A partnership signed between IFC and Djibouti-based East Africa Bank (EAB) on April 27 will help EAB better mitigate financial risks which have been amplified by the COVID-19 pandemic and improve its sustainability.
Under the agreement, IFC will help EAB strengthen its risk, trade, and credit management framework and capacities in line with international best practices to ensure it achieves sustainable growth in light of the adverse impact of the COVID-19 pandemic on the world economy.
EAB is a fully Shariah-compliant bank with seven branches in Djibouti, offering Islamic financial services solutions to clients in the country and in the East Africa region. Djibouti’s financial sector is dominated by banks, representing over 94 percent of financial assets.
“East Africa Bank has grown from strength to strength over the years and the support by IFC, apart from re-telling the same narrative of our commitment to growth and development, signifies the break of a new dawn of reinforcing our risk, trade and credit management capabilities with the objective of solidifying our financial base as well as service delivery to all stakeholders especially our customers, who are in the middle of all we do,” said Ibrahim Jaffar, CEO of East Africa Bank.
“IFC’s support will enable EAB to develop effective risk and credit management systems, helping the bank attract capital, mitigate against losses, and instill confidence in regulators, investors, and rating agencies. Strong financial institutions are essential as Africa and the world recover from the economic impact of COVID-19,” said Cheick-Oumar Sylla, IFC Country Manager for Djibouti
A 2021 World Bank report on Djibouti shows that the country enjoyed strong economic growth over the last 20 years, although it suffered in 2020 along with most economies due to the COVID-19 pandemic. The country’s GDP is expected to grow by 5.5 percent in 2021.
IFC, a member of the World Bank Group, launched its Global Risk Management Advisory Program in response to the 2008 financial crisis to address risk management challenges in emerging markets, including in Africa. The program aims to strengthen financial institutions’ risk management capacity and frameworks, loan portfolio monitoring, and nonperforming loan management while supporting emerging distressed asset markets. It has become even more relevant during the COVID-19 pandemic, which has disrupted economies worldwide and severely tested investor confidence.
Since 2009, IFC has delivered over 150 risk management financial sector workshops in Eastern Europe, Asia, sub-Saharan Africa, the Pacific, Latin America & the Caribbean, and the Middle East and North Africa, helping financial institutions strengthen their operations.