How African banks remained resilient amid COVID-19 crisis

African banks have showcased remarkable resilience in the face of the COVID-19 pandemic, with most institutions maintaining profitable balance sheets despite the economic challenges brought on by the global health crisis. The Deputy CEO and COO of the Trade and Development Bank, Michael Awori, shed light on the key factors driving this resilience in a recent interview with CNBC Africa. One of the primary reasons cited by Awori is the strong position banks had going into the crisis, attributed to higher levels of capital reserves following the global financial crisis of 2008-2009. This surplus in capital allowed banks to weather the pandemic-induced economic storm and maintain stability in their operations. Unlike the previous financial crisis, where banks faced systemic asset devaluation, the current crisis primarily caused a supply-demand shock without directly impacting bank balance sheets. Additionally, regulatory interventions enabling banks to provide support to affected clients played a crucial role in sustaining the banking sector during the pandemic. The swift adoption of digital banking services further bolstered the resilience of African banks during the crisis. The acceleration of digital technologies, particularly in trade finance, facilitated continued operations amidst disruptions in traditional paper-based processes. Mobile money platforms enabled targeted government assistance to vulnerable populations, showcasing the efficiency and convenience of digital transactions. Looking ahead, blockchain technology is poised to revolutionize banking services in the region by enhancing efficiency and security. Despite the potential benefits of blockchain, regulatory frameworks must align with technological advancements to maximize its impact in the financial sector. The Trade and Development Bank's conference focused on resilience and recovery in the post-pandemic era, emphasizing the need for collaborative efforts to drive industry growth. Global value chains were identified as a key vulnerability during the pandemic, prompting a shift towards localized manufacturing and regional integration. The African Continental Free Trade Agreement presents an opportunity for countries to leverage local expertise and boost economic prospects in the aftermath of the crisis. By aligning their strategies with regional trade agreements, African banks can capitalize on emerging opportunities and foster sustainable growth in the coming years.