ACRACRA (Reuters) – Rate hikes swept the region amid widespread inflation, currency devaluation and a senior executive at credit rating agency Fitch said on Wednesday.
African economies have struggled over the past year in the face of external forces, including Russia’s war in Ukraine, the global recession and the COVID- 19 pandemic Lingering impact.
Growth opportunities will be limited in the next 1-1/2 years, but regional banks are expected to remain profitable despite moderate-severity shocks, Fitch Senior Director Mahin Dissanayake at a press conference.
“There are both global and domestic pressures in these countries, so we think the operating environment for banks in the future looks rather bleak,” Di Sanayake said.
“Opportunities for growth are certainly limited…but the COVID-19 pandemic has shown us that African banks can be resilient in the face of global shocks.”
Morocco is the country most likely to be affected by the slowdown in Europe, given its reliance on European trade and tourism, Dissanayake said.
Nigerian banks may be affected by the continued depreciation of the naira currency, he said.
Nigeria is an import-dependent country with a highly dollarized banking sector, as the dollar strengthens, the cost of imports may increase and corporate borrowers will find it difficult to afford him Said, passed on to the client.
The currency shortage could pose a direct challenge to Nigerian banks, while they could also see more loan losses to small businesses, Dissanayake said.