Argentina, the world’s most notorious serial defaulter, was able to borrow from international investors with no repayment required for a century. Three years on, that bond is worth a fraction of its issue price as the country heads for its ninth default. By contrast, oil-rich Angola, which hasn’t defaulted since the end of its civil war in 2002, was charged a higher rate for its shorter-dated debt last year.

It’s just one example of the added risk presumed by investors that penalises African governments and companies with higher borrowing rates. And, despite the continent’s relatively exemplary record in tackling the COVID-19 pandemic, presumed risk of default is also the lens through which creditors are entering talks on debt relief.

In the latest in our series of online discussions, we probe the risk bias against Africa and ask the inevitable question: is prejudice infecting capital markets?

Tune in below for a captivating conversation with our panel of experts- Kojo Anna, Fulu Mudau, Christophe Charlier, and our very own Michael Nderitu along with Boason Omofaye:

Notes:

How does the narrative of Africa in Western media shape risk bias against the continent? [04:12]
Are default risk premiums charged by investors to Africa justifiable? [05:36]
What are some of the key issues investors are concerned about? [07:40]
How critical is data to determine the risk bias and why is the demand for data about Africa low? [12:28]
What does the prejudice against Africa stem from? [15:48]
Why are there such large discrepancies between debt terms and consequences for debt default for Africa vs other emerging markets such as Latin America and Asia? [18:47]
Is Africa being badly impacted by this bias and is coughing up most of its revenue to repay debts? [21:40]
Do high target premiums come in the way of development in the region? [25:32]
How will Africa be able to navigate debt obligations amid the COVID-19 pandemic? [27:29]
Why is there a difference between foreign portfolio investors and foreign direct investment in terms of their appetite for countries like Nigeria? [31:03]
Why can’t we trade without the dollar on the continent? [34:20]
What role can enterprises play in guiding international investment decisions? [36:54]
Is it justifiable for the West to view Africa as a single entity when doing risk assessment? {41:07]
To what extent do credit risk ratings impact investment decisions in Africa? [42:55]
How do we encourage local capital to African startups as well as get regulators to protect African start-ups? [46:15]
Are more regulations needed in the fintech space in Africa? [48:56]
What role does politics play in deciding risk premium and bias when it comes to investment decisions? [53:40]
How much do media narratives of Africa influence investors’ decisions? [56:20]

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