A survey and subsequent report, “Survey of Impact of Covid-19 on African Trade Finance,” by a consortium of African financial institutions, states that outflows from global emerging market economies in the first quarter of 2020 amounted to more than $100 billion. Globally, this figure (credited to OECD publications) includes large economies of Brazil and India, while in Africa, the hardest hit were South Africa, where $3.1 billion disappeared, and Egypt, which lost $400 million. Produced by a survey of 370 “representative” commercial banks across the continent, the report was a joint production between the Afreximbank, the African Development Bank, Making Finance Work for Africa and the UN Economic Commission for Africa. [https://afr-corp-media-prod.s3-eu-west-1.amazonaws.com/afrexim/Survey-of-Impact-of-COVID-19-on-African-Trade-Finance.pdf]
Global output, which was forecast to expand by 3.3% in 2020 (pre-pandemic), instead contracted by about 3.5%, and Africa suffered its first economic recession in 25 years. Similarly, global trade, which was forecast to expand by 2.7% in 2020, contracted by 9.2%. The report states that in Africa, the Afreximbank African Commodity Index — tracking the price of everything from maize to coal — fell by 44% in the first quarter of 2020.
As the lockdowns spread like wildfire across the continent and beyond (with imports drying up and exports piling up) banks immediately reported both higher loan demands by businesses and governments as well as higher rejection rates by banks. Africa’s two continental banks responded by creating two Development Finance Institutions (DFI )— the Pandemic Trade Impact Mitigation Facility of the Afreximbank and the COVID-19 Rapid Reaction Facility of the African Development Bank — which provided emergency finance (by relaxing reserve and compliance requirements) to regional banks.