In 2024, the volume of bank loans classified as at risk surged to CFAF 205 billion, according to the African Development Bank. This nearly 20% year-on-year increase pushed the ratio of non-performing loans to 10.2% of total outstanding credit—its highest level in several years.
Libreville – The latest report from the African Development Bank (AfDB) highlights a concerning deterioration in the quality of loans within Gabon’s banking system. Between 2023 and 2024, the volume of non-performing loans (NPLs) rose from CFAF 171 billion to CFAF 205 billion (approximately USD 357 million), representing a 19.8% annual increase.
A Warning Signal for Banking Sector Stability
With the NPL ratio climbing from 8.6% to 10.2% in just one year, Gabon has crossed a critical threshold for financial stability. This level reduces banks’ ability to finance the economy and increases their provisioning needs, directly impacting profitability.
“If this trend continues, borrowing costs could rise and access to credit could tighten for both businesses and households,” warns a Libreville-based banking analyst.
Underlying Causes of the Rapid Deterioration
The AfDB identifies several drivers behind this increase:
- Slowing economic activity, partly linked to declining export revenues and commodity price volatility.
- Tighter monetary conditions, with rising policy rates across the CEMAC region.
- Fragility in key sectors such as trade, real estate, and services, which remain vulnerable to cash flow shocks.
Implications Beyond the Banking System
The rise in NPLs threatens not only bank balance sheets but also Gabon’s ability to finance its economic diversification agenda. Small and medium-sized enterprises (SMEs), seen as potential growth engines beyond the oil sector, risk being hit hardest by more restrictive lending conditions.
Potential Responses
To mitigate risks, several measures are being considered:
- Strengthening loan recovery procedures and adjusting repayment schedules for distressed clients.
- Improving credit risk assessment tools to anticipate defaults more effectively.
- Targeted support for strategic enterprises to prevent a domino effect on employment and consumption.
According to the AfDB, the situation requires heightened vigilance from monetary and prudential authorities to safeguard financial stability and maintain investor confidence in Gabon’s economy.
