Impact of the COVID-19 Crisis on the African Financial Sector

Original source: Making Finance Work for Africa

Making Finance Work for Africa (MFW4A) is hosting a webinar on the impact of current health crisis on the African financial sector. The session will discuss in forward-looking terms how ongoing market turmoil and trade disruptions due to concerns about the impact of the coronavirus on the global economy will affect the African financial sector.

On March 11, 2020, the World Health Organization (WHO) upgraded the status of Covid-19 outbreak, which had spread to 125 countries around the world, from an epidemic to a pandemic. The announcement has stoked fears of a prolonged world economic slowdown. This slowdown is already noticeable and the ensuing slump in demand will further exacerbate price drops for commodities on which a majority of African countries depend.

The pandemic which started in China has reduced consumer spending (transport, leisure and retail) and significantly disrupted manufacturing operations. With the “factory of the world” (and now the rest of the globe) experiencing an unprecedented public health threat, global growth forecast has been lowered. According to the Organization for Economic Cooperation and Development, in its most optimistic scenario, the global growth rate will fall by 500 basis points, to 2.4%, rather than the 2.9% previously projected. The lost growth would top USD 400 billion. A pessimistic scenario predicts a 3% drop in international trade which would dramatically affect all economies, with obvious risks of recession including in Africa. Already high public and private debt levels (IMF, 2019)1, combined with a distressed global business climate, could seriously weaken African domestic financial systems.

Financial markets volatility has also increased sharply, indicating an abrupt change in investor confidence.To make things worse, many emerging markets and low-income countries are badly affected by significant outward capital flows.

Given the significance of current events and the possibility of economic contagion, African policymakers and private sector’s stakeholders are invited to discuss ongoing and/or expected fallout of the Covid19 outbreak on the African financial sector.

Discussants will also debate immediate policy responses to further strengthen the resilience of the African financial systems, with a focus on:

– Trade finance,

– Capital markets, and

– Banking sector.

The session will be moderated by Hugues Kamewe Tsafack, Financial Sector Advisor within the MFW4A team.

Please register early, due to limited number of participants.

Click here to register.

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