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The impact of COVID-19 on the Debt Capital Markets in Africa – FBNQuest

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Traditionally, corporates and states in Africa use debt capital markets to raise huge funding. As the coronavirus bites harder against the increasing debt-to-GDP ratios coupled with increasing risks in African countries, the pricing of new issuances in the international debt capital markets became relatively unattractive.

Consequently, African governments turned to other concessionary sources like the International Monetary Fund (IMF), World Bank and Development Finance Institutions for funding.

Africa’s depiction of the international debt capital markets is dominated by sovereign issuances. While its debt capital markets offer investors better returns than in developed markets, its domestic markets remain shallow and least diversified compared to other emerging and frontier markets.

Also, African corporates are less likely to raise substantial amounts of funding via debt capital markets due to various reasons including lack of depth in the domestic markets and institutional weaknesses.

Between 2014 and 2018, sovereign bonds accounted for 51.5 per cent of the total $140.3 billion raised from 437 international bond transactions in Africa.

Within 2016 and 2018, African issuers raised about $120 billion of non-local currency debt which further culminated to $245.9 billion of non-local currency debt from 759 issues within the last decade.

The largest sovereign issuer of non-local currency debt in 2019 was Egypt raising $8.2 billion. Next to Egypt is South Africa which raised $5 billion in September of the same year from its largest-ever Eurobond issuance.

However, in 2020, the effect of COVID-19 impacted the African economy resulting in a pullback from African markets as countries faced crisis on all levels including health and social services. These unprecedented shocks call for a temporary debt standstill for all African countries as economic fundamentals deteriorated.

A 2020 study on the economic impact of COVID-19 by the African Union (AU) showed that while countries in Africa could lose up to $500 billion, they may be forced to borrow heavily to survive after the pandemic, hence the need for the debt standstill—suspension of debt service.

For example, Mozambique’s debt overtook its overall economic output as its debt-to-GDP ratio, which was 100 per cent in 2018 billowed to 130 per cent in 2020; even as the country struggles to repay its $14 billion external debt.

Asides from Mozambique, there are other poor and highly indebted African countries with little fiscal space to provide a robust response and recovery from the pandemic. Some of these countries like Angola, Djibouti, Congo, Cabo Verde, and Egypt have a higher than 100 per cent external debt-to-GDP ratio, yet, they still seek more funds.

Consequently, the G-20 agreed to suspend debt repayment for the world’s 75 poorest countries until the end of 2020. UN Secretary-General António Guterres further advised that debt suspension should be extended to all developing countries, while the UN Economic Commission for Africa (ECA) recommended a complete temporary debt standstill for two years for all African countries, without exception.

Over the years, there have been calls by multilateral institutions for debt forgiveness for Africa’s most impoverished states. However, some experts opine that such cancellation or debt standstill would be perceived as a default in today realities of the international capital markets and will greatly compromise the future access of African countries to international markets.

For example, states like Benin and Ghana which were able to access capital markets over the past year at 5.75 per cent for 7 years (€500 million) and 8.875 per cent for 40 years ($750 million) respectively might find it difficult to do so if they are perceived to be in default. On the other hand, perception of default would likely also be priced into future borrowings by African countries.

Following the above, in April 2020, China, which accounts for most of the lending to African countries through its China Development Bank and the Export-Import Bank of China, expressed a willingness to provide Africa debt relief, but not forgiveness.

In June, China offered to cancel Africa’s interest-free loans, which is less than 5 per cent of Africa’s debt to China, based on bilateral negotiations.

With the already rising value of the total public debts in many African countries, to combat the prevailing crisis of the coronavirus, some African countries opted for multilateral financing. One of such countries is Nigeria.

The country, in the second quarter of 2020, requested $6.9 billion of multilateral financing from the International Monetary Fund (IMF), World Bank and African Development Bank (AfDB) to minimise the impact of the upsurge of the global pandemic.

Part of these funds was to establish a $1.2 billion COVID-19 crisis intervention fund to upgrade healthcare facilities across the country and to provide intervention funds to the 36 states including the Federal Capital Territory (FCT).

Similarly, against the backdrop of the pandemic, the African Union launched several programmes, like the African Union Development Agency (AUDA-NEPAD) COVID-19 Response Plan to help countries fight the pandemic and recover better.

Using Nigeria as a case study, activities in the domestic bond market significantly increased year-on-year given the relatively low yields in the market.

In H1 2020, seven corporate bond issuances were raised to the tune of N152.7 billion compared to N54 billion raised in three issuances in the corresponding period of the previous year.

According to the data by the Debt Management Office (DMO), the nation’s debt stock data at the third quarter (Q3) 2020 showed that the total public debt portfolio of the federal and state government combined stood at N32.22 trillion ($84.57 billion), an increase of 22.9 per cent but a decrease of 1 per cent in dollar equivalent due to the different exchange rate values within the periods.

Nigeria’s total public debt showed that $31.99 billion (or 37.82 per cent of the debt) was external while $52.59 billion (or 62.18 per cent of the debt) was domestic.

Further disaggregation of Nigeria’s foreign debt showed that $16.74 billion of the debt was multilateral; $502.38 million was bilateral (AFD) and another $3.26 billion bilateral from the Exim Bank of China, JICA, India, and KFW while $11.17 billion was commercial which are Eurobonds and Diaspora Bonds.

The debt conundrum leaves Africa in a dilemma considering the rising budget deficits coupled with the need to fund the deficits.

If Africa is to stop depending on donors and multilateral funds to finance its economic development, it needs to evolve towards market-based financing for the quantum of financing required.

In addition, African countries need to promote market-friendly policies that will attract capital to underserved sectors and allow the states to focus its limited financing on priority sectors such as education, health, and social services.


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More 14m Farmers to Benefit from AfDB-backed Initiative

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Additional 14 million farmers in 37 low-income and vulnerable countries served by the African Development Fund, the Bank Group’s concessional financing window, are set to benefit from a technology initiative targeted at scaling up climate-resilient food production across the continent.

This comes after the African Development Bank Group (AfDB) and the International Institute of Tropical Agriculture (IITA) signed a $16.61 million grant agreement to launch the third phase of the Technologies for African Agricultural Transformation Programme (TAAT-III)

TAAT-III, funded by the African Development Fund, is expected to consolidate earlier gains benefiting 14 million more farmers while introducing a more sustainable, private sector-driven delivery approach.

AfDB said the initiative aims to reinforce seed and technology distribution systems, deepen partnerships with governments and agribusinesses, and expand the digital tools, including its technology e-catalogues and real-time monitoring platforms, to speed up deployment of high‑impact solutions.

Simeon Ehui, director general of IITA, commented: “TAAT-III allows us to deepen the delivery of science‑based solutions that improve farmers’ yields and livelihoods. Working with the Bank and our partners, we are scaling technologies that make Africa’s food systems more resilient and competitive.”

Since its launch in 2018, TAAT has become one of Africa’s most effective and transformative platforms for agricultural innovation, reaching nearly 25 million farmers and boosting productivity across major staples.

The initiative has expanded climate-resilient agricultural practices across over 35 million hectares.

In a statement, the AfDB said working closely with the Consultative Group of International Agricultural Research Centres and national and regional partners, TAAT has increased crop yields up to 69% and generated more than $4 billion in additional agricultural value.

Countries including Sudan, Ethiopia, Zambia, Zimbabwe, and Nigeria have recorded notable gains in staple crop productivity and resilience to climate shocks.

Nigeria has been a key beneficiary of TAAT initiatives. Under its Wheat Compact, farmers adopting improved heat-tolerant varieties more than doubled yields from 1.7 tons per hectare to 3.5 tons per hectare.

Programme supported seed system assessments also helped inform national reforms to expand access to certified, climate-resilient seeds.

Speaking at the signing ceremony, Abdul Kamara, director general of the Bank Group’s Nigeria Country Department, said the new phase will focus on scaling innovation more rapidly

Kamara said: “TAAT-III underscores the Bank’s commitment to ensuring that proven, climate-resilient agricultural technologies reach farmers faster and at scale. This phase strengthens the systems that deliver innovation, helping countries boost productivity, enhance resilience, and align agricultural transformation efforts with the Bank’s four new areas of emphasis, dubbed the Four Cardinal Points.”

 


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Newmark Webinar Explores How AI Could Transform Healthcare in Africa

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A recent webinar hosted by the Newmark Group examined how Artificial Intelligence AI is changing healthcare across Africa, highlighting both its promise and its risks.

Newmark Webinar Explores How AI Could Transform Healthcare in Africa

Newmark

The session, titled “AI in Healthcare: Opportunities and Challenges,” brought together healthcare and communications experts who agreed that AI can help fix long-standing problems in Africa’s health systems — but only if it is used carefully and responsibly.

Gilbert Manirakiza, CEO of Newmark Group in his opening speech said that AI is already helping speed up decision-making. He said AI tools can quickly analyse patient feedback, monitor conversations online, personalise health messages for different audiences and reduce delays in approvals.

He noted that many patients now turn to AI tools like ChatGPT to ask about symptoms and treatments. Because of this, he said health communicators must take responsibility for ensuring accurate information is available.

“If AI makes mistakes in healthcare, the consequences affect real lives,” he said.

Manirakiza stressed that Africa’s healthcare environment is unique. Many communities rely on mobile phones, speak different local languages and trust religious or community leaders. He warned that AI systems built mainly with Western data may misunderstand African realities.

He summarised his position simply: AI should help speed up work, but humans must ensure accuracy.

Daniel Marfo spoke about how AI is already being used in practical ways. Insurance companies now use AI systems to process thousands of claims daily. In hospitals, electronic medical records can suggest possible diagnoses and help doctors decide which patients need urgent attention.

He also said AI tools are helping detect problems in X-rays and MRI scans faster, especially in places where there are few radiologists. This reduces waiting time for patients.

At a national level, countries such as Rwanda, Sierra Leone and Ghana are building health data centres powered by AI to help governments track diseases and plan better responses.

However, Marfo warned that AI tools must be built using local medical guidelines to gain doctors’ trust. He emphasised that AI should support doctors, not replace them.

Dr. Afriyie Bempah focused on how AI can help countries prepare for health crises before they happen. He said resilience is not just about recovering from shocks, but about predicting them early.

He cited examples such as Kenya using AI to track mosquito patterns to predict malaria outbreaks, and Ghana using digital tools to improve disease reporting. In South Africa, digital health systems have been adapted to manage patients with chronic illnesses remotely.

He explained that linking clinics, pharmacies and supply chains through data sharing can help detect disease trends early and prevent large outbreaks.

During the question session, speakers discussed challenges such as data privacy, incorrect AI outputs, biased systems, and resistance from some healthcare workers.

They recommended clear rules for AI use, fact-checking AI-generated information, and creating internal review teams to monitor its application.

In their closing remarks, the panel encouraged healthcare professionals to learn how to work with AI tools to improve efficiency. They also urged young Africans to see healthcare technology as a major opportunity for innovation and investment.

The webinar concluded that AI is here to stay in healthcare. But its success in Africa will depend on strong regulation, local adaptation and continued human oversight — especially in a sector where mistakes can cost lives.


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Conoil Bonanza Winners Emerge

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Conoil Plc is spreading joy this Valentine season as the first group of winners in its Valentine Bonanza promotion have been announced and rewarded. Launched on February 14, the campaign continues to delight customers at participating retail outlets.

The initial raffle draw, conducted on February 21, saw fortunate customers receive ₦10,000 worth of free petrol each. The draw was carried out publicly, with media representatives present to ensure full transparency. With the promotion still ongoing, more customers have the opportunity to join in and potentially be among the next winners.

A Conoil Management spokesperson explained that the initiative is a way to show appreciation to loyal customers for their ongoing support. “Our customers have responded impressively to the bonanza, with strong participation recorded across our stations,” the spokesperson said.

The second and final phase of the promotion is now in motion. Customers who purchase at least 10 litres of petrol at any participating Conoil station remain eligible to win in the grand finale raffle.

The grand finale is set for February 28 at 12 noon. Motorists in Lagos and Ogun states are encouraged to visit Conoil outlets to collect their tickets and take part in the exciting conclusion of this Valentine celebration.


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