Moody’s Investors Service predicts that African banking systems will remain deposit-funded and liquid, which will support financial stability in most countries. However, foreign currency liquidity will still pose a challenge for Nigerian and Egyptian banks. The banking sector outlooks for Nigeria, Egypt, Kenya, and The West African Economic and Monetary Union remained stable, while those for South Africa and Morocco were revised from negative to stable, thanks to their steady deposit-based funding structure, capital, and profitability despite a challenging operating environment.
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Nigeria: CBN in talks with US tech firms to boost CBDC uptake
The Central Bank of Nigeria is in talks with new technology partners to develop a new and improved system to manage its central bank digital currency (CBDC), the eNaira. It is believed that the Nigerian financial authority has discussed these plans with the New York-based technology firm R3. The effort to create the eNaira began in 2021 with the help of financial software company Bitt, which still works closely with the CBN and is “currently developing additional features and enhancements”. However, only 0.5% of Nigerians use the CBDC.
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Namibia: Namibia, Angola central banks formalize collaboration
The Bank of Namibia and Banco Nacional de Angola have signed an agreement to formalise technical collaboration and partnership. The agreement will focus on payment system integration enabled by digital capabilities and trade related guarantees between the banking institutions of the two countries. Additionally, it will involve sharing data and research into trade and related financial transactions to mitigate revenue leakages and sharing knowledge on financial inclusion initiatives. Both central banks have prioritised trade facilitation and plan to explore retail payment options such as prepaid cards for the payment of goods and services.
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Ethiopia: Ministry of Defense preparing establishment of army bank
The Ethiopian Defense Foundation and the Ministry of Defense plan to establish the country’s first army bank, according to the State Minister of Defense, Martha Luwiji. The feasibility study has been completed, and the army foundation is preparing for the bank’s establishment. The government recently increased the minimum paid-up capital requirement for a new bank to five billion birr, and it is not yet clear whether the Army Bank will offer shares to the public or limit shareholders to institutional stakeholders.
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South Africa: Development Bank of Southern Africa replaces CEO
The current CEO of DBSA, Mr. Patrick Dlamini, will step down from the board and its committees on March 31, 2023. The DBSA Board has nominated Ms. Boitumelo Mosako as the new CEO, subject to internal appointment processes and procedures. Shareholder approval has been obtained. The effective date of the new CEO appointment will be announced once completed.
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Nigeria: Banks set on fire in protest over naira shortage
Protests have erupted in Nigeria over a shortage of the new naira notes, which have been redesigned to replace dirty cash and promote a cashless society. Customers have set fire to two commercial banks and looted ATMs in Warri and Benin City, while other banks have been broken into. The Central Bank of Nigeria has not released enough of the new notes to satisfy demand. The protests come 10 days before elections in the country, with President Muhammadu Buhari facing calls to take action to avoid losing votes for the ruling All Progressives Congress.
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Ghana: IMF appoints resident advisor to central bank
The International Monetary Fund (IMF) has appointed Leonard Chumo as Resident Advisor to the Bank of Ghana (BoG) to help build the capacity of the banking supervision function of the regulator. The appointment, which was made at the behest of BoG, is fully funded by Switzerland’s State Secretariat for Economic Affairs (SECO). Chumo will support the implementation of Pillar two and three of the Basel II/III capital frameworks, as well as strengthen the risk-based supervisory framework at BoG.
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Madagascar: Central bank reports uptick in credit activity
The latest report on the Madagascan banking sector by the Banky Foiben’i Madagasikara suggests a resumption of credit activity in Q3 2022. The report highlights positive results across most banks, with a general increase in real credit flow and profitability. Meanwhile, banks invested in the region increased, while costs of operation decreased.
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Kenya: Ruto nominates deputy governor of central bank
Susan Koech, a career banker, has been nominated by Kenyan President William Ruto to be the second deputy governor of the central bank. The post has been vacant for more than five years, but with the current governor and one deputy’s terms set to expire in June, Koech could serve as acting governor if new appointments are not made. Koech’s nomination has to be approved by the Kenyan Parliament.
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Nigeria: Mobile banking usage triples year-on-year
The Central Bank of Nigeria (CBN) policy mandating a cashless economy is driving the growth of mobile payment gateways. The recent surge in the use of mobile banking has resulted in failed banking apps and customers being stranded, as Nigeria’s infrastructure is not robust enough to handle the volume of transactions. The Chairman of Voriancorelli and Cofounder of Cellulant, Bolaji Akinboro, said the problem lies with the mobile network backbone, which is not being invested in properly by the state. The CBN intends for a cashless economy to be driven by a mobile-first generation by 2025, but Nigeria’s lack of smartphone access and underdeveloped infrastructure is an issue.Regenerate response
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Ghana: Access to financial services leapfrogs due to mobile money, fintech
Financial inclusion in Ghana has increased from 22% in 2011 to 68% in 2021, driven by mobile money, digital banking and fintech solutions, according to the governor of the Bank of Ghana, Dr. Ernest Addison. He stated that the bank’s proactive stance on digital finance and issuance of Branchless Banking Guidelines in 2008 paved the way for fintechs to reach the unbanked and underserved. Despite surpassing the average financial inclusion rate of 55% in sub-Saharan Africa, Dr. Addison stressed there is still much to be done to enhance financial inclusion, especially for women, the unbanked, and underrepresented groups in the population.
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Namibia: Several promotions at Bank of Namibia
The Bank of Namibia (BoN) has appointed Romeo Nel as technical adviser to the governor. Nel has been with the bank for 22 years, and has a background in law, banking, accountancy, and economics. As technical adviser, he will be in charge of financial sector development and regulatory advice. Other promotions in the management structure include Moudi Hangula, who has been promoted to branch manager of the BoN’s Oshakati office, Ancois Plaatje, head of the banking supervision department, and Karin Elago, acting deputy director of on-site examinations.
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Ethiopia: New NBE governor lays out priorities for his tenure
The newly appointed governor of the National Bank of Ethiopia (NBE), Mamo Mihretu, has outlined his priorities to revive the country’s economy. The governor’s first priority will be to stabilize prices and the foreign currency market through monetary mechanisms and the second priority is to achieve financial stability. The central bank’s ability to control inflation has been hindered by the 30% inflation rate that has persisted for over a year, though the governor is optimistic about the 7.3% economic growth expected this year. The rise in investments in Treasury bills, increasing loans by commercial banks, and the growing deposit base are all positive signs for the economy.
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Ethiopia: Government sends cash to banks in war-torn Tigray region
The Ethiopian government is sending over $90 million to Tigray and restoring banking services to the war-torn region. National Bank has started sending 5 billion Birr to Mekele, and Ethiopian Airlines has increased flights to the region from 3 to 5 per day. This follows a peace deal agreed in November to end the two-year conflict between the federal government and the Tigray People’s Liberation Front. The TPLF agreed to disarm and return federal government control in exchange for access to Tigray. Some aid deliveries have resumed since the deal.
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Nigeria: Market traders protest against shortage of Naira notes
Angry market women in Warri, Delta State, Nigeria, protested against the shortage of Naira notes due to the Central Bank of Nigeria’s enforcement of the cashless policy. The protesters, who carried placards and leaves, besieged commercial banks in the area, forcing them to close abruptly, and burnt tires along busy roads, causing heavy gridlock. The traders rejected the Nigerian government’s cashless policy and demanded that banks release their money so they can carry out their businesses and take care of their families. Security operatives were spotted trying to address the protesters, but they insisted that the banks must release their money.
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Uganda: MFIs want recognition as microfinance banks
Microfinance institutions and money lending firms in Uganda are pushing to be recognized as microfinance banks. They argue that this recognition will give them visibility and trust among the clients they serve. Currently, all microfinance institutions are categorized as microfinance deposit-taking institutions (MDIs) and divided under four tiers. By being recognized as microfinance banks, they will be able to mobilize resources which can be used to bring down the current high interest rates. The institutions will build consumer confidence and improve the saving culture among Ugandans. However, there are concerns about the institutions being able to handle the added pressure of operating as banks and meeting the capital demands.
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Kenya: SACCOs urged to create central pool of liquidity
Simon Chelugui, Cooperatives Cabinet Secretary, has urged Kenyan Saccos to create a central liquidity system to reduce financing costs and reliance on banks. The government plans to disburse the second phase of the Hustler Fund through Saccos and banks, allowing MSMEs and registered groups to access loans between Ksh 100,000 and Ksh 2.5 million. Over 18 million Kenyans have borrowed Ksh 16 billion from the Hustler Fund since its launch in November, with half of the amount repaid.
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Madagascar: New governor takes helm of central bank
The government of Madagascar has appointed a former IMF official as its new governor for its central bank. The new governor, Dr. Noro R. Rakotonirainy, will take on the role on March 1, 2023 and will be responsible for overseeing the country’s monetary policy, maintaining financial stability, and promoting economic growth.
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Ghana: Fintech should focus on financial inclusion
The Bank of Ghana has encouraged financial technology companies to invest in traditional financial services such as “susu” operations and to target tech-savvy youth. The central bank believes that this could increase financial inclusion and support economic stability. The Bank of Ghana will work with fintechs to ensure financial services are available to all Ghanaians and a conducive regulatory environment will be provided. The Growth Director of Taptap Send, Africa, has called for the government to relax regulations and restructure its tax policies for the fintech industry.
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Kenya: Gov’t considering launch of ‘green’ bank
Kenya is planning to establish a bank to handle investments in green projects only. The bank will develop credit guarantee instruments and schemes to enhance access to finance for green investments. The government requires at least 2.4 trillion shillings to implement green projects by 2030 and aims to cut greenhouse emissions by at least 32% within seven years. The proposed bank is expected to reduce investment risks in the sector and supplement government investment in priority projects.
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Ethiopia: Financial liberalization won’t be an easy process
Ethiopia is seeking to open its banking sector to new entrants, but the process will not be easy. The country’s central bank has imposed strict regulations to ensure stability, including requirements for minimum capital and a ban on microfinance institutions. In addition, state-owned banks still dominate the market, which may make it difficult for new entrants to compete.
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Kenya: Central bank approves new digital lenders
The Central Bank of Kenya has approved 12 more digital credit providers, bringing the total number to 22. Some of the approved companies include Getcash Capital, Jumo Kenya, and M-Kopa Loan Kenya. The bank has received 381 applications and says more approvals will be granted once the remaining applicants submit the necessary documentation.
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Uganda: State-owned banks undercapitalized?
Tropical Bank and Post Bank, two financial institutions owned by the government of Uganda, are running out of capital, according to the country’s Auditor General. The Financial Institutions (revision of minimum capital Requirements) Instrument, 2022, requires banks to have a minimum paid-up capital of at least Shs120bn ($32.7m) by the end of 2022. Tropical Bank currently has a paid-up capital of Shs88bn, while Post Bank has Shs98bn. Post Bank has responded that it will comply with the minimum capital requirement and does in fact have a paid-up capital of Shs112bn.
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Ghana: Slow progress on domestic debt exchange
Ghana’s Domestic Debt Exchange (DDE) program, launched in December 2022, aims to restructure the country’s debt and access a $3 billion loan from the International Monetary Fund. Despite slow progress, the deadline for bondholders to sign up for the program has been extended several times to January 31st. The government and the Ghana Securities Industry Association have recently reached an agreement on the terms of participation by capital market operators in the program, which will have improved terms. Bondholders have been skeptical due to lack of clarity surrounding the terms.
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Nigeria: Central bank extends timeline for old naira notes
Nigeria’s central bank has extended the deadline for citizens to turn in old naira notes. The original deadline was January 31, but has now been pushed back to February 28. The move is part of a larger effort by the bank to phase out older notes and replace them with updated versions.