Pumping life into African nonperforming loan market

As bad debts in Africa rise, banks are increasingly being constrained by not being able to pump new credit into African economies. The International Finance Corporation (‘IFC’) is looking to stimulate a secondary market in the African region through their Distressed Assets Recovery Program (‘DARP’).

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“Banks don’t have a balance sheet or the bandwidth to properly deal with these issues on their own. Banks are recognizing that you need third parties to come in.”

Ryan Wood-Collier – CIO & co-managing partner – Greenpoint Capital

Countries and banks’ Covid-19 relief measures are growing stale as NPLs on the continent are expected to double in 2021. Africa requires a secondary market to  allow for financial stability, but the IFC’s initiative will look to kick-start the required debt rehabilitation and relief to debtors. 

Although still in its infancy, Greenpoint sees the secondary NPL market opening up with banks allowing third parties to inject new capital to stabilise the capital structure of good operations.

Read more about the DARP initiative and the IFC’s views on supporting the African continent here.

To find out more about Greenpoint and its finance and investment offering, please contact Nic van Zyl at nic@greenpointcapital.co.za.

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