By Calvin J. Ntho
JOHANNESBURG- The banking industry in some African economies is estimated to expand 1.5 times faster than GDP by the year 2020, and the Standard Bank Group views this scenario as a good opportunity to expand its presence on the continent.
According to the institution’s joint Chief Executive Officer, Mr Ben Kruger, the Group last year also witnessed steady growth in a number of African countries.
“Africa remains core to the Standard Bank Group’s strategy. We are committed to further expansion in Africa, recognising that Africa is both the world’s fastest-growing region and that we are a deeply-rooted African bank,” Kruger said at last week’s 6th Africa Media Forum held in Johannesburg, South Africa.
Kruger continued: “The (London-based) Economist Intelligence Unit predicts the banking industry in 16 key African economies will expand 1.5 times faster than GDP by 2020. That represents quite phenomenal growth – assets will grow by 248 percent to US$1.37 trillion; deposits will expand by 270 percent to US$1.1 trillion.
“According to the EIU, the biggest absolute increase is likely to be in Nigeria, while the strongest growth rates are predicted in Angola, Uganda, Ghana, and Tanzania. South Africa, Botswana and Namibia will, of course grow, much more slowly, coming from a much higher base.”
The Standard Bank Group currently has 528 branches, 1000 Automated Teller Machines (ATMs), 14,000 staff and 3.7 million customers in Africa, outside South Africa, Kruger noted. He added the organisation’s operations in Africa provide 25 percent of the entire Group’s revenue, with impressive results coming from Nigeria, Ghana and Kenya, in the past year. The Group’s balance sheet, he said, grew with deposits increasing by 42 percent and customer-loans going up to 27 percent last year.
Kruger, however, said there are a number of challenges the Group would face in the quest to consolidate its position in Africa.
“Of course, Africa has its challenges; we recognise them, and are keen to work with regulatory authorities at national and regional level, in trying to address them. Critically, we would like to see the further strengthening of equity and bond markets on the continent, and a stronger savings culture. We would also like to see African development finance institutions evolving to the point that they are able to share risk with private-sector banks.”
Other market risks, Kruger highlighted, included, growing risks of significant losses from system failure and cyber-crime, increased retail multi-banking, and raised consumer expectations about prices, services and rewards programmes, and the need for banks—under growing political, regulatory and social pressure—to define themselves more sharply and successfully as socially and economically valuable, and to earn and defend their value to their customers and to society.
“The continent is also rich in infrastructure investment-opportunities. Standard Bank is already involved in a variety of large-scale investment projects. In the West African iron-ore belt, for example, we’re involved in the execution of a landmark iron ore project in Sierra Leone. We anticipate further major developments in southern West Africa, with multiple high quality infrastructure projects anticipated in the Republic of Congo, Gabon and Cameroon.
“In East Africa, a vibrant energy infrastructure corridor is emerging, with oil discoveries in Uganda and northern Kenya, additional exploration potential in southern Ethiopia, and Southern Sudan looking for an alternative export route for its production. There is keen appetite for the construction of an interconnected series of energy pipelines to the Kenyan coast, and related energy projects such as refineries and storage facilities.”