By Samuel Ouma
The European Investment Bank (EIB) on Thursday released a unique analysis of the impact of COVID-19 on financing across Africa.
The Finance in Africa 2021 report, written with the support of Making Finance Work for Africa (MFW4A), is the sixth study of Africa’s financial sector by the European Investment Bank, the world’s largest international public bank, owned by the 27 European Union member states.
The new report explores how access to finance provided by banks, microfinance, and private equity sectors have been affected and what long-term trends may impact private sector investment.
EIB surveyed 78 leading banks and financing institutions active across sub-Saharan Africa to examine the impact of the pandemic on banking and business lending.
It also investigated how Africa’s financial sector harnesses the digital revolution and detailed the challenges and opportunities of green finance for banks.
The feedback from 78 leading African institutions in the Finance in Africa 2021 report shows the resilience of Africa’s financial sector and enthusiastic engagement to embrace digitalization.
The report also indicated future risks that could hinder financing for business growth, renewable energy, and recovery from the pandemic.
“Africa’s banks are crucial for ensuring access to finance which is essential for private sector growth and climate action. They also understand the unprecedented challenges triggered by the COVID-19 pandemic. The European Investment Bank is committed to supporting transformational private and public investment across Africa in close cooperation with financial sector partners,” said Thomas Östros, European Investment Bank Vice President.
According to EIB, the Covid-19 pandemic had already prompted major business changes and has accelerated digitalization trends that were already underway before the crisis but that were slower in adoption.
This has unlocked new opportunities for African financial institutions to innovate and drive financial inclusion.
Consequently, African banks can also play an important role in society’s adjustment to climate change and contribute to its mitigation, for example, by including environmental risks in their credit and investment process or by incentivizing clients for green investments.
“With this unique report, we aim to capture how the African financial sector has rapidly adapted to the COVID-19 pandemic, pointing to continuing challenges and highlight exciting opportunities for climate finance and digitization.” said Abdelkader Benbrahim, Making Finance Work for Africa Partnership (MFW4A) Coordinator.