On the face of it, the credit crunch is having a noticeable impact in Africa. Stock markets across the continent have seen big falls since the start of the year. In South Africa, the Johannesburg Stock Exchange share index has fallen 40%. In Kenya, the Nairobi 20 share index has lost more than a quarter of its value. Nigeria too has suffered. Until recently, sub-Saharan Africa's second biggest economy was benefitting from a rapid influx of foreign investment. Hedge funds and private equity firms from around the world have been pouring money into its equities and bond markets. Investor fears But according to Razia Khan, head of Africa research at Standard Chartered bank in London, the flow of funds is drying up. "We've certainly moved away from the situation where everyone was scrambling to get something in Nigeria," she says. If the western world is in a recession, it will have a negative effect "There definitely has been evidence in recent weeks that it is not just that investors are not putting in new money, but they have actually been pulling out." But that doesn't tell the whole story. Analysts say that while foreign investment has boosted Nigeria's financial markets in recent years, domestic money played an even bigger role. And while the stock market has fallen by more than a third this year, regulatory changes, rather than the credit crunch are widely seen as the key factor. Nor is the gloom which has affected some of Africa's key markets universally shared. Local versus global In Ghana, for example, the GSE all share index has actually gained about 60% this year. So what is going on? "Local issues dominate - they affect us more than global issues," says Richard Agala, head of research at IC securities in the Ghanaian capital Accra. "Take the example of Kenya, where we've seen a very bearish trend over the past couple of months. South Africa's stock market has not been immune to the recent crisis "We don't believe this is due to the global crisis. It has more to do with the violence after the election, which has undermined confidence," he says. But Africa is not immune to what is happening elsewhere. The continent has been benefitting from a boom in the price of commodities, boosted by very high demand from the rapidly industrialising economies of India and China. But if the credit crunch sparks off a global recession, there is a real risk that demand - and prices - could fall. Slowdown concern "In the last eight years or so Africa has become one of the faster growing parts of the world", says Roelof Horne, portfolio manager with Investec in Cape Town. "Obviously, if the western world is in a recession, it will have a negative effect. We have already seen commodity prices come down from their peaks. "That will certainly have an effect on African exports." But for the moment, he says, Africa remains an excellent place to invest. "Africa's got so much positive going for it, for a change. For many decades, we could only find negative things to talk about as far as the economy was concerned. "That isn't the case any more".