[Africa CEO Forum] Are African Banks ready for the Future of Africa?
On a regular basis we consult African CEO's about their views on business.
This is Today's Question:
Are African Banks ready for the Future of Africa?
Harriman Oyofo, CEO of Mann Safety | Nigeria: "Are African Banks contributing actively to the development of the continent? I would say yes and no because it is a two-fold question from my perspective. Taken from the domestic front, the answer is an unhesitant NO for the simple fact that accessing business growth funding from any Nigerian bank is like the proverbial head of the camel through the eye of a needle.
They appear not cut out to support economic growth especially where Small and Medium Scale businesses are concerned... read more
Thierry Sanders, Founder bidx, CEO Mekar | The Netherlands: "Life for African banks has been relatively easy. Treasury bills provide a high return for little effort. Western capital is getting very low rates at home, and is seeking out higher rates in Africa.
So if you bank is solid, and you have guarantees and currency hedging available, then your work shouldn’t be tough. But there are new winds blowing... read more
Herbert Rajula, CEO, Poraeh Investments | Kenya: "There are issues that make this a tricky question. First, that the African bank can truly hold its position in the region’s progress, where we have seen only a few jumping ahead of others e.g. Equity bank.
Secondly, the failure to realize the huge opportunities presented by the region's diversification demonstrated (M-Pesa, Kenya) and MTN, Nigeria) gap to tap into and customize solutions, which address the need for the different target groups (i.e. SMEs, youth and startup). Thirdly, innovation and lack of the creative support structures are another part. So I will try to expound on the observations highlighted above... read more
Akin OKE, Management Consultant for Easy Data Resources | Nigeria: "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... read more
Franklyn Jumu, Country Representative Inigmah | Sierra Leone: "The Banking industry across Africa needs to be working towards three interrelated objectives to be ‘future ready’ for Africa: Creating wealth through economic growth, trade and investment | Steadily reducing reliance on foreign aid by tapping into the global markets for capital and making Africa attractive for investments | Unlocking Africa’s considerable domestic market of one billion people through greater integration aimed at reaping a demographic dividend.
To this end, we are seeing many banks focusing their strategy around four key areas including reducing the cost of doing business, reducing the risks to business, expanding the size and diversity of Africa’s internal markets; and investing in human capital... read more
Samuel Stallone-Obaraemi, Senior Human Resources Manager TNS RMS | Nigeria: "Banks are meant to do the basic functions of lending, deposit taking, and making payments. It is almost impossible to differentiate one bank from another on the above grounds, except one begins to look at the different strategies banks take to withstand competition, globalisation, disruptive technologies, the peculiarities of emerging economies as it relates to Africa, new laws etc.
Today the tide of globalisation is defining and in some cases redefining the future of the financial world. This is evident in the massive global consolidation exercises here and there, the growth and spread of electronic banking in growing economies... read more
Dennis Belford is Senior Executive Africa, Calypso Technology | UK: "There is no doubt that African banks are up skilling and dealing with global as well as regional and national banking needs. Some points noteworthy:
Kenya has the most advanced mobile banking community in the world with their Central Bank accounting for e-cash | A number of African countries have dematerialised stock markets, collateral pools, as well as online money market, Fx and bond trading | There are positive signs of the alleviation of poverty for the first time ever in Africa | Rwanda will be poverty-free by 2018... read more
Simon Bere, Chief Business Strategist at Inigmah | Zimbabwe: "Banks are a critical component of the economic development of companies, nations and continents. These institutions have traditionally been the primary vehicles for the safe and efficient flow and exchange of money within and across local and global economies.
Banks are also an important source of investment for companies through their capacity to mobilize financial resources and offer them in the form of loans. Finally, banks are used for the safe storage of cash by individuals and companies. This means that healthy financial systems are critical to Africa’s economic development... read more
Lasbrey Uzoma Nze, CEO Alpha Zomax Consultants | USA: "African banks have evolved through a chequered history of post-independence reforms, deregulations and structural adjustments all geared towards stimulating the economies of various African nations.
Many of the reforms had been at the instance of the International Monetary Fund under its Structural Adjustment Program, especially in the last two decades of the 20th Century... read more
Johan Meintjes, CEO Tentmaking Outreach Ministry | South Africa: "Since 2012, in efforts to encourage local and sustainable economic initiatives in Southern Africa, I have found banks very hedging and extremely selective in what they fund. On the other hand banks seem quite brutal in pouncing upon floundering business enterprise and some individuals.
My humble opinion is that banks serve the primary world economy, but are not suitable for the bottom-upward socio-economic mobilization of the bottom-billion in Africa. Development and local financial cooperatives might be a more suitable option for building local wealth and for stimulating the sustainable development of rural Africa as well as the lower socio-economic sector in the growing cities of the last continent."
Rudolf Huber, Managing Consultant The Methanist | Austria: "Africa faces local electricity and fuels problem which could be resolved by turning flares into power and mobility. This will require local financing as most installations are small to mid-scale and hence the financing requirements are much more moderate than for large scale plants.
If African banks are to stand up to the challenge, they will have to provide early seed financing in order to help those projects get real and acquire Project Finance capabilities for the later stages. This requires skills to separate the good and solid projects from the posturers. But it will also allow African banks to jump into a very solid, profitable and long-term business with local roots and local branches. Africa is not export only anymore. It rapidly becomes a market in itself and that needs sophisticated financial tools. Some banks will be up to the challenge. Who will rule the flock?"
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