News & Analysis: Financial markets

African Fiscal Vulnerabilities: Effects of 2020 Global Support Initiatives

“Fiscal vulnerabilities among African sovereigns had been building up in the years leading to 2020’s pandemic, driven by challenging economic conditions; unfavourable changes in exchange rates and commodity prices; in addition to significant borrowing, including loans from China, which today is Africa’s largest bilateral lender, alongside greater bond issuance.”

via Scope Ratings

Bondholders need to forgive some African sovereign debt

“A high risk of default has been priced into African bonds. The warning signs have been clear for everyone to see. The pandemic brought the day of reckoning forward.”

via Financial Times

COVID-19 impacts investors’ energy strategies in Africa

“Over 50% of African energy market participants polled by African Business say that COVID-19 will have an impact on their investment strategy in 2020/2021, but participants remain bullish about the prospects for renewable energy and continue to see the continent as an attractive opportunity.”

via Africa Business Magazine

Kenyan banks stable but lending frozen

“Kenya’s banks are well capitalised and have good liquidity, but if they do not overcome their aversion to risk businesses will be starved of the credit they need to recover from COVID-19.”

via African Business Magazine

Africa must boost internal trade to recover from COVID-19 slump, AU says

“The collapse in foreign direct investment to African economies during the pandemic has bolstered the need for intra-African trade, the continent’s top trade official has said, warning that it will take years for investment to return.”

via Financial Times

We are not expecting another banking crisis in Nigeria, says Fitch

“Banks’ earnings and profitability will weaken in the medium term. This reflects lower activity (slower loan growth in particularly), the low interest rate environment, low yields on government securities, lower income from debt relief measures and rising credit costs. That said, most banks are expected to remain profitable in 2020 due to their revenue-generating capacity and low cost of funding.”

via African Business Magazine

Cameroon’s multi-pronged strategy to beat COVID-19-induced slump

“In order to counter the downturn, Yaoundé has announced plans to get the economy back on its feet: both in the short term through financial support for businesses, and longer term by strengthening trade with the rest of the world.”

via New African Magazine

Healthy banks essential for Covid-19 economic recovery

“The global economic devastation that has come in the wake of the coronavirus crisis has not spared Africa but perhaps the impact has not been so severe yet. Banks have also been hit hard from several angles but seem to be coping well and are being supportive of their customers during this difficult time. Report by Rafiq Raji.”

via Africa Business Magazine

Healthy banks essential for COVID-19 economic recovery

“It is not an entirely bad period for African banks. The large ones are recording increases in deposits. This is not surprising. Predominantly cash-backed welfare initiatives around the continent are being channelled through banks, with some recipients choosing to put them in their savings accounts instead.”

via African Business Magazine

COVID-19 sustains assault on battered regional currencies

“In recent weeks, regional currencies have come under increased pressure against the dollar as the impact of the COVID-19 pandemic threatens to dismantle efforts by central banks to maintain stability and arrest negative impact on their economies. Depreciating currencies result in increased cost of living as prices of basic goods rise; and servicing of hard currency-dominated loans becomes expensive for institutional borrowers.”

via The East African