How did Ghana's capital markets handle the Covid-19 pandemic?

The Covid-19 pandemic has severely affected economies, businesses and consumers across the world, especially in terms of crisis management, supply chains, liquidity and operations. Central banks and the wider banking community were among the first to experience these disruptions. Countries hit hard by the pandemic have taken aggressive fiscal and monetary policy measures to address the challenges posed by the health crisis, including cuts in policy rates.

After Ghana recorded its first case of Covid-19 on March 12, 2020, the Bank of Ghana (BoG) – the country’s central bank – announced policy measures to cushion the economy from the effects of the pandemic. It did so after assessing its expected impact on the economy, such as a decline in GDP growth, imports and exports, tax income and foreign exchange receipts. Among the policy measures introduced was a reduction of the policy rate by 150 basis points to 14.5%.


The pandemic intensified uncertainties in international financial markets, causing a downturn in bond prices. This widened the spread on sovereign bonds, especially in emerging markets such as Ghana. Most emerging market sovereign issuers were downgraded by the major ratings agencies in the wake of the pandemic as a result of strained budget conditions and weaker economic outlook. For example, Fitch revised its outlook for Ghana’s long-term foreign currency issuer default rating (IDR) to negative from stable and affirmed the IDR at “B”. Ghana witnessed some exits in its bond markets, leading to sharp increases in yields as investors revised their risk-off sentiments and shifted to safer assets such as gold. Demand for government bonds was sustained, however, by local investors, including asset managers and banks, as investments were focused on more liquid and safer assets.

The disruptions extended to corporate bonds and a shutdown of new issuances as investors reassessed their risk appetites and corporate institutions shied away from the market due to wider credit spreads from the slowing of business activities. The market returned to some form of normalcy in 2021 with the re-emergence of some offshore investors and corporate issuances. Five corporate institutions have accessed the bond market to raise funds to support their business activities between January and October 2021.

Stocks & Private Equity

Stock markets around the world reported slumps in their indices in the wake of the Covid-19 pandemic as investors exited sectors that were particularly affected by the crisis, and shifted their investments to more liquid and safer assets. This was reflected in the returns of the GSE, which averaged -14% in 2020. The situation improved in 2021 and returns averaged 43.7% that year. This was largely supported by Ghana’s technology giant, MTN. The pandemic’s effect on private equity has been mixed, with more investments in technology and some pharmaceutical companies. However, sectors such as hospitality, tourism and aviation witnessed slower growth. Some private equity funds with investee companies in the affected sectors saw fund returns significantly impacted in 2020-21.

Support Measures

Following the BoG’s banking sector clean-up in recent years, the remaining 23 banks in the market are strong, with good financial soundness indicators (see Banking chapter). The central bank rolled out measures to support the financial sector, including revisions to the primary reserve requirement, capital conservation buffers and provisioning for loans in certain categories. In partnership with banks and mobile money operators, the BoG implemented measures to facilitate more efficient payments and promote the use of digital payments. As part of risk assessment, the BoG reduced allocations to severely affected sectors, and invested more in liquid government securities and better-performing sectors. While there was an increase in non-performing loans, the sector continues to be robust and plays a leading role in supporting the country’s post-pandemic recovery.

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The Report: Ghana 2022

Capital Markets chapter from The Report: Ghana 2022

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