Page 15 performing sectors), minimize<sup>and absorb current losses, and generally improve</sup> asset quality and streamline<sup>their operations.</sup> In this context, it has become<sup>more difficult to draw the attention of analysts</sup> and bank management to the potential<sup>of certain lending opportunities in Sub-</sup> Saharan Africa, an attention<sup>which is a prerequisite to mobilizing support for</sup> renewed wider-scale banking activities.

A related problem is the fact<sup>that the scope for adjusting pricing to reflect</sup> actual or perceived risks and to<sup>take advantage of the relative scarcity of long-</sup> term commercial bank financing<sup>has been declining, Decision-makers in the</sup> banking industry are strongly<sup>averse to lending at any price to non-performing</sup> borrowers, while some borrowers<sup>and external public officials appear to have</sup> difficulty accepting the high<sup>fees and interest margins that lenders consider</sup> commensurate with the perceived<sup>risks.</sup> It may be possible to establish<sup>a more realistic Irisk:reward" relationship in</sup> lending that is shifting to the<sup>private sector, perhaps more along the lines of</sup> venture capital support and more<sup>commercial activities that can generate far</sup> higher returns than traditional<sup>interest margins and fees on loans. However,</sup> in the present situation, commercial<sup>banks appear unlikely to pursue new</sup> strategies of this nature.

Instead, the primary approaches<sup>that are being used to improve risk:return ratios</sup> on African business appear to<sup>be the provision of no-risk, fee-based services,</sup> by means of fully secured letter-of-credit and other traditional trade-related facilities, intermediation and<sup>management of donor funds, representation of</sup> governments in debt negotiations,<sup>and general merchant banking or financial</sup> engineering services.

# 3. ExIROrt Credit AgAnen SuoD2rt

The WDTs' aggregate statistics<sup>suggest that the OECD export credit agencies have</sup> also been less active in Sub-Saharan Africa in recent years as they too<sup>face non-</sup> performing loans, budgetary discipline,<sup>more conservative borrowing practices</sup> and otherwise depressed demand<sup>in a number of countries. Many agencies have</sup> suspended or been slow to re-open<sup>or commit resources undervarious</sup> credit, guarantee and insurance programs.

Given the fact that a classic role<sup>of the commercial banks has been to provide</sup> funding and/or residual risk<sup>financing in conjunction with official export</sup> finance programs, the reduction<sup>in lending from this source has translated into</sup> fewer opportunities for the banks.

In some cases, the decline in<sup>export credit agency support may also be related</sup> to an increase in concessional<sup>financing. An increasingly critical event in</sup> country-donor relationships,<sup>the Consultative Group meetings, now generates</sup> virtually all of the long-term<sup>financing support for public investment programs</sup> that traditionally received<sup>some commercial bank and export credit agency</sup> support. Similarly, on the<sup>short-term side, balance-of-payments</sup> support in the