Africa’s Unbanked Lures Financial Sector Investors
Written by Andrew England | From FT
When Bob Diamond, the controversial former chief executive of Barclays bank, announced that his new investment vehicle was making its first foray into Africa, it triggered a flurry of attention on the continent’s banking sector.
He hopes to revive his career by betting on the future of the world’s least banked continent. His investment vehicle, Atlas Mara, splashed out $265m on BancABC, a low-profile midsized southern African bank with operations stretching from Botswana to Zimbabwe. He rapidly followed that deal with stakes in Union Bank of Nigeria and the Development Bank of Rwanda.
Diana Layfield, chief executive for Africa at Standard Chartered, speaks of a “pretty dynamic market”.
“We’ve seen competition for people, we’ve seen a lot of hiring . . . and now we are seeing new investors in the financial services sector, an obvious one being Atlas Mara,” Ms Layfield says.
This year, Standard Chartered opened a bank in Angola, Africa’s second-biggest oil exporter and its third-largest economy, while Citigroup opened a branch in Lubumbashi, the Democratic Republic of Congo’s mining centre, in 2013. Barclays, meanwhile, completed a deal that saw it combine its Africa operations with Absa, its subsidiary and one of South Africa’s top four banks, now rebranded Barclays Africa.
For now, much of the activity is about building footprints and positioning for growth as the deal flow across the continent remains relatively small. With the exception of South Africa, which boasts a $1tn stock market, capital markets are small and often illiquid.
One investment banker comments: “There are far too many banks chasing the opportunities that are there today. Everybody thinks they have to have some kind of presence in Africa and do something.
On the retail side, just a quarter of adults in sub-Saharan Africa report having an account at a formal financial institution, which is less than half of the global average of 51 per cent, according to the World Bank.
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