Nigeria and other Sub Saharan African countries will suffer a 2.1 percent contraction in 2020 as a result of the Covid-19 induced disruption of economic activities. However, the SSA countries will return to growth at 4 percent in 2012 which may not be enough for meaningful development.
This is the projection of Fitch Ratings in its current report on SSA titled “Outlook on Sub-Saharan Africa sovereigns is negative” released on Monday.
In particular, Fitch Ratings has said the shock emanating from the pandemic has had a most profound effect on the region’s oil producing countries namely, Angola, Congo, Gabon and Nigeria on account of their dependence on petrol dollar receipts for funding their local and external financial commitments.
“The global shock has had a strong impact on the SSA region via commercial and financial linkages, and domestic containment measures – with many countries imposing lockdowns and curfews – have caused severe disruption to economic activity in many countries.
Fitch said countries with a concentration on tourism, particularly Cabo Verde and the Seychelles, had also been badly affected.
It noted that the coronavirus pandemic and the oil price shock it triggered had had a severe impact on sovereigns in sub-Saharan Africa, which led to rating downgrades on seven of the 19 rated SSA sovereigns since the beginning of March 2020.
“Four sovereigns in the region have negative outlooks on their rating, which is unusually high, pointing to continued downside risks to ratings,” it said.
The credit agency explained that only Cote d’Ivoire carried a positive outlook.
According to Fitch, the fall in revenue, combined with additional spending from the healthcare sector would lead to a surge in deficits and debt levels in 2020, and debt would continue to rise in 2021 for a majority of countries.