Government willing to accelerate credit growth in Democratic Republic of Congo
The Vice President of DRC Central Bank has announced a 50% reduction in banks' capital requirements.Jules Bondombe Assango announced that banks would receive up to 50% capital relief on any transaction that is secured with a credit risk guarantee supplied by the African Trade Insurance Agency (ATI).
The measure of the Central Bank reduces the volume of capital required from 24.5% to 12.25%, if the transaction meets all eligibility criteria. Although these prudential requirements are still high - ratios of this magnitude are common in many countries of Francophone Africa - the decision of DRC Central Bank should have an important leverage effect on the loan market.
This announcement is the result of negotiations undertaken by the ATI warranty credit risk at the regional level on the Continent. In the case of the DRC market, the new rule should allow an increase in the volume of loans granted by local banks as well, as it should also encourage African border banking groups as well as foreign multinationals to enter the market.