African Equity Capital Market (ECM) activity in 2020 was the lowest it has been in the last decade, recording a significant decline in both volume and value, according to PWC’s latest report. The report, ‘Africa’s Capital Market Watch’ indicated that the market recorded a value decline of 2 per cent and a volume decline of 23 per cent. This, experts argue, was not unexpected especially with everyone having to deal with the Covid-19 shock. The drop in equity markets however, was largely driven by the impact of repercussions of the Covid-19 pandemic, as well as global and economic uncertainty, the consultancy said. ““While many global markets experienced a brief delay in activity at the onset of the pandemic, followed by recoveries before the end of the year, the pause experienced in African capital markets was more prolonged. Some recovery was noted in the second half of the year with the completion of several deals,” Ashley Schoombee is quoted saying in the report. Consequently, the slowdown effect on the pandemic was evident in the volumes and values of non-local corporate, sovereign and supranational debt raised during the year. Prolonged downward trend for IPO Like it has been in the past four years, the initial public offering (IPO) activity continued a downward trend. According to the report, a total of five IPOs were recorded in 2020, the lowest number in a decade. In 2019, the volume of IPO activity recorded a decline of 47 per cent compared to 2018. PwC points out that the largest IPO in 2020 by value was the dual listing of Bytes Technology Group on the LSE and JSE, raising $467-million. Bytes is a UK business that demerged from South African technology company Altron. In contrast however, further offer (FO) value in 2020 increased by 16% compared to 2019, but fewer companies accessed the market in 2020, which continues the trend of lower FO volumes over the past few years, PwC states. Domestic deals The report highlighted that domestic deals accounted for 71 per cent of ECM volume and value recorded in 2020. This has been the same trend for the past couple of years. Statistically, domestic activity accounted for 72% and 78% of ECM volume and value, respectively. There was a significant decline in outbound ECM activity between 2019 and 2020. In addition, PwC reports that African issuers have raised $167-billion in non-local currency debt from 536 issuances over the past five years. “Patterns of corporate non-local currency bond issuances have been somewhat inconsistent over the past five years, owing to the small number of active issuers and the variable size of issuances over the period. Total proceeds in 2020 represented a five-year high of $7.2-billion.” The report reads in part. “A state of uncertainty seems to have become the ‘new normal’ globally, and we can expect some degree of volatility and caution to continue to affect Africa’s capital markets activity in 2021,” Andrew Del Boccio, PwC Africa Capital Markets Leader, said in a previous interview with the press. Egypt has consistently been the largest issuer of sovereign bonds over the past five years, accounting for 38% of all sovereign bonds issued in 2020. In 2020, when the Covid-19 pandemic hit the country, many countries cancelled or postponed their plans to issue bonds in light of the pandemic related economic and financial uncertainties.