Underrated Sub-Saharan Africa scores over Eurozone in handling Covid

Several sovereigns including Benin, Cote d'Ivoire, Ethiopia, Ghana, Kenya, Rwanda and Uganda, probably avoided a contraction in GDP in 2020 and will recover to earlier strong growth, say analysts

Underrated Sub-Saharan Africa scores over Eurozone in handling Covid
Despite months of lockdowns which have muted economic activity, the Sub-Saharan Africa contracted a mere 3% this year and is expected to bounce back to around 3.5% growth in 2021. Photo: Reuters. 

(ATF) Sub-Saharan African (SSA) sovereigns deserve better credit ratings given that the region’s economies have fared better during the pandemic than the Eurozone, with several avoiding a contraction in GDP in 2020.

That’s the opinion of a senior economist who questions why the outlook on the nations’ debt remains negative and many levels below developed European countries that didn’t manage the Covid crisis as well.

According to Simon Quijano-Evans, the chief economist at the London-based investment management firm Gemcorp Capital, Sub Saharan African countries have been rated about nine notches below the Eurozone periphery countries because many countries in Sub Saharan Africa aren't really analysed to the extent of countries like Turkey, or South Africa or Brazil.

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“In a number of cases, especially the oil-exporting countries in Sub Saharan Africa, the spreads are lower than what ratings are telling us,” Quijano-Evans says. “And then you have other countries, for example, like Angola, where both ratings and spreads in my view are too high, and where there is plenty of potential for spreads to come down yields to come down as well, and ratings to improve.”

Quijano-Evans adds that SSA has also been able to deal with Covid much better than many other developed markets including Western Europe, Eastern Europe and also North America, which is another reason why the region deserves higher ratings.

The Gemcorp Capital’s head economist is also bullish on China and says that in about a decade China could approach the size of the US economy, which should dictate the future course of the US-China political relations.

The young population of both countries, he says, are not particularly interested in geopolitics and politics, that the politicians of both countries should take into account that the younger generation wants to have a future, he adds.

economy Sub-Sahran Africa Credit Ratings in Africa