How debt, slow growth impact capital market – PwC


PRICEWATERHOUSECOOPER, PwC Nigeria, has raised concerns on the impact of growing debts and slow economic growth in Africa is affecting equity market on the continent. It said debts and slow growth are dragging Nigerian and other African equity capital markets activities down over the past three years.

The firm in its 2019 African Capital Market Watch report presented at a webinar hosted by the Making Finance Work for Africa partnership and PwC Nigeria, noted that capital market value in 2019 was the lowest seen over the past decade, with the volume of deals lower only in 2012. These, according to analysts at PwC, are findings from the review of the performance of Africa’s capital markets between 2010 and the first quarter of 2020.

While exploring the impact of COVID-19 on African capital markets at the webinar, stakeholders in African capital markets noted an increase in the activities of domestic investors. According to Andrew Nevin, chief economist, PwC Nigeria, and Alice Tomdio, director, capital markets, PwC Nigeria, who presented the data, African economies now face the unprecedented challenge of the COVID-19 pandemic, which has severely impacted global financial markets.

Commenting on the data and the potential impact of the COVID-19 pandemic, Geoffrey Odundo, chief executive officer, Nairobi Securities Exchange, said, “Capital markets in East Africa have taken a hit, with a 20 percent decrease in trading volume since the beginning of COVID-19,” adding that there was increased activity from domestic investors.

On his part, Daniel Tetteh, director-general, Securities and Exchange Commission, Ghana, 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. He added that a good proportion of these trades originated from domestic investors.

Speakers at the webinar also stressed the important role of African capital markets in supporting the post-COVID-19 recovery, saying this could be achieved if African markets were deepened and provided with avenues for the investment of the significant pools of local capital currently tied up in “dead” assets.

According to them, expanding the range of available asset classes should also include measures to attract and support new listings. The panel discussants agreed that the increased engagement of local investors in the current environment was a positive sign.

They added that developing a deep pool of domestic investors was essential for African capital markets to play their full role in supporting the post-COVID economic recovery.

– Jun. 5, 2020 @ 16:39 GMT |

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