UK bank records $10m loss on Cameroon, Gambia divestment

A major UK-based financial institution has crystallized a $10 million loss on its exit from Gambia and Cameroon operations, marking a sharp setback in West African banking expansion and signaling deepening credit and operational headwinds across the Sahel-Guinea corridor.

The divestment underscores mounting pressures on foreign lenders navigating political volatility, currency instability, and non-performing loan portfolios in smaller African markets. Gambia, in particular, has grappled with post-coup institutional fragility since 2021, while Cameroon's persistent Anglophone conflict has curtailed economic activity and investor confidence. The $10 million charge—substantial for a market of Gambia's size—reflects both direct credit losses and the cost of orderly exit from illiquid banking operations.

## Why Are UK Banks Retreating from West Africa?

Western lenders face a perfect storm in markets like Gambia and Cameroon: slim margins due to intense local competition, currency depreciation eroding dollar-denominated returns, and elevated default rates among corporate clients hit by inflation and weak demand. The Central Bank of The Gambia's monetary tightening and the CFA franc's peg to the euro have compressed profitability. Additionally, stringent regulatory capital requirements in London make low-return African operations increasingly uneconomical. Brexit-era compliance costs have further squeezed capacity for smaller market engagement.

## What Does This Mean for Regional Investment Climate?

The withdrawal amplifies a troubling trend: foreign institutional capital is selectively de-risking West Africa, particularly in fragile or smaller economies. This creates a vacuum—local and Chinese lenders may fill the gap, but with different lending standards and less market discipline. For multinational corporates and infrastructure projects, tighter credit availability will raise borrowing costs and slow project financing. The Gambia River Basin Development Organisation (OMVG), which recently partnered with the African Development Bank on energy integration initiatives, may face headwinds in accessing traditional Western financing for cross-border hydropower and grid upgrades.

The timing is also significant. Even as the AfDB doubles down on West African infrastructure and renewable energy—OMVG's framework aims to unlock shared water resources for power generation across Senegal, Mali, Guinea, and Gambia—the exit of established foreign banks removes crucial intermediaries for project financing and trade settlement. This fragmentation can slow capital mobilization for projects that promise 2–5 year build timelines and long-term revenue visibility.

## How Should Investors Adapt?

Savvy investors must diversify funding sources: explore AfDB concessional finance windows, bilateral development banks, and syndication with regional lenders (Ecobank, UBA) rather than relying solely on traditional Western institutions. Currency hedging becomes non-negotiable. Project developers should prioritize revenue streams in hard currency (export revenue, diaspora remittances, energy sales to neighboring grids) and negotiate local-currency risk-sharing with offtakers.

The $10 million loss is a canary in the coal mine—it signals that West African operations require higher hurdle rates, tighter covenant packages, and deeper local expertise than headline returns suggest.

---

#