Impact of global financial & economic crisis on financial - - PowerPoint PPT Presentation

Impact of global financial & economic crisis on financial services workers in select African countries

By Aidan Eyakuze Serengeti Advisers Ltd

Outline

• 1. Study Objectives
• 2. Structure of financial sector
• 3. Financial sector employment & trade unions
• 4. Global Crisis: Impact & Response
• 5. Impact on financial sector employment &

social dialogue

• 6. Observations

Study Background & Objectives

• Background:

– Geneva (Feb 24-25): ILO asked to ‘collect data, monitor, analyze and disseminate information on trends in employment in the finance sector…’

• Objectives:

– Rapid assessment of effects of global economic crisis

• n financial services sector in Egypt, Kenya Nigeria,

South African and Tanzania; – Document impact on financial sector employment; – Analyse effectiveness of measures to cope with fallout

• n employment in the sector

Structure of the financial sector

34 42 24 31 32 6 3 3 4 Egypt Kenya Nigeria South Africa Tanzania

Commercial Banking

Private State Owned

• 34

898 1,400 13 Egypt Kenya Nigeria South Africa Tanzania

Microfinance Institutions

13 20 23 113 13 7 7 8 83 5 5 15 19 10 Egypt Kenya Nigeria South Africa Tanzania

Insurance Sector

General Life Composite

Financial sector employment…

188,000 21,657 270,000 922,000 26,501 240,000 25,498 303,000 1,687,000 17,497

Egypt (Dec 02) Kenya (Dec 07) Nigeria (Dec 03) S Africa (Dec 01) Tanzania (Dec 01)

Financial Sector Employment

Earliest (date) Pre-crisis

Share of total employment Egypt (2008): 1% Kenya: n/a Nigeria (2007): 0.56% S Africa (2008) 13% Tanzania (2006): 0.1%

…and Trade Unions

Country Trade Union(s) Members (latest)

Egypt

National Trade Union of Banks, Insurance and Financial Affairs (NTUBIFA) 100,000 (2008)

Kenya

Banking, Insurance and Finance Union (BIFU) 2,972 (2000)

Nigeria

Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI) National Union of Banks, Insurance and Financial Institutions Employees (NUBIFIE) no data

South Africa

South African Society of Bank Officials (SASBO) 59,000 (2009)

Tanzania

Tanzania Union of Industrial and Commercial Workers (TUICO) 38,000 (2006)

Global Crisis: Impact & Response

Country Impact Response

Egypt

• Decreased activity in tourism, transport,

finance, real estate;

• Drop in portfolio investment flows, CASE 30

index lost 56% but recovered in 2009 Stimulus package: USD 2.7 bn (2008/09) and USD 1.8 bn (2009/10) Subsidies, investments in SMEs, infrastructure upgrading

Kenya

• GDP growth fell from 7.1% (2007) to 1.7%

(2008), and projected at 3% (2009)

• Decline in FDI, remittances, tourism, exports

Stimulus package: USD 1.03 bn rural development, and constituency resilience plus a USD 3.1 bn ‘Marshall Plan’ for the longer terms

Nigeria

• Sharply lower oil revenues as global demand

and oil prices dropped; international reserves fell by USD 19bn in 9 months

• Stock market lost 46%
• (Homegrown) banking crisis!

USD 3.9 bn bailout for nine banks USD 2 bn stimulus (from excess crude account)

South Africa

• Economy contracted by 6.4% in Q1 09 and 3%

in Q2 09;

• 770,000 jobs lost led by manufacturing and

mining USD 101 bn stimulus package for social spending, infrastructure, housing and education Looser monetary policy

Tanzania

• Economic growth slows from over 7% to 4-5%
• FDI reduction to USD 670m (2009) from USD

744m (2008)

• Decline in tourism and export revenues

USD 1.7 bn stimulus, mostly to protect banking system from commodity-based loans going sour

Impact on financial sector employment & social dialogue

Country Job losses Social Dialogue Egypt

No reports or evidence of any None reported

Kenya

134 of which 85 completed, 49 planned (Source: FKE, May 2009) None reported

Nigeria

Several thousand to 72,000 job cuts; mostly middle management & support staff (Source: online papers and news reports) Militant language by ASSBIFI and NUBIFIE against lay-offs, but little evidence of action as banks proceed with lay-offs

South Africa

Net gain of 50,000 jobs (despite loss of 28,000 jobs in April-Sep 2009) (Source: Statistics South Africa) None reported

Tanzania

262 job cuts (94% at four large global banks) Net gain of 360 in commercial banking

(Source: Serengeti Advisers database)

None reported

Observations

• Weak integration to global financial markets

protected Africa’s financial sectors  maintain caution with respect to opening up

• Financial sector employment accounts for a

tiny share (0.1 – 1.0%) of total employment  easy to ignore.

• Information on financial sector employment

(numbers, trade unions) is patchy and dated  ILO may want to support work to update and maintain it

Thank you for your attention

Discussion