(Ecofin Agency) - Africa is vulnerable to a massive capital flight due to the current covid-19 crisis and the bad level of oil price. Rating agency Fitch says this is because the continent is not resource-strong enough to deal with external shocks.

“The souring sentiment does not only affect financing in international markets, but it could also lead to portfolio outflows where investors have invested in local-currency debt in countries like Nigeria, Egypt, Ghana, and South Africa,” said Mahmoud Harb, senior analyst at Fitch.  

Fear and insecurity sentiment linked to the coronavirus outbreak has pushed foreign investors to sell R20 billion ($1.2 billion) of South African government bonds this month already, Bloomberg found. According to experts, the current scenario is not showing any good outlook for Africa’s economy and a massive capital exodus is not going to help.

“Sub-Saharan African countries have limited fiscal and external buffers in the sense that they don’t have readily available assets they can use for counter-cyclical policy purposes, such as large sovereign wealth funds,” Harb said.

Africa’s oil-producing countries will have to deal with a situation tougher than in 2014 when production overflowed the market. Unlike this time, demand is now expected to tumble, the first time since 2009.