African Finance in Brief: Margins rise, rate cuts spread, dollar rethink gathers pace

For the final week of February, Africa’s financial story is being reshaped by strong bank earnings, early monetary easing, and a gradual rethink of dollar dependence in trade. At the same time, economic rankings and global influence metrics are shifting, underscoring a continent in transition amid global uncertainty.

African banks extend profitability lead

African lenders continued to outperform Emerging-Market peers in the first half of 2025, with net interest margins rising to 6.2 percent, up from 5.7 percent in 2024, according to Fitch Ratings. While EM bank margins held broadly flat at 4.2 percent, Africa was the only region to post a clear improvement, largely driven by Nigerian banks benefiting from elevated interest rates.

Why it matters: The margin expansion strengthens earnings buffers and investor confidence in African banks. However, the dependence on high interest rates means profitability could soften as central banks begin easing cycles.

Tariff uncertainty fuels dollar diversification push

African corporates are accelerating plans to reduce reliance on the US dollar for trade settlements, with growing interest in renminbi and local currency transactions, Ecobank Transnational said. CEO Jeremy Awori noted that even with relatively modest US trade exposure, Africa remains vulnerable to global policy shocks emanating from Washington.

Why it matters: A gradual shift away from dollar dominance could ease FX pressures and improve trade efficiency across the continent. But progress will depend heavily on payment infrastructure, liquidity depth and policy coordination.

Burkina Faso’s global profile climbs

Burkina Faso recorded Africa’s biggest improvements in the 2026 Global Soft Power Index, rising 23 places to 143rd, according to Brand Finance data analysed by BusinessDay. The gain reflects the military government’s strong sovereignty messaging and repositioning on the global stage.

Why it matters: Improved perception can enhance diplomatic leverage and investor curiosity, but without parallel economic and security gains, the soft power boost may prove fragile.

Nigeria deepens easing cycle

Nigeria trimmed its benchmark interest rate by 50 basis points to 26.5 percent on Tuesday, marking its second cut in five months as inflation pressures gradually cool. The move signals a cautious shift from the aggressive tightening stance that dominated policy through 2023–2024.

Why it matters: Lower rates could stimulate lending and support growth, but the central bank must balance easing with currency stability risks in a still-fragile macro environment.

Egypt closing in on Africa’s top economic spot

IMF projections show Egypt on course to overtake South Africa as Africa’s largest economy by 2028, with output expected to reach $485.3 billion. Nigeria is projected to remain third, highlighting a gradual reordering of the continent’s economic league table.

Why it matters: The projected shift underscores the payoff from sustained macro reforms and investment inflows. It also signals to investors that Africa’s growth leadership is becoming more geographically diversified.

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