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Tough Times Lie Ahead for Banks in Africa

The next 12-18 months will be “very difficult” for African banks as widespread inflation, currency devaluations and interest-rate hikes sweep the region, a senior director of credit ratings agency Fitch said on Wednesday. Growth opportunities over the next one-and-a-half years will be limited, but regional banks are expected to maintain their profitability in the face of shocks of medium severity, Fitch senior director Mahin Dissanayake said during a media briefing. “The opportunities for growth will certainly be limited … but the Covid-19 pandemic showed us that African banks can be resilient when faced with global shocks.” Dissanayake said that Morocco was the country most likely to be affected by the economic slowdown in Europe, given its dependence on European trade and tourism. Nigerian banks are likely to be affected by the naira’s ongoing depreciation, he said.