The European Investment Bank (EIB)'s Banking in Africa survey for 2022 shows that, following the outbreak of the war in Ukraine, the main concerns for banks are the cost of local currency funding, competition from the non-banking sector and deteriorating asset quality. Last year, following the onset of the pandemic, banks were chiefly worried about asset quality, and had little concern about local currency funding costs. The rollout of FinTech continues to transform the traditional banking-dominated financial sector across the continent. The entire FinTech ecosystem in Africa has experienced rapid growth. As of April 2022, there were more than 1 000 active companies, up from 450 in 2020.
Banks are also doing more to improve access to finance for women. Seventy percent of the banks surveyed have a gender strategy in place and sponsor women- and gender focused initiatives in the community, an increase of 10 percentage points on the share in the 2021 survey. Finally, Sub-Saharan African banks are reacting to the multifaceted challenges posed by climate change and are more proactive in terms of screening both their existing loan book and prospective projects for climate risk.
The EIB lends extensively in Africa, including to financial institutions, to promote on-lending in support of key development goals. The objective of the Finance in Africa Report is to understand the current financial landscape in Africa. An important part of this is to understand the challenges facing the banking sector so that the EIB can better target its operations on the continent. While the banking sector is the predominant focus, the report also takes stock of financial development in Africa, green capital flows, trends in the microfinance industry and the evolution of private capital markets in Africa.