MFW4A 2020 Annual General Assembly – Virtual Edition

Financial Sector Development in the Era of COVID-19
9-10 December 2020

Introduction

The Partnership for Making Finance Work for Africa (MFW4A) will host its virtual Annual General Assembly (AGA) on 9-10 December 2020. The two-day meeting will take place in an unprecedented global economic and social environment resulting from the pervasive effects of the COVID-19 crisis. The pandemic has brought major disruptions to economic activities across the world and the impact reflects the speed and magnitude of the contagion and greater economic integration of global supply chains. Countries face demand, supply and financial shocks, and have used monetary and fiscal stimulus, as well as financial sector interventions to cope with the economic downturn.

Nearly one year into the unfolding COVID-19 crisis, “there remains considerable uncertainty around the pathway of the pandemic, the means and speed of any economic recovery and what structural changes…it will bring in the longer-term”. Although economic activities and employment levels around the world have rebounded to varying degrees from the depths reached in Q2 2020, they are still far from the pre-crisis levels. Furthermore, a resurgence of COVID-19 infections accompanied by barrier measures such as lockdowns, travel bans, and social distancing will likely continue in 2021.

In Africa, the COVID-19 crisis has impacted all aspects of society and the economy and the multi-faceted effects are threatening to reverse the development progress of recent years. The impact on trade, commodity prices, remittances, tourism is likely to be devastating with economic growth expected to collapse to a negative 1.6% and a real GDP per capita fall of 3.9%. Consequently, COVID-19 could push up to 43 million people into extreme poverty in Africa, wiping out at least five years of progress in fighting poverty.

The pandemic crisis has already prompted major changes in how business is conducted in the financial industry such as accelerating the digitalization to cope with the new operating environment and much deeper changes may occur in the future as the crisis last longer. At the policy level, the crisis is also expected to impact financial sector development (FSD) efforts and have implications for the formulation and implementation of policies and regulations to address the economic downturn and ensure stability in a post-COVID era.

Beyond the current COVID-19 crisis, a positive note is the new momentum for the implementation of the African Continental Free Trade Area (AfCFTA) which brings along significant hopes for African SMEs and massive opportunities for scaling up SME finance and trade finance on the continent. Underpinning the expansion of intra-African trade is the development of a good infrastructure system to facilitate the movement of goods and services. Africa needs more long-term capital to sustain continuous efforts in deploying hard and soft infrastructure, hence the need to unlock the potential of domestic institutional investors to complement foreign capital sources.

As African governments across the continent continue to address the COVID-19 pandemic and economic fallout, the current context calls for a deep reflection on the resilience of the financial sector to withstand such shocks and the role of financial sector development in supporting Africa’s post-COVID-19 recovery process. At MFW4A, our immediate priority focuses on understanding current challenges and identifying opportunities in order to derive lessons for more effective and efficient financial sector interventions by governments, regulators and financial institutions.

Expected Outcomes

The expected outcomes of the AGA include:

  • Understanding pertinent challenges faced by the African financial sector in the context of the COVID-19 crisis;
  • Identifying opportunities to derive lessons for more effective and efficient financial sector interventions by governments, regulators and financial institutions to support a post-COVID recovery; and
  • Fostering cooperation between members of the MFW4A Partnership and African financial Stakeholders to engage in post-COVID recovery.

Participants

The AGA will bring together MFW4A Governing, Associate and Non-Funding Members, select development partners, and African financial sector stakeholders. Members shall select a representative from within their organization, who shall act on statutory matters on their behalf.