Moody Rating Agency has said that like their global peers, multilateral development banks based in Africa1 will be called on to do more to help the region recover from the pandemic amid tighter funding conditions, and address rising food and energy prices triggered by Russia’s invasion of Ukraine. It said that for most, however, robust capital positions, shareholder support and healthy liquidity positions reduce credit risks arising from the region’s challenging operating environment.
According to Moody, “lending growth will be concentrated among MDBs able to raise equity. Most of the African MDBs we rate kept leverage levels stable during the pandemic by reallocating rather than increasing lending. Additional lending will be concentrated among those MDBs who have already or expect to raise capital from shareholders like African Finance Corporation, African Export- Import Bank and West African Development Bank. Some pressure on asset quality is likely. Associated credit risks are greatest for those MDBs whose loan portfolios are more exposed to a deteriorating operating environment like African Local Currency Bond Fund, BOAD, Eastern and Southern African Trade and Development Bank, and ECOWAS Bank for Investment and Development Bank.”
