Nature stress test: Assessing exposure of five African banking systems

The report evaluates how nature-related risks impact business profits and credit losses in five African banking systems. It finds that an 'orderly transition' aligned with the Global Biodiversity Framework (GBF) minimizes financial risks, whereas a 'disorderly transition' can lead to significant profit losses and increased credit losses, particularly in agriculture and mining. The analysis highlights that nature-related risks in these sectors are comparable in scale to climate-related risks in emissions-intensive sectors.

• Financial risks to the real economy and banking systems are lowest under an 'orderly transition' aligned with the Global Biodiversity Framework (GBF), where businesses voluntarily reduce their impacts on nature and mitigate risks.
• Under a 'disorderly transition' scenario, where policy action is taken but businesses do not adapt, exposure-weighted net present value (NPV) profit losses are highest in Zambia (6.7%) and Ghana (4.7%).
• Nature-related risks in agriculture, mining, and manufacturing are of a similar scale to climate-related risks in emissions-intensive sectors. For example, by 2050, annual unweighted profit losses in agriculture could reach 50% in some cases, compared to 25% for mining in a net-zero climate transition scenario.
• In a disorderly GBF-aligned scenario, cumulative expected credit losses for banking systems could increase by up to 9% by 2030 and up to 21% by 2050, with some priority sectors seeing losses as high as 75% by 2050.
• Nature-related risks are heavily concentrated in seven priority sectors: agriculture and forestry, mining and quarrying, food, beverage, and fertilizer manufacturing, consumer goods retail, electricity, gas, and water, construction, and metals and minerals manufacturing.
• Physical risks under current policies are most severe in Morocco, with exposure-weighted NPV profit losses of 7.7% from 2020 to 2050, driven largely by water shortages.
• Business mitigation actions in an orderly scenario—such as adopting sustainable farming or moving mining locations—could reduce exposure-weighted NPV profit losses by 27% to 78% across the five banking systems.
• Macroeconomic risks include inflationary pressure from rising agricultural commodity prices, potential job losses in nature-dependent sectors (where agriculture employs 39-59% of the population in Ghana, Rwanda, and Zambia), and reduced international competitiveness of exports.

APA

FSD Africa (2024). Nature stress test: Assessing exposure of five African banking systems. https://fsdafrica.org/wp-content/uploads/2025/05/nature-stress-test-assessing-exposure-of-five-african-banking-systems-1.pdf

Chicago

FSD Africa. Nature stress test: Assessing exposure of five African banking systems. 2024. https://fsdafrica.org/wp-content/uploads/2025/05/nature-stress-test-assessing-exposure-of-five-african-banking-systems-1.pdf.

Wikipedia

{{cite report |author=FSD Africa |title=Nature stress test: Assessing exposure of five African banking systems |date=July 2024 |url=https://fsdafrica.org/wp-content/uploads/2025/05/nature-stress-test-assessing-exposure-of-five-african-banking-systems-1.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{fsdafrica2024nature, author = {{FSD Africa}}, title = {{Nature stress test: Assessing exposure of five African banking systems}}, institution = {FSD Africa}, year = {2024}, month = jul, url = {https://fsdafrica.org/wp-content/uploads/2025/05/nature-stress-test-assessing-exposure-of-five-african-banking-systems-1.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }