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COVID-19: Could Africa’s Awakening be the Silver Lining?

While the wealthy countries are mobilising hundreds of billions of dollars in stimulus packages, most of the world’s poor nations essentially do not have the fiscal space to do much besides hope and ask for relief.




COVID-19 is a rude awakening for the world. It has catapulted us into a health and an economic crisis that is affecting not only the poor but also the rich. The inconvenient pandemic has laid bare for the world to see the underlying problems of the global economic paradigm. It highlights the unsustainability of the current systems and the need for change – from the US with the biggest economy, to the smallest most fragile economies in Africa.

Sadly, this is not news. It was not a secret that the current economic system was not working for the majority of the planet; the dominant paradigm was simply unquestionable. However, now faced with a shared crisis on a global scale, the impact – as with every other challenge – will be felt more by the majority poor. And while the pandemic has been problematic for all, it comes with the very real and frightening potential for a systemic meltdown in Africa. Indeed, as that Anon WhatsApp, that’s been doing the rounds says: we may be in the same storm, but we are not in the same boat.

The good news is that questions are now a fair game about the system that has left a sizable share of the global population on their knees even in good times. A system that has also been choking our planet. And respected opinion-makers around the world – including Africans – have indeed been calling for change.
So now here we are. In response to the pandemic, many countries and international institutions have moved rapidly to adopt counter-cyclical measures to provide stimulus to the economy. The US approved two programs worth over 2.6 trillion dollars combined. International institutions are announcing programs for immediate relief and plans for additional financing that will help countries return back to scale.

READ MORE: Nigeria’s External Reserves plunge to $40.3 billion as devaluation concerns brew

While the wealthy countries are mobilising hundreds of billions of dollars in stimulus packages, most of the world’s poor nations essentially do not have the fiscal space to do much besides hope and ask for relief. The result is that many are now calling for a moratorium on debt repayments, but this is temporary relief. The debt will still have to be paid and for many African countries, more and more, the debts are owed to the private sector. While some are calling for increased aid, others are calling for China to pay reparations to African countries. Many intellectuals of African descent have signed a public letter calling for change with a focus on the need for African governments to invest in the people, end corruption and aim for second independence.

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Though these are all good ideas and will likely help, they are not enough. In essence, everyone is drawing from their usual arsenal of arguments and instruments to suggest the means to “recover” from this pandemic. It is a view of the epidemic as an interruption rather than as a surprise, even though gruesome, game changer. Even though we do not recognise this as the answer to the prayer we have been making on the need for transformation to deal with chronic poverty, the growing inequality, unsustainability and climate disaster, this pandemic might yet lead us towards positive economic transformation if there were such a thing. It could be the opportunity to confront our demons and perhaps shift trajectory; something we had come to believe is impossible because of our unbridled capitalist holy grail.

READ ALSO: COVID-19: Take-off of Africa Free Trade Zone “AFCFTA” Postponed

Our conviction is therefore that none of these well-meaning interventions is the long term solutions. Even if all the debts were magically cancelled, without changes in the underlying conditions (both global and national) our countries would likely just get into debt again soon. For example, Nigeria’s external debt stood at about $36 billion at the end of 2004. Negotiations with the Paris Club in 2005 yielded debt relief and with payments by the government, Nigeria’s external debt declined to about $3.5 billion in 2006. Today, Nigeria’s external debt has reached over $27.6 billion and debt service has become the biggest item in the budget, requiring over 50% of foreign earnings.

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We are not arguing against aid or reparations; this is a time in which the developing world needs all the support and redress possible. However, we must view these as temporary and residual measures. They should happen, but they are not going to bring about the transformation humanity needs.
It is time to break out of this illusion of a box. The problem is not only African; it is a global challenge. No amount of tinkering at the edges without a fundamental shift will solve the underlying problems. After all, Africa was being hailed as rising! Yet just one virus and we are facing a potential economic collapse in Africa and many parts of the world? And the long lines in many US cities for free meals at food banks is an indication that precarity is not limited to the developing world. We cannot and must not continue to produce a few billionaires in return for millions living on the edge. The current economic system is and has been failing humanity.

The question has often been asked what Africa may have to offer the world from her creativity, cultures and wisdom, partly because Africa has seemed less far gone, so to speak, in terms of being entrenched in global capitalism and hyperbole. Yet it has also been difficult to take Africa seriously when constantly on the backfoot – patronised and infantilised – in part because our leaders circle the globe with begging bowls and promises on one hand, while on the other hand, our elites are siphoning our commonwealth into private accounts overseas. But the times have become urgent, and the needs globally mutual.

READ MORE: Nigeria considers request for debt relief as debt stock climbs

For once, our underdevelopment and exclusion spell not only precarity but also opportunity. Our prevalence of and comfort with alternative and informal ways may not be simply dismissed as backwardness and fragility, but rather read as the seeds for resilience, new models, and better growth paths. Perhaps we finally have – albeit in strange costume – the level playing field in the realm of ideas about how to better organize our future economies.
And yes, Africa is willing and able to lead in finding ideas. In fact, we are proposing a project to do just that. We are launching a project on reimagining economies around the world, starting in Africa. The project boldly calls for a real reset and invites a much more radical, imaginative exploration of new economic foundations, principles, shapes, structures and systems. The goal is to design and propose to the world new socio-economic systems that are more inclusive, sustainable, and just.

There will be no investment in what has been, no holy cows. A venture of imagination to redefine and expand the economic menu is what is called for. We will explore multiple answers and approaches, pushing to think beyond the current paradigms, to imagine a new world with novel ethos. It will require new imaginaries, new processes of engagement, new institutional configurations and methods, new eco-logics, and boundless horizons. Will the world welcome and support this potential silver lining?

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For us, it comes to this: It is time to break free from our limited appetites for new thinking and imaginations. The fact is “the time is never right”. But there is no better time than now. We are all finally humbled to the point of vulnerability. Nobody knows any better than the other. It is therefore crucial that we seize this opportunity to seek new thinking and new ideas. The world needs everyone to contribute their ideas and innovations. We might as well get started in Africa!

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Article written by Olugbenga Adesida,  co-founder of The Africa Innovation Summit and co-founder of Bonako, a tech company based in Cabo Verde. and Geci Karuri-Sebina, co-founder of the Southern Africa Node of the Millennium Project and a visiting research fellow at the University of Witwatersrand in South Africa

Nairametrics frequently publishes articles from experts such as financial analysts, economists, researchers and investors. We also feature articles from guest writers and bloggers who wish to push their views and opinions through our platform. To get your articles on Nairametrics, kindly send an email to [email protected] and we will publish it within 24 hours of approval by our editorial team.



  1. Olawaleking

    May 13, 2020 at 12:23 am

    What Nigeria should now is to invest in Agriculture and the youth because we are the leads of tomorrow and Nigeria’s should stop valuing the valuing the White country. Government should look inward and do something different for Nigerians and God bless us.

  2. Kalu oji idika

    May 14, 2020 at 12:11 pm

    Erudite and well packaged write up but Africa need a new leadership breed who are conduit for internalisation of development. The lesson of the pandemic is do it yourself and do not depend on others instead of external help.

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Recession; proactive measures not cyclical factors can resuscitate economy

The National Bureau of Statistics (NBS) released the GDP report for Q3 2020 which officially confirmed the economy has slipped into a recession.



FG warns Nigerians about on-going N3million COVID-19 grant scam, IMF, World bank loans, Over 56% of 2019 budget expenditure was released for capital projects , FG changes decision to sell stake of oil assets in JVs, Finance Bill: Nigeria exempts small businesses from Company Income Tax , Finance Bill is for the good of Nigerians – Finance Minister, Zainab Ahmed, Nigeria, five other West African countries reject ‘Eco’ as ECOWAS single currency, FG rejects calls for tax reduction, tax relief for donors to intervention funds, Nigerian economy going into recession, might contract by -8.9% - Finance Minister, Nigeria to spend $33.20 billion in 2021 up 17.2%, will spend 25% of budget on debt servicing - Finance Ministry, COVID -19: FG accesses $750m loans from World Bank for states

Earlier this week, the Minister of Finance, Budget & National Planning, Zainab Ahmed attended the 26th Nigerian Economic Summit and in her presentation highlighted some of the steps and investments the government is making to bring the economy out of a recession. Some of the points she highlighted were; stimulating the economy by preventing business collapse through ensuring liquidity, retaining and create jobs through support to labour intensive sectors such as agriculture, undertake growth-enhancing and job-creating infrastructural investments in roads, rails, solar power and communications technologies, promoting manufacturing and local production across all levels as well as advocating the use of made in Nigeria goods & services. She also highlighted focus on pro-poor spending as a strategy to mitigate the impact of covid-19 on poor households.

We recall that during the weekend, the National Bureau of Statistics (NBS) released the GDP report for Q3 2020 which officially confirmed the economy has slipped into a recession. Following the 6.10% contraction recorded in Q2 2020, the economy further contracted though at a decelerating rate of 3.62% in Q3 2020. We reckon that prior to the covid-19 crisis, economic growth had began to slow with Q1 2020 GDP growth of 1.87% trailing prior 5-quarter average of 2.29% (excluding Q1 2020). The economy has largely survived on an oil-led recovery which we consider cyclical with other core sectors lagging and reeling from the fallout of the impacts of the 2016/17 recession.

In our view, the government needs to be proactive and strategic about policies it intends to adopt to resuscitate the economy. The focus on social welfare, fiat-led interventions in agriculture, emphasis on infrastructure development and advocacy for local manufacturing is reminiscent of prior strategies that can’t be really be considered successful. In our opinion, the economy is in dire need of influx of investments and adequate skill pool to spearhead resource allocation, which we believe can be provided by the private sector. Thus, the public sector should in our view invest in tackling structural issues around ease of business operations (borrowing costs, regulatory & licensing bureacracies/inconsistencies, public agency corruption & FX policies etc.) as well as strengthening regulatory & legal frameworks while the private sector drives the investments for accelerated growth in manufacturing, infrastructural development, agriculture and other core sectors.

In our view, supporting a free market-led economy (given the more organised nature of the private sector than the public sector) would see a return of foreign direct investments into the Nigerian economy while local entrepreneurs would be motivated to take more risks to develop businesses. The outlook for oil prices remain weak and production levels may remain below historical levels as OPEC attempts to keep price stable. Thus, the possibility of a cyclical recovery is limited, only proactive measures to correct long term structural issues would restore the economy on the path of accelerated inclusive growth.

CSL Stockbrokers Limited, Lagos (CSLS) is a wholly owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.

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Understanding T.I.N.A. in the Nigerian financial system

As investors face an environment where uncertainty persists, the alternative left will be to park their excess funds in a safe place until Covid-19 passes.



This week, I want to talk about T.I.N.A….(no not the girl)

T.I.N.A. is an acronym for There Is No Alternative. It is used to describe a situation where the markets have excess liquidity and have no outlet to invest, so they invest in low yielding government securities because there is simply no alternative out there.

The financial markets today are awash with liquidity.

In the US for example, the CARES Act 1 cost an estimated $2.3t (11% of US GDP) including $510b to prevent bankruptcies and $349b in Small Business Administration Loan.

All this cash simply increases the liquidity of the financial system. The US Federal Reserve further lowered rates to a band of 0-0.25% in March 2020, the effect? Rates offered by banks on deposits have crashed.

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Thus investors face an environment where the economy is shut because of Covid-19, and uncertainty persists. The only alternative left to the market is to park their excess funds in a safe place until Covid-19 passes, that safe place being US Treasuries and Bonds.

Thus the Fed and US Treasury can offer the low yielding paper to the market because the market is chasing safety, the investors buy because there is no other safe alternative out there, safety first.

It’s the same in Nigeria, the economy has contracted due to the COVID-19 mandated shut down and also exchange rate and land border closures.

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These issues have strained the economy and have been amplified by falling economic output. As a result, investors are very risk-averse and are not willing to expose their capital to risk, thus they are seeking the safety of the sovereign paper.

(READ MORE: The economy may end up weaker if inflation rate is not controlled – CBN report)

The Central Bank of Nigeria (CBN) faced with a glut of liquidity has done what any prudent banker will do, it has dropped the fees it pays to lenders when it borrows money from them.

Thus the Nigeria Treasury bill rate which is the cost of the CBN borrowing at the short end of the market, (less than 365 days) has fallen.

Take the latest auction of Treasury Bills dates 11/11/2020, the rate now being offered by the CBN for 91day and 364-day paper is 0.0350% and .300% respectfully.

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The low rates to my mind is not a surprise, but consider that the CBN offered to borrow N19b from the market, but received subscriptions from the markets to place N99b, this at 0.0350%.

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Why are investors flooding the Sovereign Debt market with money? Because there is no alternative viz a viz risk and reward.

The Nigerian Stock Exchange All Share Index for instance has fallen from a recent high of 42, 624 in January 2018 to 32, 990 as of the Week ending Friday 20th, 2020.

In essence, the Nigerian investors prefer to book negative real return by holding risk free government paper than take any investment risk by exposing their capital to commercial lending.

(READ MORE: Uber, JP Morgan Chase, Moderna gain, COVID-19 vaccine triggers U.S Stocks Up)

Again this is a normal consequence when there is uncertainty in the markets but the lack for a better word “greed” in the markets has offered the CBN a rare chance to drop rates even in an inflationary environment.

The consequences of T.I.N.A. in the Nigerian financial system is clear.

Low rates will discourage savings, already the Pension Fund Administrators have a decision to make if they will continue to hold a full 8% of their portfolio in a negative-yielding but safe investments. T.I.N.A. also supports the Central Bank of Nigeria’s strategy to force banks to lend to the real sectors.

By dropping the risk-free rates in the economy, the CBN is making a point that there is no more free lunch, rather yield will have to be generated from creating risk assets and earning a return.

This sounds good on paper but the investing environment in Nigeria is yet unchanged positively, new taxes are being proposed, land borders are still shut, wages are still low and falling due to inflation.


In general, the Nigerian consumer is in a weak state with very low buying power, as evidenced by the sachetization of the consumer space. It will take a brave investor to commit funds, but then again, fortune, they say, favors the brave.

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Traders’ Voice… A recession, for how long?

With the oil sector likely to remain depressed in Q4 2020, expectations of recovery will rest mainly on the future performance of the non-oil sector.



Recession! I think we all saw this coming. The Nigerian economy declined for the second consecutive quarter by 3.6% YoY in the third quarter of 2020, following a 6.1% drop in the preceding quarter. It marks the 2nd recession in the country in four years amid a significant decline in the oil sector, coupled with the rippling effects of the restrictions implemented across the country in early Q2 in response to the COVID-19 pandemic.

During the Sunday sermon, my pastor made a spirit-filled statement. He said, “it is hard to create sustainable wealth with a shaky foundation.” This statement did not only resonate with me spiritually, but it also did economically. In the case of Nigeria, ever since we shifted all attention to crude oil, it has been one economic struggle or the other. If I start talking about the macro-economic and sociocultural headwinds that watered down the effect of the fiscal and monetary stimulus packages, I would be forced to ‘off my mic’. At the end of the sermon, we were all asked to say this short prayer “Oh Lord, heal my foundation.” I also made the same prayer for Nigeria. However, deep down, I know we will need just more than prayers to address the fundamental issues hindering growth in the economy. The question remains, how long will it take to diversify the economy?

Over the years, huge amounts of investment have gone into the Agricultural sector in a bid to diversify the economy from crude oil. However, the agricultural sector remains underdeveloped and unable to sustain the economy (maybe we need to decide on what sector can really take us to the promised land). Although Nigeria is not the only country that has been gravely affected by the Covid-19 pandemic, I think it is safe to say that the Nigerian economy was already showing signs of weakness following a steady decline in crude oil prices and external reserves.

Just thinking out loud, for a country that is so rich in natural recourses, has a youthful population, favorable weather and fertile land, why do we struggle to generate multiple revenue streams? I guess it is true what they say, “one man’s trash is another man’s treasure.”

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The oil sector recorded a real growth rate of -13.89 percent YoY, driven by the depressed price of crude oil this year. We also witnessed a significant drop in oil production, which declined by 18.13% YoY to 1.67 Mbps, representing its lowest level since the third quarter of 2016, due to compliance with OPEC+ cut agreements.

ICT remains the outperformer in the non-oil sector

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The non-oil sector recorded a real growth rate of -2.51 percent YoY in Q3 2020, which is down by 4.36 percent relative to the rate recorded in Q3 2019, but represents an improvement of 3.54 percent when compared to the 6.05 percent contraction recorded in the preceding quarter. The gradual economic reopening pursued during the third quarter aided the improvement. The underlying subsectors that supported the non-oil sector include Information and Communication (14.56%), Agriculture (1.39%), Construction (2.84%), Financial and Insurance (3.21%), and Public Administration (3.58%).

For how long?

With the oil sector likely to remain depressed in Q4 2020, expectations of recovery will rest mainly on the future performance of the non-oil sector. We expect that the N2.3 trillion stimulus package contained in the economic sustainability plan will play a major role in supporting the recovery of the non-oil sector.

Nevertheless, the economic impact of the #EndSARS protest remains a concern as well.

All eyes are on the MPC meeting…

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The MPC will be holding its last meeting for the year and with the recent macro-economic data (GDP and inflation), market participants will be anticipating the outcome of the meeting more than ever. The MPC will have to decide between further supporting economic recovery or taming inflation. The Central Bank of Nigeria unexpectedly slashed its monetary policy rate by 100 bps to 11.5% during its September 2020 meeting, bringing anchor to the lowest since 2016.

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Inflation vs Interest rate (2015-2020)

*White line… inflation
*Blue line…. MPR benchmark rate

Where is the money?…….

The decision of the MPC will be a major determinant of market direction for the rest of the year. We face three
possible scenarios.

1. Bull case (rate cut): A further rate cut at the MPC will most likely renew interest on the long end of the
curve in the bond market as the short to mid end have received most of the traction in weeks. We will
also witness renewed interest in the equities market after last week’s pullback created possible entry

2. Base case (maintain status quo): The relatively quiet trend will persist in the bond and equities market.
Participants will be looking forward to the PMA on Wednesday where stop rates could print negative.

3. Bear case (rate hike): Although least likely, this would lead to a sharp knee jerk negative reaction
across all financial assets especially in the fixed income market.

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