Essay Balance of Payment in Africa

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Balance of payment deficit is an imbalance in a nation’s balance of payments in which payments made by the country exceeds payments received by the country. It’s also known as unfavourable balance of payment because more currency is flowing out then currency flowing in to the country. Unequal flow of currency will reduce supply of money in the nation and has implications for inflation, unemployment, production, and other factors of domestic economy (political, social, cultural and economic factors).
I agree with the statement that political, cultural, social and economic factors have forced countries in Africa to have consistent deficit balance of payment. Below are some findings and some supporting points on why such factors
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Existing structures and institutions such as Anti-Corruption Commissions and Bureaus should be strengthened against corruption intensified in African Countries. Unless and until Africans are committed to it, corruption is the cancer that will eat up all the socio-economic and political achievements of the continent and Africa might not see the light of day.
Political stability- It has played an important role in determining the stability of balance of payment deficit. The most significant deterioration of political risk perceptions between June 2008 and June 2009 was over Sub-Saharan Africa and Middle East and North Africa. This is roughly the comparative severity with which the global economic crisis affected emerging market regions and the social unrest showed the highest increase among the political risk. This was followed by the related risk of violent demonstrations and the burden was put on the capital account. This was all related to the global financial and economic crisis which affected the balance of payment. An example would be Kenya where the post election violence really devastated the country’s financial crisis.
Deputy Managing Director of the International Monetary Fund (IMF), Takatoshi Kato says that the global financial crisis presents tremendous challenges for Africa, despite

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