Lagos, Nigeria, 19 October 2022 - GCR Ratings (“GCR”) is aware of the ongoing issues between Kogi State Government of Nigeria and Dangote Industries Limited and Dangote Cement Plc over the ownership of Obajana Plant and would like to communicate as follows.
Zimbabwe has faced tough economic challenges and extraordinary shocks caused by the protracted drought, cyclone Idai, and the COVID-19 pandemic, which led to sharp contractions in economic growth in 2019 (-6.1%) and 2020 (-4.1%), while inflation reached 837% (YoY) by July 2020. According to the International Monetary Fund (“IMF”), real GDP growth rebounded to 6.3% in 2021. Due to better rainfall in the 2020/21 season which boosted agricultural production (through a bumper maize harvest) and electricity generation, assisted by improved capacity utilisation in industry; increased mining activity; buoyant construction; and the stabilisation of prices and exchange rates. A tighter policy stance since mid-2020 relative to 2019 contributed to lowering inflation to 60.7% (YoY) at end-2021.
South Africa’s banking sector is advanced and highly sophisticated relative to its regional peers. As at 31 December 2021, South Africa’s banking sector comprised 18 commercial banks, 4 mutual banks, 5 co-operative banks, 13 local branches of foreign banks and 29 foreign banks with approved local representative offices.
As of 31 December 2021, the number of licensed commercial banks remained at seven, with one branch of a foreign bank and one representative office. The banking sector is comparatively small and highly concentrated with four large banks, of which three are subsidiaries of South African banks[1] and one is locally owned[2] . The four large banks are designated as domestic systemically important banks (“DSIBs”) by the BON and hold the largest share of the sector’s asset base. The sector’s branch network decreased in 2021, as the number of branches contracted to 137 (2020: 145) at the end of 2021, following a preference for digital channels and the need to cut costs.
[1] First National Bank Namibia Limited, Standard Bank Namibia Limited, and Nedbank Namibia Limited.
[2] Bank Windhoek Limited.
As at 31 December 2021, Lesotho’s financial sector comprised four commercial banks, 10 insurance companies, 46 insurance brokers, 118 microfinance institutions, two asset management firms, six stockbrokers and two money transfer institutions. There are no secondary financial markets (stocks, bonds, options, and futures) in the country. The financial sector is dominated by the banking industry with total assets constituting 67.1% of the total financial sectors assets and 58.2% of GDP at end-2021.
Eswatini’s banking sector is relatively small with assets of about 30% of GDP. The financial sector is dominated by non-bank financial institutions (“NBFs”) i.e., the pensions sector, insurance sector and collective investment schemes, with gross assets accounting for about 110% of GDP, including a large government retirement fund (with assets of about 35% of GDP). The financial institutions are closely interconnected and have large foreign exposures, with NBFIs providing a sizable share of banks’ deposits while holding about half of their assets abroad (about 40% of GDP), exposing the system to external shocks. Households are highly leveraged compared to neighboring and other middle-income countries; and the sovereign-financial sector linkages have been strengthening, exposing the sector to the government’s weak fiscal position.
Botswana’s banking sector comprises 10 commercial banks and three statutory banks, namely the Botswana Savings Bank, Botswana Building Society and National Development Bank (“NDB”). All of the commercial banks operating in Botswana are subsidiaries of major regional or international banking groups, and therefore, are subject to significant external direction. The sector is dominated by four commercial banks (Standard Chartered Bank Botswana Limited, First National Bank of Botswana Limited, Stanbic Bank Botswana Limited, and Absa Bank Botswana Limited), with a combined market share of about 80% in terms of both total commercial bank assets and deposits. The stability and franchise of these institutions pose a threat on smaller banks’ ability to grow market share.
The purpose of the publication is to aid regional and sectoral comparability, alongside providing a platform for understanding GCR Ratings.
The GCR Ratings Framework is anchored upon the GCR Risk Score. This numerical scoring system, which forms a single analytical approach across multiple sectors (including Financial Institutions, Insurance Companies, Corporates, Asset Management, Investment Holding Companies and Financial Services Companies), was designed to improve the transparency of GCR’s ratings. Furthermore, GCR risk scores simultaneously determine both international and national scale ratings, which is a significant enhancement from the traditional approach of determining national scale ratings from international ratings via mapping tables. Lastly, we believe the GCR’s Ratings Framework anchors an entity’s creditworthiness in its operating environment.
The Mauritian economy is on a recovery path, after a sharp contraction in 2020 precipitated by the COVID-19 pandemic. With tourism halted, real GDP contracted by 15% in 2020 (real GDP growth was 3% in 2019), and the current account deficit widened substantially according to the International Monetary Fund (“IMF”). The worst hit sectors were tourism (including accommodation and food services) and manufacturing sectors since activity declined sharply with the closure of borders and disruptions in the global supply chains. Other sectors were also impacted due to the knock-on effects, albeit with varying magnitudes. Real GDP growth rebounded strongly to 5% in 2021 and is forecast to rise to 6.1% in 2022, fueled by the construction sector and public investment, gradual recovery in the tourism industry, and as exports strengthen in line with global demand. In the medium-term, real GDP growth is expected to firm to the pre-pandemic trend growth of 3-3.5%. Annual inflation increased substantially from 2.7% at end-2020 to 6.8% at end-2021 and further to 11% at end-April 2022 and is expected to rise to 11.4% later in 2022 due to surging commodity prices, past depreciation of the rupee, and recovering domestic demand. Unemployment, while higher at 9.5% in 2021 (2020: 9.2%, 2019: 6.7%) was contained by wage support schemes and is expected to decline as the economy recovers and to return to trend (around 7%) in the medium-term. Downside risks to the outlook include the impact of the Russia-Ukraine war that has amplified the increase in fuel and food prices and global supply bottlenecks, a resurgence of the pandemic, uncertainty surrounding tourist arrivals and tightening of global financial conditions. Mauritius successfully exited the FATF list of jurisdictions under increased monitoring in October 2021. As from November 2021, the United Kingdom also removed Mauritius from its list of high-risk countries under its UK Money Laundering and Terrorist Financing Regulations 2021. Mauritius was also removed from the European Union List of high-risk countries shortly after. The delistings are important milestones for the Mauritius International Financial Centre and is credit positive for banks.