Reframing how banks assess African sovereign risk
Sustainable Sovereign Debt Hub (NatureFinance)
Africa
Economic research & analysis
Commissioned to examine how commercial banks price risk in African sovereign lending
Emerging markets and developing economies face growing challenges in accessing long-term, affordable capital. Rising interest rates, tighter financial conditions and mounting debt vulnerabilities are constraining access to financing, particularly for African sovereigns. Plato Group was commissioned by the Sustainable Sovereign Debt Hub at NatureFinance to examine how commercial banks' internal risk models and decision-making processes shape their lending to African governments — engaging twelve commercial banks across the continent in an exercise of a depth not previously undertaken.
Our advisers across Africa and in London co-led the study, which identified a self-reinforcing structural gap in how risk is priced and pinpointed three areas where tangible change could counter it. The findings — now published by the SSDH — speak directly to debates set to feature on the agenda at upcoming G20 and IMF–World Bank meetings.