Ahmed A Namatalla and Arif Sharif Cairo
AS the top loan arranger in Africa for the past three years, Standard Chartered is used to playing catch-up in the second half of the year. It has got its work cut out this year.
Egypt’s Banque Misr, a Cairo-based lender with about $650 billion (R7.9 trillion) fewer assets than Standard Chartered, is the best performer so far, underwriting about $1.6bn in loans on the continent, according to data. That is more than double the figure for second-placed Bank of China. Standard Chartered, joint last with seven other lenders, has not been this far behind since 2009.
“Typically we see African loan volumes stronger in the second half of each year, and we expect a similar trend will emerge in 2015,” Daniel Berman, the head of capital markets for Africa at Standard Chartered, said this week.
The lender has made a series of senior management changes this year in a bid to reverse two years of declining profit and rebuild investor confidence. Part of the slowing in African borrowing was because of the Nigerian election, Berman said.
The continent’s loans market almost doubled during Standard Chartered’s years of dominance to about $43bn in 2014.
State-owned Banque Misr has climbed the table as the economic policies of Egyptian President Abdel Fattah al-Sisi spur lending. The country is relying on government-sponsored infrastructure spending to pull the economy from its biggest slump in two decades.
More than 90 percent of Banque Misr’s loans this year have gone to the Suez Canal Authority and Upper Egypt Electricity Production Company, both of which are also state-owned companies. The nation is investing more than $8bn to dig a channel parallel to the Suez Canal to increase the number of passing ships and boost revenue.
Egypt’s economic output this year may jump to 4.2 percent, about double the average annual rate of growth since the uprising that ousted Hosni Mubarak in 2011. Countries in the six-member Gulf Co-operation Council have provided billions of dollars in grants, loans and investments to help support al-Sisi’s government.
Second-half rally
Economic growth in sub-Saharan Africa may slow to 4.2 percent this year from 4.6 percent in 2014, according to World Bank estimates released this month.
As African central banks raise interest rates to combat inflation, and economic growth shrinks, the second-half rally in lending activity may never come, according to London-based Capital Economics.
“We expect rapid credit growth in sub-Saharan Africa to cool off this year as central banks raise interest rates,” William Jackson, an London-based emerging markets economist at Capital Economics, said this week. – Bloomberg