PwC: African capital markets value at lowest in a decade

Africa's capital markets are facing challenges, with a recent report from PwC indicating a decline in equity capital market activity on the continent. The report highlighted that overall equity capital market activity in Africa dropped by 44 percent in value in 2019, the lowest in over a decade. Alice Tomdio, Director of Capital Markets Services Group at PwC, discussed the findings in an interview with CNBC Africa, shedding light on the key points affecting the market. Tomdio pointed out that the lack of IPOs on the Johannesburg Stock Exchange was a significant factor in the decline of activity, as about 70 to 75 percent of the activity in the region stems from South Africa. Economic challenges, political gridlock, and corporate failures in 2018 contributed to the downturn in the equity capital market activity in the country. Despite the bleak outlook for 2019, Tomdio highlighted some positive developments in Africa's capital markets over the past two years. One of the bright spots is the growth of the local currency bond market in Africa, demonstrating a shift towards sustainable finance. Several African countries have made strides in this area, with initiatives such as green bond frameworks and issuances. Kenya, Nigeria, and South Africa have seen significant progress in the green bond sector, with various companies and governments issuing green bonds to fund sustainable projects. Additionally, Seychelles introduced the first blue bond, and Bayport issued the first social bond in Mauritius, signaling a growing interest in socially responsible investing. Looking towards the future, Tomdio expressed optimism about the potential progress in Africa's capital markets. She highlighted a trend of private equity-backed IPOs gaining momentum in the region, with companies like AirTel, Vivo, and CEPLAT leading the way. These dual-listed companies have raised substantial proceeds from IPOs, showcasing the collaborative efforts between domestic and foreign exchanges to drive more mega IPOs in the market. While challenges persist, such as economic uncertainty and political instability, Tomdio believes that the increasing focus on sustainable finance and innovative fundraising methods will pave the way for growth in Africa's capital markets. By leveraging the strength of private equity-backed companies and fostering collaboration between domestic and foreign investors, the continent could see a positive shift in capital market activity in the coming months and years.