“Very difficult” 18 months ahead for African banks — Fitch 2022-23 Outlook – The North Africa Post

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 (21 September).
African economies have struggled over the last year in the face of external forces including lingering effects from the COVID-19 pandemic, a global economic downturn and most recently Russia’s war in Ukraine. The next one-and a half years will have limited growth opportunities, but African banks can expect to remain profitable in the face of shocks with medium severity, Mahin Dissanayake told the media. “These countries have global pressures as well as domestic pressures, so we think that the operating environment for banks is looking quite gloomy going forward,” Dissanayake said.
He also pointed out that Morocco is the most likely country to be affected by the European economic slowdown, due to its dependence on European tourism and trade. Nigerian banks are likely to be affected by the country’s currency, the naira’s, ongoing depreciation, he said. He said that Nigeria, an import-dependent country, will likely experience higher import costs as the dollar strengthens. Corporate borrowers will have a difficult time passing on these increased costs to their customers. Dissanayake stated that currency shortages could pose problems for Nigerian banks directly and may cause them to make more loans to small businesses.