According to a research published by Agusto &Co, Nigerian banks have a significant amount of exposure to the economic and fiscal problems in Ghana due to their subsidiaries operating there and their investments in Ghanaian bonds. The research states that as of December 31, 2022, Nigerian banks with affiliates throughout Africa have direct and indirect holdings of Ghana Eurobonds totaling roughly N800 billion ($1.7 billion), or about 4% of the industry’s total investment securities.
According to rating agency Fitch, Ghana owns around $13 billion in foreign debts denominated in dollars. In the paper “Ghana Debt Crisis and the Impact on Nigerian Banks,” published by Agusto &Co, it was stated that the impacted banks have direct and indirect investments, which are currently showing on their balance sheet.
As a result, the impacted Nigerian banks recorded impairment charges on the bond, varying from 10% to 59% of the outstanding value of their respective investments.
“Overall, the Industry booked a cumulated impairment charge of about N280 billion ($604 million) on Ghana bonds, which eroded an estimated 19.7% of the Industry’s pre-impaired operating profit. Following the DDEP, Ghana has placed its focus on restructuring its external debt of about $30 billion and is aiming for a $10.5 billion debt service relief.