Africa - a continent 'rocking with opportunities'!

 by Robin Amlôt
CPI Financial is committed to delivering the most relevant financial news, features and analysis to bankers and businesses. For the last 14 years its flagship publication, Banker Middle East, has offered transparent, accurate reporting and analysis of the banking and finance community in the MENA region alongside, for the last seven years, coverage of the phenomenal growth of the Shari’ah-compliant financial sector through its stablemate Islamic Business & Finance.

The expertise that created and grew these journals has now been focussed on launching a new sister publication – Banker Africa – that will bring the skills and analytical reporting that have made the company’s magazines required reading to a new audience.

Why Africa? The answer is simple – Africa’s time has come! By 2025 the continent will have more than 60 cities with over a million inhabitants and by 2040 will be home to the world’s largest working-age population. What’s more, Africa is already home to highly desired and desirable locations for investors. Analysis in 2012 by international real estate consultancy Knight Frank showed property in Nairobi, up 25 per cent, and on the Kenyan coast, up 20 per cent, leading the gains in the firm’s global Prime International Residential Index.

The rise of Africa’s emerging middle class will see the continent’s financial services industry expand at a compound annual growth rate of 15 per cent through to 2020 with mobile banking a particular driving force. Elsewhere in this issue you can read exactly what kind of ‘game changer’ the coming of smartphones truly is for financial services.

Recently Anthony Eaton, Manager of the JM Finn Global Opportunities Fund, noted that income in Africa has virtually doubled since 2000 and private consumption in the continent is already as big as it is in India and Russia. Consumption is widely anticipated to double again by 2020, which ‘would put it at the same level as China in 2009’.

Katie Koch, Senior Portfolio Strategist and Chief of Staff for the Goldman Sachs Asset Management Office of the Chairman, is a particular fan of opportunities in Nigeria, of which she said, “It has 160 million people with a median age of 19, so it is incredibly attractive demographically. We think it’s one of the countries most likely to rank among the BRICs in terms of importance to the global economy in the future.”

Late last year, Ahmed Heikal, Chairman and Founder of Citadel Capital, the largest private equity firm in Africa claimed, “Africa is rocking with opportunities for savvy private equity players.” The continent has vast mineral resources, holding eight per cent of the world’s oil reserves and seven per cent of its natural gas reserves. Heikal believes in the ‘SANE’ choice in particular; the SANE countries (South Africa, Algeria, Nigeria and Egypt) account for one-third of Africa’s population and more than half of the continent’s FDI, foreign reserves, exports and trade.

Yet misperceptions remain; fear of risk in Africa, especially as evinced from outside the continent, is ‘overblown’ according to Heikal. Further, there is more to the Africa story now than many realise. Dr, Suleiman Ahmed Walhad, CEO of Dahabshil Bank International, told Banker Africa, “... go to Mombasa, Kinshasa or Durban, to name a few, you can see an Africa that isn’t portrayed on [the world’s] TV... Awareness is what is needed – true Africa must be known. Africa must be able to market itself...”

Which is not to say that enormous opportunities for growth in financial services do not exist... they do. Recent reports suggest 65 per cent of the continent’s population is unbanked with penetration standing at 60 per cent in urban areas and less than 20 per cent in rural areas. With Banker Africa we aim to provide a journal for the industry to report on and assist its growth and development in the exciting years ahead.

Read the first issue of Banker Africa online now.

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Lies, damned lies... and laughable statistics

by Robin Amlôt
Surveys have a tendency to bring out the schoolboy in me. I can’t help it. It’s just that some of the numbers that get generated make me giggle. I’m sorry. Let me give you an example from PwC’s 16th annual Global CEO Survey. According to the survey results for banking and capital markets CEOs, 54 per cent see lack of trust in the industry as a threat to growth. So what?

You might well ask. I turn that number on its head and arrive at a statistic which tells me that 46 per cent of CEOs surveyed within the banking and capital markets sector either don’t give a hoot about the fact that they are considered untrustworthy or, perhaps, even view it as a positive benefit for growth prospects. Huh?

Here’s another example, 61 per cent of banking and capital markets CEOs are increasing their focus on ways to support a culture of ethical behaviour. Turn that on its head and you have 39 per cent of them apparently not interested in supporting a culture of ethical behaviour!

I suppose we should be grateful that the survey also tells us that 71 per cent of banking and capital markets CEOs have made growing their customer base a top three investment priority and that 89 per cent are planning to strengthen customer engagement.

Then come the duck-billed platitudes; take this, quoted from a bank in Hungary although I imagine it is the kind of PR-speak that many bankers are now being told to spout, “Clearly, the most important stakeholders are our clients because, quite simply, without them we would be out of business.”

Yes indeed, but do you believe? I said, DO YOU BELIEVE? Let me hear you say, “I believe!” My apologies for turning revivalist there but it really is the kind of comment that should be true, should be taken to be true and yet is little more than meaningless white noise.

I believe that this is underlined by the more than four-fifths (81 per cent) of financial sector CEOs who apparently see over-regulation as a threat to growth. This from a global industry, some of whose members have proved to be as safe and reliable as an arsonist in a gunpowder factory!

It would be nice to think that the banker who told PwC, “The bank is a business, but we also feel responsible for contributing to the country’s economic development. We have a business, but if we do not comply with the objective of being agents of economic progress through offering credit, we are not fulfilling our fundamental role of distributing the savings in the economy,” meant every word.

Regaining customer trust, both corporate and consumer, is a matter of transparency. Adam Smith had it right more than 200 years ago when he noted that whenever traders meet in private, ‘the conversation ends in a conspiracy against the public, or in some contrivance to raise prices’.

To succeed in banking in the post-financial crisis, brave new world of this decade, you should be taking advantage of changing technologies to improve customer service, lower costs and increase speed to market; improving customer transparency while getting customer targeting and cross-sale opportunities right; and, ego notwithstanding, be prepared to cut your losses both moral and financial by simplifying operations and exiting underperforming businesses and assets. It is time, as Barclays CEO Antony Jenkins recently told legislators in the UK to start ‘shredding’ a banking culture that has been both ‘aggressive’ and ‘self-serving’.

Read this article in cpifinancial.net