African countries must look to their local and global bond markets to raise enough capital to reboot their economies, which have been severely ravaged by COVID-19, African banks bosses have noted.
Group Chief Executive Officer (CEO) of Ecobank, Ade Ayeyemi and the CEO of Equity Group Holding, James Mwangi noted that African leaders have done well to manage the health crisis that came with the outbreak but it is time for careful decisions to revive economies from the shackles of the pandemic.
According to them, these decisions must be taken deliberately to ensure that African nations are not plunged into governance crises as a result of their inability to put in measure to alleviate the economic plight of citizens.
“We cannot get out of this situation in one year. Whether it is about raising bonds locally and internationally, it is important that the sovereign is able to inject liquidity and life into the economy so that people do not suffer unnecessarily. We have a health crisis which is being solved, it is creating economic crisis which need to be solved so that we don’t get a social and governance crisis,” Mr. Ayeyemi said.
Mr. Ayeyemi was speaking during a Bloomberg Invest Global virtual conference on the theme, Weathering Market Turbulence in the Age of COVID-19, the Macro View of Middle East and Africa.
Speaking at the same event, the CEO of Equity Holding, James Mwangi said: “I think every country is in a unique position to respond differently. We are seeing others’ early responses to health, that doesn’t not really require a massive bond issue because it is just improving the health system. But as we move into the next stage, particularly in addressing the economic issues, we need major decisions.”
The two top executives believe that COVID-19 has pulled a lot of the unbanked population into the banking space due to digital means, resulting in significant mop up of liquidity outside the banking sector thereby increasing banks’ portfolios. Governments have also helped by channeling social intervention through digital platforms.
“In a COVID-19 scenario and post COVID-19 –with the understanding that people cannot go out all the time, with the understanding that cash is a vector of transmission– I think all the countries across Africa, the infrastructure that has been put in place both by the banking system and the telecommunication operators are now being used as a medium of getting money into the hands of people that actually needs it.
“In our banks, we have seen a massive adoption of the new methods of receiving money and making payments. We are seeing our regulators trying to ensure that as many people as possible do have that access and we are seeing governments using that medium as means of sending money quickly and directly to the base of the economy.
It is important as we go forward to also start bringing the Micro, Small and Medium Scale Enterprises to get included in the financial system because that is how we can collectively have a better and inclusive growth going forward,” Mr. Ayeyemi intimated.