Banks in sub -Saharan Africa will not be directly affected by American customs duties, but the “second round effects”, including their impact on macroeconomic perspectives and on China, could still be felt, said the rating agency Moody’s.
According to a recent Moody’s report on African banks, the impact should result in an increase in financing costs and the impact of the slowdown in growth in China, which is an important export market for exporters of raw materials from sub -Saharan Africa.
“The potential economic slowdown in China is a significant secondary risk: the drop in demand could lead to a decrease in volumes and export prices, in particular for raw materials,” said Mik Kabeya, vice-president and senior analyst at Moody’s Ratings, in an interview with Reuters on Thursday.
When mining and oil companies ship less or earn less per tonne, banks record less commissions on commercial funding, which could weigh on new loans.
The official index of Chinese manufacturing activity fell to 49.0 in April, its lowest level in 16 months, highlighting the impact of American customs duties.
The International Monetary Fund has revised its growth forecasts for China to 4 % for 2025 and 2026, warning that the drop in demand would affect exporters of raw materials.
According to Kabeya, the risk aversion aversors resulting from customs duties could expand the differences between the obligations denominated in dollars and those denominated in other currencies, which would increase refinancing costs for banks which finance more than 20 % of their assets in strong foreign currency on the wholesale market.
