Growth in private sector credit slows in sub-Saharan Africa, says IMF
The growth in lending is not expected to resume in the short term.Credit to the private sector has slowed in most sub-Saharan countries since the beginning of the year, the International Monetary Fund (IMF) said in its adjusted outlook for the global economy, published on May 3rd.
"This recent phenomenon is examined in relation to the rapid growth in private sector credit recorded over the 2010-13 period, when commodity prices were trending upward and financing conditions were favourable," the institution stated in a report seen by Ecofin agency.
Several countries that are not exporting natural resources such as Senegal, Kenya, Togo and Mozambique present risks associated with fast credit growth that could weigh on their financial stability.
However, in most countries exporting natural resources, rapid credit growth was related to a catching-up process.
The growth in lending should not resume in the short term, given that the IMF now forecasts growth of three per cent in 2016, against 3.4 per cent in 2015.
However, the institution considers that sub-Saharan Africa has many assets, being home to the most innovative mobile financial services in the world, which can compensate for some of the infrastructure and other shortcomings that most countries face. Micro financing has also grown rapidly, providing financial services to the poor.
However, the IMF warns that all new and rapidly growing financial developments also pose potential financial stability risks.