Johannesburg — Banks in sub-Saharan Africa will not be directly impacted by U.S. import tariffs, but “second round effects”, including their impact on the macroeconomic outlook and on China, could still bite, credit rating agency Moody’s said.
The impact is likely to include higher funding costs and fallout from slower growth in China, which is a big export market for Sub-Saharan African commodity exporters, Moody’s said in a recent report on African banks.
“China’s potential economic slowdown is an important second round risk: weaker demand could cut export volumes and prices, especially for commodities,” said Mik Kabeya, VP-Senior Analyst at Moody’s Ratings in an interview with Reuters Thursday.
When miners and oil companies ship less or earn less per tonne, banks book fewer trade-finance fees, potentially putting a squeeze on new lending.
China’s official factory activity index fell to 49.0 in April, its weakest in 16 months, underlining the toll of U.S. tariffs.
The International Monetary Fund cut its China growth forecast to 4% for 2025 and 2026, warning that weaker demand would ripple through commodity exporters.
Investor risk aversion as a result of tariffs may widen dollar-bond spreads, lifting refinancing costs for banks that fund more than 20% of assets in wholesale hard currency, Kabeya said.
*Colleen Goko, editing: Jane Merriman – Reuters
