What supervisory reviews and restatements reveal about expected-credit-loss practice — and what risk teams should fix first.
Five years after IFRS 9 adoption became widespread across African banking markets, a pattern has emerged in supervisory reviews: the models are mostly adequate, and the governance around them mostly is not. Restatements trace less often to mathematics than to stale macro scenarios, undocumented overlays and staging criteria applied inconsistently across portfolios.
The most common finding is overlay drift: management adjustments introduced during COVID that were never retired, recalibrated or documented against current conditions. The second is scenario governance — models fed with macroeconomic paths that no economist in the bank still believes.
For risk teams prioritising remediation, the sequence that satisfies both auditors and supervisors is: document and time-limit every overlay, refresh scenario governance with named ownership, then re-test staging criteria against realised transitions. Model re-development, the expensive option, is usually third on the list — not first.
Questions fréquentes
What is overlay drift in IFRS 9?
Overlay drift is the accumulation of management adjustments to model outputs that persist after the conditions justifying them have passed, without documentation or recalibration. Supervisors increasingly flag it as a governance failure even when the resulting provisions are adequate.