By Precious John
The Making Finance Work for Africa (MFW4A) partnership and PwC Nigeria co-hosted a webinar to explore the impact of COVID-19 on African capital markets last month.
Data presented from the PricewaterhouseCoopers (PwC) Nigeria 2019 African Capital Market Watch, which reviewed the performance of Africas capital markets between 2010 and the first quarter of 2020, shows that African equity capital markets activity have seen a downward trajectory over the past three years as major economies on the continent are faced with fiscal challenges due to growing debt levels and slow economic growth.
Capital market value in 2019 was the lowest seen over the past decade, with the volume of deals lower only in 2012. African economies now face the unprecedented challenge of the COVID-19 pandemic, which has severely impacted global financial markets, according to Andrew Nevin, PwC Nigerias Chief Economist, and Alice Tomdio, the firms Director Capital Markets, who presented the data.
Commenting on the data and the potential impact of the COVID pandemic, CEO of the Nairobi Securities Exchange Geoffrey Odundo said: Capital markets in East Africa have taken a hit, with a 20 per cent decrease in trading volume since the beginning of COVID-19.
On the positive side, there was increased activity from domestic investors, he added.
Director-General, Securities and Exchange Commission (SEC), Ghana, Daniel Ogbarmey Tetteh said that market activity on the Ghana stock market had remained robust, with an almost threefold increase in trading volumes between January and April 2020, compared to the same period in 2019. Again, a good proportion of these trades originated from domestic investors.
Speakers also stressed the important role of African capital markets in supporting the post-COVID recovery. For this to happen, African markets need to be deepened and provide avenues for investment of the significant pools of local capital currently tied up in dead assets.
Expanding the range of available asset classes should also include measures to attract and support new listings. The panel agreed that the increased engagement of local investors in the current environment was a positive sign, and that developing a deep pool of domestic investors is essential for African capital markets to play their full role in supporting the post-COVID economic recovery.