ATI is well placed to provide accurate analyses. From its headquarters and offices based in Africa,ATI offers an on-the-ground perspective of the risks faced by investors and others doing business on the continent. In this section, we interview key members of ATI’s operations to obtain insights into the challenges and the opportunities in African markets.
In this issue, Deepak Dave, ATI’s newly appointed Chief Risk Officer, sheds light on the practical implications of doing business in Africa under the cloud of COVID-19.
Q: What is your assessment of the current and future impacts of COVID-19 on African markets?
The most obvious impacts are the dramatic drop in economic activity that will harm incomes across the continent, those of governments, companies and individuals. The drop in revenues and thus government spending will have a significant impact on the social spending of our countries, thus hurting the most vulnerable. The drop in Governments’ ability to service debts and continue spending on development will have a significant roll-on effect for years on our ability to trade, raise money in international markets and impede our most precious resource, our people.
Q: As a follow-up question, what is your assessment of the current G20 and Paris Club initiative to provide a workable solution to the private creditor debt owed by African sovereigns?
These are means by which the world shows that it stands with Africa at this difficult time, and that there will be an understanding and empathetic attempt to restructure the burdens of debt and foster investment so as to improve the continent’s ability to bounce back from the low point we are at.
However, many African governments have indicated that they would prefer to do this on their own terms, an admirable impulse since it will allow the priorities of the continent to take precedence and mean that future access to international markets will be available.
Q: What industries are likely to be the hardest hit as a result of the pandemic, and what is your advice to companies trying to navigate their way through these sectors?
Our view is that tourism and travel and related services will be the first to take a hit. These have substantial effects on individual incomes, and most importantly they hit forex receipts very hard. Supply chains in agribusiness, horticulture have been stunted, but we know demand will more obviously bounce back, as it will for the resources businesses and their supply chains.
Q: What is your advice to financiers and investors, who, like many, may be reticent about further engagement in Africa?
Africa’s 1.3Bn people are a growing, thriving and resourceful part of the global economy. Our resources, commodities and supplies are vital for the World’s economic recovery, and sticking with us through the long-term will always be remunerative and rewarding.
Our governments are acting in the best interests of their people and have started working on how we will recover and make good on our commitments to others. Stay with us, the only way is up.
Q: Where do you see the opportunities?
Recovery will come quickest in sectors that are part of global supply chains, servicing international clients. For example agri-business, horticulture, textiles and minerals. In local economies, digital finance and e-retail are taking a growing share of local currency spending for investors with a medium-term framework.
Deepak Dave brings over 20 years of global experience in banking, capital markets and private finance. He has served in senior positions at GE Capital, Export Development Canada (EDC) and Barclays Investment Bank and founded Riverside Advisory. He holds a Bachelors from McGill University and a Masters from the University of London.