suggests that bank lending has grown since, but mainly in resource rich countries such as Angola, Liberia, Nigeria and Zambia.

Bond issuance in Sub-Saharan Africa was almost exclusively limited to South Africa until 2006. Low and middle-income Sub-Saharan African countries other than South Africa received negligible amounts of bond financing from international markets. More recently, Ghana issued $750 million of international bonds in 2007, and several other Sub-Saharan African countries are considering international bond issues.<sup>15</sup>

# **_Portfolio equity flows were almost absent in Sub-Saharan Africa excluding South Africa_**

Portfolio equity flows have increased since 1990 to an estimated $15.1 billion in 2006 and are now an important source of external finance for Sub-Saharan Africa. However, portfolio flows have gone almost exclusively to South Africa ($15 billion). When South Africa is excluded, portfolio equity flows are negligible in low- and middle-income Sub-Saharan African countries. Although South Africa has received more than $4 billion annually, on average, since 1995, other Sub-Saharan African countries together received less than $50 million annually during this period. Foreign investors appear to be averse to investing in Africa because of lack of information, severe risk perception, and the small size of the market that makes stocks relatively illiquid assets. One way to encourage greater private investment in these markets could be to tap into the diaspora outside Africa. Some initiatives being prepared by the diaspora is the formation of regional funds to be invested in companies listed on African stock markets.

# **_Personal and institutional remittances are a growing source of external financing for SubSaharan Africa_**

Recorded personal remittance inflows to Sub-Saharan Africa have increased steadily during the last decade, from $3.2 billion in 1995 to $9.3 billion in 2005 and to $10.3 billion in 2006. Most of this flow ($8.5 billion) went to low-income Sub-Saharan African countries in 2006. Unrecorded flows through informal channels are believed to be even higher (World Bank 2005; Page and Plaza 2006).<sup>16</sup> In six Sub-Saharan African countries—Botswana, Cote d'Ivoire, Lesotho, Mauritius, Swaziland and Togo—remittances were higher than ODA flows. In Lesotho, Mauritius, Swaziland and Togo, remittances were also greater than FDI.

> 15 Ghana, which benefited from over $4 billion in debt relief under the HIPC and MDRI, concluded a bond issue for $750 million with a 10 year maturity and 387 basis point spread . The resources will finance infrastructure and development projects. Some of the other Sub-Saharan countries that are potential candidates for entering the international bond market include Kenya, Nigeria and Zambia, all three of which have seen significant increases in the non-resident purchases of domestic public debt in recent years (World Bank 2007a).

> 16 Page and Plaza (2006) estimate that 73 percent of remittances to Sub-Saharan African countries were through unofficial channels. Using this estimate, remittances to Sub-Saharan Africa through formal and informal channels would be more than $30 billion annually.

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