Until recently, African banks had been “reporting stellar growth and juicy returns”, says The Economist. Credit-ratings agency Moody’s calculated that they were four times more profitable than Europe’s struggling lenders. But now a combination of falling commodity prices and slowing economies is turning profits into losses.
Nigeria may be on the verge of a second banking crisis in less than ten years. The central bank estimates that bad debts in the system have doubled to 10% in six months due to the oil-price slump.
In Ghana a plunging currency forced the central bank to raise interest rates, which – along with commodity price falls – has propelled non-performing loans to 16% of the total. It looks as though Africa’s banks won’t be able to help rectify the continent’s “desperate shortage of credit” in the next few years.