Lessons learnt from North Africa banking

03 August 2010

Stricter regulations and cautious lending helped banks in the Maghreb states weather the crisis

Stricter regulations and cautious lending helped banks in the Maghreb states weather the crisis

One of the biggest ironies of the global financial crisis is that the banking sectors in some of the poorest and least developed countries have largely avoided the worst impacts of the meltdown. Over-reliance on real estate and funding mismatches between deposits and loans exacerbated the effects in areas like the Gulf.

This was not an issue for the economies of North Africa and other developing nations, and therefore their banks have not had to deal with the same high levels of non-performing loans and debt restructuring. Furthermore, Morocco and Tunisia started overhauling their banking sectors several years ago, implementing stricter regulations and encouraging more cautious lending; this positioned them well to work through the recent change in the global economic climate.

By contrast the Gulf states and Dubai in particular have been heavily impacted by the crisis. As newly emerging economies, banks in the Gulf based their business models on those used in Western banks, which left them overleveraged and facing huge loan default problems. The banks in the GCC will continue to suffer the consequences of this for some time yet.

In the meantime, banks in North Africa are talking of expansion rather than retrenchment. They are looking at growing in Sub-Saharan Africa and capitalising on an under banked population. Backed by strong deposit bases and a growing private sector, the opportunity for growth in banks from the Maghreb is there for the taking. The next few years offer a major opportunity for them shine.

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