Senegal’s banking sector began 2020 in a sound position, benefiting from the country’s business-friendly economic reforms. “The banking system was broadly in a healthy state before the [Covid-19] crisis,” says Cemile Sancak, the International Monetary Fund's (IMF's) resident representative in Senegal. “At our most recent assessment [in January] shortly before the crisis, the banking system was adequately capitalised while transitioning to new Basel II/III prudential standards. There were no systemic issues.”
In common with their international counterparts, Senegalese lenders now face an uncertain future, however, thanks to the coronavirus pandemic. Though the authorities have been swift to act, capital injections may be required in the medium term to stave off the risk from corporate credit defaults.
