Secondary markets for non-performing debt could support African countries confronting high NPL ratios – ~16% in Kenya and CEMAC, 9% in WAEMU. Removing regulatory and legal hurdles would allow banks to transfer impaired assets to private sector investors- an approach that proved successful in EU states post-2008 financial crisis. Attracting buyers would require favourable regulatory and legal frameworks, addressing pricing gaps and data availability. A roundtable of banking regulators, distressed asset investors, servicers, and commercial banks will discuss building dynamic NPL markets in the continent.
Key points
- The loan data quality and debt enforcement needed to attract NPL buyers
- Structuring investment vehicles that facilitate sales and resolution of NPLs
- Best resolution practices and out-of-court resolution