[Africa CEO Forum] Akin Oke: Old rent-seeking practices are keeping African Banks as bit part players in African economic development
African Banks have gone through a number of transformations in the past few decades and this has resulted in the emergence of a few strong regional banks that can surely compete in global markets. However, their potential to stimulate all round economic development for Africa remains limited by a key challenge they haven’t yet been able to master.
This is because despite the giant steps forward that have seen the emergence of these regional players – who should be at the forefront of stimulating economic development in Africa by deepening access and inclusion to financial services – there remains the old rent-seeking practices that has kept them as bit part players in African economic development.
I believe the lack of willpower to significantly improve financial access and inclusion is the most glaring evidence of this reliance on the old rent-seeking business approach. In my view, it is unacceptable that in 2015 an estimated 75% of Africa’s population are without bank accounts. This alone deprives these productive demographic (considering that Africa’s population is predominantly made up of young people in their 20s-30s) the needed push towards financial support they need for economic progress. The rural and urban poor currently excluded in this transformation are believed to have a combined savings deposit potential valued between USD50-60billion by some recent estimates.
The good news is that with the maturing mobile banking services in some regions – notably East Africa – improvements in financial inclusion is expected to significantly improve retail banking services and development finance to the vast numbers of unbanked Africans. The anticipated increase in deposit base should enable African Banks to support long-term investments in SMEs, mortgage financing and critical infrastructure required to drive Africa’s growth and economic development.