Adesola Adeduntan on COVID-19 & the future of banking in Africa
The Covid-19 pandemic is throwing up new challenges to Africa's baking sector, with warnings from the IMF that the pandemic's largest threat to banks being related to their loan portfolios. Similarly, Moody's changed its outlook for the banking systems for Nigeria, Morocco and South Africa to negative from stable. Adesola Adeduntan, Managing Director and CEO of First Bank of Nigeria and Subsidiaries joins CNBC Africa to discuss the future of banking.
Wed, 20 May 2020 11:09:51 GMT
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AI Generated Summary
- The COVID-19 pandemic has caused significant health and economic challenges globally, leading to a contraction in the global economy and Africa's GDP.
- The banking sector in Africa is undergoing a rapid digital transformation, accelerating the shift from traditional brick-and-mortar to digital channels to meet evolving customer demands.
- Banks are collaborating with regulators to restructure loans and provide support to sectors most affected by the pandemic, such as oil and gas and manufacturing.
The COVID-19 pandemic has sent shockwaves through Africa's banking sector, with warnings from the IMF about the potential threats to banks related to their loan portfolios. Moody's negative outlook for the banking systems in Nigeria, Morocco, and South Africa has further underscored the challenges ahead. Adesola Adeduntan, the Managing Director and CEO of First Bank of Nigeria and Subsidiaries, shared his insights on the future of banking during a recent interview with CNBC Africa. Adeduntan highlighted the unprecedented health and economic crisis triggered by the pandemic, emphasizing its transformation from a health crisis to an economic one. The global economy is expected to contract by over 3%, surpassing the impact of the 2008-2009 financial crisis. Africa's GDP is projected to shrink by 1.6%, with major economies like South Africa and Nigeria facing significant contractions. Adeduntan stressed the need for strategic interventions to mitigate the economic fallout, given Africa's trade dependencies on key global markets. The banking sector has been forced to adapt rapidly to the 'new normal' imposed by the pandemic. Adeduntan noted a shift towards digital channels, accelerating the migration from brick-and-mortar to click-and-mortar banking. With branches closed during lockdowns, customers embraced alternative channels like ATMs, online banking, and mobile platforms. Adeduntan emphasized the irreversible nature of this transition, highlighting the importance of ongoing technological investments to meet evolving customer preferences. To address exposure to the hardest-hit sectors, such as oil and gas and manufacturing, banks are collaborating with regulators to restructure loans and provide moratoriums on principal payments. Adeduntan praised the proactive measures taken by central banks, particularly citing the support from Nigeria's Central Bank under Governor Godwin Emefiele. The interview concluded with a call for continued pragmatic approaches to navigating the crisis and supporting customers through these challenging times. Adeduntan's insights shed light on the resilience and adaptability of Africa's banking sector in the face of unprecedented challenges, signaling a shift towards a more digital and customer-centric banking landscape in the post-COVID era.
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