This paper, prepared for the African Economic Research Consortium (AERC) Conference on Rethinking African Economic Policies (6-8 December 2009,

Nairobi, Kenya) finds that G-20 countries have responded through fast and large bailouts, historically large fiscal stimuli and accommodative monetary policies.

The global financial crisis has affected G-20, African and other countries. Effects have been widespread and have encompassed a wide range of transmission belts, albeit different ones in different countries, and with different levels of impact. When the crisis broke, several analyses at the time (in September 2008) suggested that sub-Saharan Africa (SSA) would not be affected as much because financial systems were not leveraged as much as in the UK and the US. By the end of 2008, however, it had become clear that SSA was feeling the effects of the crisis, probably mostly through real channels. Recently, it has become clear that SSA has been affected also by financial contagion. International bank lending increased at unsustainably fast rates until September 2008, but has since decreased significantly, by around 10% in the case of Africa. Based on actual evidence so far, and forecasts in some cases, we note a shortfall of some $134 billion for SSA countries (trade, bank lending, remittances, portfolio flows and foreign direct investment (FDI)). As a result of the crisis, 10 African countries are experiencing declines in real

GDP (compared with forecasts made before the crisis) of more than 5% in 2009, 11 of between 3% and 5% and 19 of between 1% and 3%; others have been affected less.