Intelligent CXO Issue 09 | Page 55

REGIONAL ROUND-UP

AFRICA APAC EUROPE MIDDLE EAST NORTH AMERICA

EIB STUDY HIGHLIGHTS IMPACT OF COVID-19 ON AFRICAN BANKS

The European Investment Bank ( EIB ) has published a unique analysis of the impact of COVID-19 on financing across Africa . The Finance in Africa 2021 report surveyed 78 leading banks and financing institutions active across sub- Saharan Africa to examine the impact of the pandemic on banking and business lending , investigate how Africa ’ s financial sector is harnessing the digital revolution and detail the challenges and opportunities of green finance for banks .

“ Africa ’ s banks are crucial for ensuring access to finance which is essential for private sector growth and climate action . They also understand the unprecedented challenges triggered by the COVID-19 pandemic . The European Investment Bank is committed to supporting transformational private and public investment across Africa in close cooperation with financial sector partners ,” said Thomas Östros , Vice President , European Investment Bank .
The Finance in Africa 2021 report , written with the support of Making Finance Work for Africa ( MFW4A ), is the sixth study of Africa ’ s financial sector by the European Investment Bank .
The new report explores how access to finance provided by banks , microfinance and private equity sectors have been affected and what long-term trends may impact private sector investment .
“ The COVID-19 pandemic has already prompted major changes in how business is conducted and has accelerated digitalisation trends that were already underway before the crisis but that were slower in adoption . This has unlocked new opportunities for African financial institutions to innovate and drive financial inclusion . African banks can also play an important role in society ’ s adjustment to climate change and contribute to its mitigation , for example , by including environmental risks in their credit and investment process or by incentivising clients for green investments .
" With this unique report , we aim to capture how the African financial sector has rapidly adapted to the COVID-19 pandemic , pointing to continuing challenges and highlighting exciting opportunities for climate finance and digitisation ,” added Abdelkader Benbrahim , Making Finance Work for Africa Partnership ( MFW4A ) Coordinator .
The detailed analysis of the impact of COVID-19 on financial intermediaries , backed by a survey of bank lending across the continent , concluded that Africa ’ s financial sector has remained stable but that private sector financing may recover slowly , with small business and microentrepreneurs being the hardest hit .
The survey suggests that nearly 50 % of African banks are most concerned about the quality of existing assets and more than 20 % are most concerned about a reduced demand for financing and an increase in the risk of future lending .
African financial sectors have displayed remarkable resilience during the COVID-19 crisis and a liquidity crisis in the banking sector was averted , as most banks were well capitalised before the crisis and policymakers reacted fast . x www . intelligentcxo . com
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