African banks may face mounting pressure as U.S. tariffs on China threaten to slow one of their key trading partners.
While sub-Saharan lenders are not directly targeted by the tariffs, Moody’s Ratings warns of “second-round effects” likely to impact financial stability.
China’s cooling economy could spell trouble for African commodity exporters, reducing both demand and prices for minerals and oil.
“When miners and oil firms ship less or earn less per tonne, banks lose trade-finance fees,” said Moody’s senior analyst Mik Kabeya.
This drop in earnings may force banks to cut back on new lending, further tightening liquidity in already constrained markets.
China’s factory activity shrank in April, with an index reading of 49.0—its weakest in over a year—highlighting the fallout from tariffs.
The International Monetary Fund also downgraded China’s growth forecast to 4% for 2025 and 2026, citing persistent demand weakness.
A slowdown in China, Africa’s top buyer of raw materials, would strike at the heart of many African economies.
Higher global risk aversion may also push up dollar-bond spreads, raising the cost of borrowing for African banks.
Over 20% of bank assets in the region are financed in wholesale hard currency markets, making them vulnerable to tighter conditions.
Moody’s cautions that these interconnected risks could ripple through financial systems and dampen already fragile growth prospects.
As global economic tides shift, African banks brace for aftershocks from policies set oceans away.
