Fitch reports rapid credit growth in sub-Saharan countries
A new report from the Fitch rating agency released on Tuesday shows that credit is growing rapidly in sub-Saharan Africa, with over 15 percent growth reported in eight countries between 2009 and 2011.A new report from the Fitch rating agency released on Tuesday shows that credit is growing rapidly in sub-Saharan Africa, with over 15 percent growth reported in eight countries between 2009 and 2011.
These are Ghana, Cameroon, Gabon, Kenya, Lesotho, Mozambique, Rwanda and Uganda. According to Fitch, the credit growth observed in the 15 countries studied primarily reflects the expansion of the financial sector in a context of rapid economic development.
Credit increased as macroeconomic and financial risks reduced, the agency said in a statement, adding that most countries in sub-Saharan Africa need more credit, not less, to finance their development.
However, the development of credit in these countries is facing several constraints, including low incomes, an underground economy and weak institutions.
The agency also added that bank supervision by central banks has improved since the beginning of the global economic crisis and that banks have higher capital ratios (an average of 16.8 percent in 2011) as well as abundant liquidity.
In addition, their exposure abroad is low, which protects them from turmoil in other parts of the world.
According to a report published by the IMF in April 2012 entitled "Sub-Saharan Africa: Sustaining growth in a global climate of uncertainty", although the region's financial systems are underdeveloped compared to the rest of the world, financial markets have considerably diversified over the past decade, so that domestic credit accounted for 20 percent of GDP in 2010, compared with 14 percent in 2000.