bad loans, African bankers stuck to earning profits the old-fashioned way: paying very little to depositors, and earning a big “spread” by buying guaranteed government debt, which yielded healthy returns.