African Exporting Firms in the Turmoil of the Global Financial Crisis

Abstract

Since late 2008, countries around the world have been affected by the global economic slowdown. The crisis had serious implications for low income countries; in particular, those which are highly dependent on trade, foreign investment, and remittances to meet economic growth and social needs. Most studies have focused on the collapse in primary commodity exports as the main effect of the crisis on African countries. This paper adopts a different approach by examining the impact of the recent global financial crisis on exporting firms in the manufacturing and services sectors in low income countries of the African continent. The paper investigates the impact of the global financial crisis on three Sub Saharan African economies namely Burkina Faso, Malawi and Niger using firm level data from the World Bank Enterprise Survey. The study analyses export behaviour of 1,118 firms in these three nations in 2005 and 2009. The findings reveal that the recent economic downturn has impacted negatively on the firm’s decision to enter the export markets. This result is consistent across Malawi and Burkina Faso while the result is statistically insignificant for Niger.