Trade in Financial Services in Southern Africa: What Room for Negotiators post-2008 Financial Crisis?

The document analyzes the intersection of global financial regulatory reforms (Basel III, G20) and regional trade negotiations in the SADC region. It argues that while the 2008 crisis did not directly collapse South African banks, the resulting 'second-round' effects—liquidity freezes and increased risk premiums—severely impacted trade and project finance. The author concludes that G20-driven reforms, adopted by South Africa, will likely act as new, non-negotiable barriers to trade in financial services across the SADC region, potentially reducing cross-border lending to non-investment grade African countries.

• Financial services are a critical economic driver in the region, representing over 50% of the gross domestic product (GDP) for both Botswana and South Africa.
• The 2008 financial crisis caused a 'second-round' effect in South Africa characterized by a crisis of confidence and liquidity, where banks stopped lending to each other and risk premiums on interbank borrowing rates rose from nearly zero to 500 basis points.
• Project financing in Africa suffered significantly as governments cancelled or delayed infrastructure projects due to the high cost of long-term financing and the collapse of the 'originate and distribute' model for project loans.
• South Africa is a net exporter of financial services to the SADC region, and its adoption of G20 reforms is expected to dominate and shape the regional trade negotiations in the SADC Trade Negotiating Forum.
• The G20-driven regulatory reforms, particularly Basel III's capital adequacy and liquidity requirements, are perceived by banks as potentially punitive and likely to create new barriers to trade that are not amenable to reduction through regional negotiations.
• There is a risk that Basel III reforms will reinforce a trend where cross-border lending is concentrated in a few investment-grade African countries (Botswana, Egypt, Morocco, South Africa, and Tunisia), further reducing capital flows to the rest of the continent.
• Botswana's economy was severely hit by the crisis through its mining sector; diamond production halted between December 2008 and April 2009, and the sector contracted by 38.4% in the first nine months of 2009.
• South Africa's financial sector was protected from the worst of the initial crisis by exchange controls, but the real economy suffered, with exports falling by 24% in the first quarter of 2009.

APA

Thomas, R. (2011). Trade in Financial Services in Southern Africa: What Room for Negotiators post-2008 Financial Crisis? South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2011/02/Research-Report-8.pdf

Chicago

Thomas, Rosalind. Trade in Financial Services in Southern Africa: What Room for Negotiators post-2008 Financial Crisis? South African Institute of International Affairs, 2011. https://saiia.org.za/wp-content/uploads/2011/02/Research-Report-8.pdf.

Wikipedia

{{cite report |last1=Thomas |first1=Rosalind |title=Trade in Financial Services in Southern Africa: What Room for Negotiators post-2008 Financial Crisis? |publisher=South African Institute of International Affairs |date=February 2011 |url=https://saiia.org.za/wp-content/uploads/2011/02/Research-Report-8.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{thomas2011trade, author = {Thomas, Rosalind}, title = {{Trade in Financial Services in Southern Africa: What Room for Negotiators post-2008 Financial Crisis?}}, institution = {South African Institute of International Affairs}, year = {2011}, month = feb, url = {https://saiia.org.za/wp-content/uploads/2011/02/Research-Report-8.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }