Goldman Sachs expected several countries in Sub-Saharan Africa (SSA) to face challenges in meeting their external financing needs in 2020, as they entered the coronavirus crisis with pre-existing vulnerabilities. It anticipated the current account balance of SSA economies to widen by two percentage points of GDP on average in 2020. It indicated that Angola and Nigeria face high risks of short-term balance-of-payments stress due to their reliance on hydrocarbon exports. Further, it projected a substantial decline in tourism receipts in Africa this year, which will have a significantly negative impact on Kenya, Mauritius and Tanzania. However, it considered that the deferments of bilateral interest payments by external creditors will provide negligible relief for balance-of-payments of SSA countries, while the anticipated decline in global remittance inflows will affect a limited number of SSA economies, such as Nigeria, Kenya and Ghana.

It expected the financing needs of SSA oil-exporters to significantly increase this year. It noted that Angola is already in debt relief talks with its creditors, while capital outflows have constrained Nigeria's external position, which resulted in an 8% devaluation of the naira against the US dollar in recent months. 

In parallel, Goldman Sachs said that the external positions of Ethiopia and Uganda are fragile, mainly due to the countries' low level of foreign currency reserves and to their reliance on foreign direct investments (FDI) for external financing. As such, it noted that a decline in FDI inflows due to the coronavirus pandemic will exacerbate the financing challenges of the two economies. Further, it considered that the scale of deterioration in the current account balance for the rest of SSA countries is manageable, even though their external positions have weakened and their ability to access international markets has diminished. It expected policymakers in SSA countries to choose between adjusting their exchange rates and monetary policy to rebalance external and internal pressures, or seeking additional sources of financing to cover capital outflows.
Source: Goldman Sachs