COVID-19 IMPACT ON BANKS IN AFRICA NOT DEVASTATING
MOODY’S Investor Services has said its reading of the impact of the Covid-19 coronavirus would not have an ultimately devastating effect on Africa’s banking systems, including those of Nigeria and South Africa. In a report last night on the Banking Sector, the ratings agency, on which South Africa breathlessly awaits a crucial ratings decision, acknowledged that the coronavirus pandemic and the sharp oil price drop have already led to portfolio outflows from emerging markets, including Africa, and will exacerbate the slowdown in economic growth at a time when government debt levels have increased to over 50 percent of GDP on average across the continent. Moody’s said in such an environment, banks’ financial performance – asset quality, profitability, and foreign currency liquidity – will likely suffer. It said banks specifically in oil-exporting countries, due to their heavy exposure to the oil & gas sector, primarily Nigeria, will face renewed asset quality pressures. Partly dollarised banking systems like Angola, DRC and Nigeria will also be faced with renewed foreign currency liquidity pressures if the portfolio outflows persist. “Despite these challenges, our baseline scenario assumes a significant global disruption but not an extensive and prolonged slump,” Moody’s said.