The borrower power balance is shifting in sub-Saharan Africa
Bankers have to be more innovative amid improving economic and political conditions
Banks in sub-Saharan Africa are looking for quality assets that promise adequate returns, in a region where banking differs vastly from the international landscape. These banks face issues that include challenging economic and political conditions, the high costs of hard currency borrowings, currency transfer and inconvertibility constraints, single obligor limits, and the limited depth of local currency markets. The banking power balance has shifted in sub-Saharan Africa over the past year, particularly in traditional banking where investors are hungry for good credits. Bankers have to think innovatively when they structure transactions and mitigate risk to deliver results. This trend – mostly a result of the limited returns achieved on assets – has been more prevalent in the US dollar syndicated loan space, with a few sovereign borrowers in East Africa now borrowing at five to seven years, as opposed to the usually two- or three-year bullet facilities. Coupled with this is the low...
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