The market value of the 100 banks and banking groups listed on Africa’s most highly valued financial markets declined by $39 billion between January 1 and July 23, 2020 as the Covid-19 pandemic continues to threaten growth prospects for the African continent. According to the latest forecast by the African Development Bank (AfDB), the continent’s GDP is expected to contract by 1.7% this year, down 5.6% from the previous January forecast. A pessimistic scenario goes as far as envisaging a 3.4% drop in GDP. Vera Songwe, the Executive Secretary of the Economic Commission for Africa, said that this contraction is probably the deepest recession in at least a quarter of a century.
These forecasts were published against a backdrop of tensions over the debt moratorium. In April 2020, G20 decided to temporarily suspend debt servicing for 40 African countries until the end of the year for an estimated $5.3 billion of the 2020 debt service to be carried forward to help some of the countries to manage the impact of the Covid-19 pandemic by having more flexibility on debt repayment. Last weekend, World Bank President David Malpass urged the G20 to extend the debt relief program until the end of 2021. G20 executives have met virtually several times in July 2020 to pave the way for this extension of the moratorium on the debt until the end of next year.