Pumping life into the African nonperforming loan market

By Virginia Furness
Posted on Thursday, 25 February 2021 16:45, updated on Monday, 1 March 2021 17:05

The Central Bank of Nigeria headquarters in Abuja. REUTERS/Afolabi Sotunde

Last year the International Finance Corporation partnered with Nimble Group, a South African distressed debt investor, to buy $90m of unsecured retail nonperforming loan (NPL) portfolios in South Africa, Namibia, Botswana, Lesotho and Eswatini (former Swaziland).

The acquisition is the IFC’s first in Africa under its Distressed Assets Recovery Program (DARP) which, over the last decade, has supported distressed asset markets across the world.

It marks a significant development for a continent faced with rapidly rising NPLs and a lack of options for resolving them. As Covid-19 relief measures like payment holidays expire, Moody’s says NPLs across the continent will double in 2021, curbing banks’ ability to lend credit vital to economic recovery.