British banks shun away from Africa due to risk of operation [image: courtesy]
Africa—Top-notch British banks are shunning away from Africa and casting doubt on the economic growth prospects of a continent that has been riding on the narrative “Africa Rising” for more than a decade.

UK’s financial conglomerate Atlas Ltd (Atma), which had acquired banks in seven African countries, is at the tail end of leaving Africa.

It has termed its African investments “risky” and Sub-Saharan African macroeconomic environment as challenging.

The bank’s holding company, which is listed on the London stock exchange, says currency volatility and drying up of liquidity in African markets adversely impacted its operations promoting the board to reconsider divesture and new funding options to shore up the Group’s balance sheet.

According to Atma’s annual financial statements for the 14 months to February 28 this year, the difficult operating environment on the continent has been exacerbated by the Covid-19 pandemic with many African central banks struggling to provide liquidity support for local banks impacted by the crisis.

“At the same time political pressures led to the imposition of regularity restrictions on the interest rate increase, imposition of fees and other actions that would ordinarily be available defend liquidity and capital, if not profitability,” the company says.

According to the report the equity market decline in Africa, last year was 60% worse than in other emerging markets, reflecting a new particular “risk off” view of Africa investment.

“We already constrained fiscal environments and relatively limited assistance from central banks, African markets have been unable to mount an economic response as impactful as those in the US or the EU, and local currencies, debt and capital markets remain under considerable pressure,” said Michael Wilkerson, the Group’s chairman.

From September 2020 to date, Atma has completed divestment in Mozambique, Rwanda, Tanzania and Botswana, and discussions are ongoing for the sale of its Zambian subsidiary.

The company which was formed in 2013 has planned to acquire banks and sustain operations in 15 African countries.