Economy
Impact of COVID-19 on Debt Capital Markets in Africa
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.
Source: NBS
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.
By Adedapo Adesanya
Despite signs that Nigeria’s headline inflation is easing, rising food prices continue to threaten the country’s inflation outlook, the chief executive of the Centre for the Promotion of Private Enterprise (CPPE), Mr Muda Yusuf, has warned.
He noted that structural inflationary pressures in the real economy remain pronounced despite improving macroeconomic stability.
In a policy brief released following the inflation report, he noted that headline inflation eased marginally, while month-on-month change moderated from 1.75 per cent to 1.66 per cent, indicating that headline inflation has largely plateaued.
According to him, the dominant concern in the latest inflation report is the renewed acceleration in food inflation.
This growth, he said, suggested that food prices have resumed an upward trajectory after a brief period of moderation.
Warning that a renewed increase in food inflation has significant economic and social implications, he stressed that food inflation remained the biggest driver of Nigeria’s cost-of-living crisis, stressing that rising food prices continue to erode household purchasing power, worsen poverty and food insecurity while weakening the inclusiveness of the current reform programme.
He maintained that sustained moderation in food prices is critical to improving citizens’ welfare and strengthening public confidence in the ongoing economic reforms.
Acknowledging the easing of core inflation as encouraging, he drew attention to the persistence of urban inflation.
At 16.08 per cent, urban inflation exceeded the national headline inflation rate of 15.91 per cent, while month-on-month urban inflation increased from 1.99 per cent to 2.13 per cent.
According to Mr Yusuf, the figures indicated that inflationary pressures remained particularly intense across urban centres.
He attributed the rising urban inflation partly to increasing population displacement from rural communities affected by insecurity, expressing worry that as more households migrate to urban areas, demand for housing, transportation, utilities and other essential services would increase, adding to inflationary pressures and creating additional urbanisation challenges.
Addressing insecurity in farming communities, he said, was important not only for protecting lives and property and boosting agricultural output but also for easing cost pressures in urban centres, adding that the June CPI data reinforced the view that Nigeria’s inflation challenge is predominantly structural rather than monetary.
On the monetary policy outlook, he said the data do not justify further monetary tightening, arguing that headline inflation has largely stabilised.
The CPPE chief expected the Monetary Policy Committee (MPC) to retain the current monetary policy rate at its next meeting, adding that the priority is for monetary and fiscal authorities to work together to accelerate structural reforms to expand food supply, improve logistics, reduce energy and production costs, lower debt service costs, as well as strengthen domestic value chains.
By Aduragbemi Omiyale
Additional shares of Sterling Financial Holdings Company Plc have been listed on the Nigerian Exchange (NGX) Limited.
The new equities were added to the company’s existing stocks on Customs Street on Thursday, July 16, 2026, a notice from the bourse confirmed.
Business Post reports the total new ordinary shares of Sterling Holdings listed yesterday were 13,812,239,000 units.
They were from the offer for subscription of 12,581,000,000 ordinary shares of 50 Kobo each sold for N7.00 per share, which was oversubscribed by investors.
The financial institution brought the new shares to the stock exchange to increase its total issued and fully paid-up shares to 65,929,251,414 ordinary shares of 50 Kobo each from 52,117,012,414 ordinary shares of 50 Kobo each.
“Trading licence holders are hereby notified that an additional 13,812,239,000 ordinary shares of 50 Kobo each of Sterling Financial Holdings Company Plc were on Thursday, July 16, 2026, listed on the daily official list of Nigerian Exchange Limited.
“The additional shares listed on NGX arose from the company’s offer for subscription of 12,581,000,000 ordinary shares of 50 Kobo each at N7.00 per share.
“With the listing of the additional shares, the total issued and fully paid-up shares of Sterling Financial Holdings Company Plc have now increased from 52,117,012,414 to 65,929,251,414 ordinary shares of 50 Kobo each,” the notice read.
By Adedapo Adesanya
President Bola Tinubu has signed a Presidential Executive Order on Virtual Assets Coordination, establishing a new framework to coordinate the regulation of virtual assets across government agencies as Nigeria seeks to curb fraud while supporting innovation in the digital economy.
The Executive Order, which takes immediate effect, creates a Virtual Asset Council chaired by the Central Bank of Nigeria (CBN) to harmonise oversight of cryptocurrencies, tokenised assets, stablecoins, and other digital assets without creating a new regulator.
As part of the new framework, the CBN will establish a regulatory sandbox that will allow eligible firms to test virtual asset products, blockchain solutions, and related services under regulatory supervision before they are introduced to the wider market.
The development was disclosed in a statement issued on Friday by the President’s Special Adviser on Information and Strategy, Mr Bayo Onanuga.
According to the presidency, the Executive Order responds to the growing complexity of virtual assets, which increasingly cut across the traditional boundaries of currencies, securities, commodities, and payment systems.
The fragmented regulatory environment has left gaps that have exposed Nigeria to money laundering, terrorism financing, cybersecurity and data privacy risks, fraud, and revenue losses.
The government said some unregistered operators have exploited these regulatory gaps to defraud unsuspecting Nigerians, resulting in significant financial losses.
“The Order is designed to close these gaps through supervisory coordination, without introducing new layers of regulation or displacing the mandates of existing agencies,” the statement read.
Under the new framework, the Virtual Asset Council will be chaired by the CBN, with the Nigeria Revenue Service (NRS) and the Securities and Exchange Commission (SEC) serving as vice chairs. Other members include the Nigerian Financial Intelligence Unit (NFIU) and the Office of the National Security Adviser (ONSA).
The Council will provide policy direction, improve cooperation among participating agencies, and work with the Attorney General of the Federation to develop a harmonised legal and institutional framework for the sector.
The Executive Order also establishes a Virtual Asset Office, which will serve as the Council’s operational arm. The office will be domiciled at the CBN and will coordinate information sharing, applications, and reporting among the participating agencies through a shared supervisory technology platform.
The presidency stressed that the Executive Order does not create a new regulator or transfer statutory powers from existing agencies, clarifying that instead, each institution will continue to exercise its existing mandate while working within a coordinated framework.
Under the arrangement, registration of virtual asset businesses will depend on the nature of the service being offered.
Activities classified as securities will continue to be regulated by the SEC, while payment, settlement, custody, and other services involving non-security virtual assets will fall under the CBN.
Where there is uncertainty over regulatory jurisdiction, the Virtual Asset Council will determine the appropriate supervising agency.
“The sandbox will provide a controlled environment in which eligible operators can test and operate virtual asset products, services, and blockchain-based solutions under close supervision, enabling the participating agencies to assess the implications for monetary sovereignty, financial stability, market integrity, consumer protection, financial inclusion, and revenue administration before products reach the wider market,” the statement added.
According to the presidency, the sandbox will enable regulators to evaluate the implications of emerging products for financial stability, monetary sovereignty, consumer protection, financial inclusion, market integrity, and revenue administration.
The central bank is expected to announce further details of the sandbox.
