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African Business 2020 edition

  • Text
  • Agenda
  • Business
  • Invest
  • Union
  • Industry
  • Sustainable
  • Development
  • Regions
  • Trends
  • Sectors
  • Afcfta
  • Trade
  • Investment
  • Africa
  • Global
  • Continent
  • Projects
  • Economic
  • Infrastructure
  • Countries
A unique guide to business and investment in Africa. Global Africa Network is proud to launch this inaugural edition of African Business 2020 at a time of energetic planning for a prosperous future for the continent. The African Union’s Agenda 2063 is much more than a document about a hoped-for future, it contains concrete goals and deliverables. The Programme for Infrastructure Development in Africa (PIDA) and the development finance institution, the African Development Bank (AfDB) are already rolling out valuable projects that are changing the reality on the ground in vital areas of the African economy. Perhaps the most significant event of recent times is the signing by African leaders of the African Continental Free Trade Area agreement (AfCFTA) which will bring together all 55 member states of the African Union and cover a market of more than 1.2-billion people. African Business 2020 has articles on all of these recent trends, plus overviews of the key economic sectors and regional and country profiles. In 2019 Ethiopian Prime Minister Abiy Ahmed received the Nobel Peace Prize for peace-making efforts in his region. The economic dividends of peace are beginning to be felt. In 2020 South African President Cyril Ramaphosa assumed the mantle of AU Chairperson. He brings to the role considerable experience in conflict management, constitution-writing and seeking consensus. Global Africa Network is a proudly African company which has been producing region-specific business and investment guides since 2004, including South African Business and Nigerian Business, in addition to its online investment promotion platform www.globalafricanetwork.com

OVERVIEW Banking and

OVERVIEW Banking and financial services Innovation is paying off in finance. The Central Bank of Kenya plays an important role in the country’s economy. The number of banks in Africa is diminishing but the number Africans who use banks is growing rapidly. Consolidation of the banking sector is taking place simultaneously with a rollout of technological innovation that is making banking services more accessible. Where 170-million Africans had access to banking in 2012, that number grew to nearly 300-million in 2018. The consulting group McKinsey expects that number to reach 450-million by 2022. Mobile telephony is at the heart of the expansion. The highly successful M-Pesa launched in 2007 in Kenya. M stands for mobile and pesa is the Swahili word for money. M-Pesa is operated by Safaricom and Vodacom and now has 37-million customers in seven countries, the Democratic Republic of Congo, Egypt, Ghana, Kenya, Lesotho, Mozambique and Tanzania. The average monthly amount processed by M-Pesa is .9-billion. Similar services are offered in Zimbabwe by EcoCash, Ethiopia’s M-Birr and services like MTN Mobile Money, Orange Money and Airtel Money. Sector Insight M-Pesa has 37-million customers. A first-generation mobile phone with USSD technology is the only requirement for users to make payments, send money or apply for loans. Traditional banks are putting huge amounts of money into technology in an attempt to head off fintech startups and telecommunication companies from encroaching on their territory. ■ AFRICAN BUSINESS 2020 66

OVERVIEW Banks Kanika Saigal, writing in Euromoney in 2019, describes the evolution of Africa’s banking sector as “colonialism to consolidation”. After listing the actual or mooted departures of former colonial or international banks from Africa since 2015 (Barclays, BNP Paribas, Credit Suisse, HSBC and RBS), Saigal notes that larger local banks have bought up smaller entities. This came about largely because of new rules about capitalisation and had quick results in Nigeria where 24 banks were left standing out of 89. Results have been slower in other regions, most notably in Kenya where 40 licensed banks serve a population of 45-million. However, innovation and profitability seem to be combining in the banking sector. Saigal quotes Kenya Commercial Bank CE Joshua Oigara saying, “The continent’s overall banking industry is the second-fastest growing, the second-most profitable of any global region and a hotbed of innovation.” Standard Bank’s history involves both colonial and African components, but its current ownership reflects a major modern trend. The bank’s market capitalisation at the end of 2018 was -billion and the group’s largest shareholder is the Industrial and Commercial Bank of China (ICBC), the world’s largest bank, with a 20.1% shareholding. Development and trade finance The African Development Bank (AfDB) is the principal funder of development projects on the continent. In 2019 the bank’s capital was increased by 5-billion to 8-billion. AfDB is strongly focussed on infrastructure development and energy is the most important priority within that brief. In announcing the capital increase, the bank reported that since 2015, its projects had connected 16-million people to electricity, provided 70-million with agricultural technologies, given 55-million better access to transport, nine-million people access to finance and 31-million people with access to water and sanitation. The New Development Bank, a relative newcomer arising out of the establishment of BRICS, is another infrastructure funder. The International Finance Corporation, the private-sector focussed member of the World Bank Group, now has 21 offices in Africa and singed long-term financing deals worth .5-billion in 2017. The IFC intends to grow new markets by reducing risk. The Export Credit Insurance Corporation of South Africa (ECIC) provides export credit and investment guarantees, stepping in where commercial banks might be risk-averse to support private investment. The European Investment Bank is the investment arm of the European Union and often partners with African institutions. China has a wide range of financial entities who are active across a range of sectors in Africa. These entities include the China Development Bank (CDB), the China International Trade and Investment Corporation (CITIC), China Export and Credit Insurance Corporation (CECIC), China Export Credit Insurance Corporation (Sinosure) and the China Export- Import Bank. Exchanges There are 27 stock exchanges in Africa, 25 of which are members of the African Securities Exchanges Association. Ethiopia intends launching a stock exchange in 2020. The African Exchanges Linkage Project (AELP) aims to assist cross-border trade and the settlement of securities, increase continental investment flows and to add depth and liquidity to African financial markets. Seven exchanges are currently participating, representing 85% of the continent’s securities market capitalisation. ■ Online Resources Africa Financial Markets Initiative: www.africanbondmarkets.org African Securities Exchanges Association: www.african-exchanges.org Association of African Central Banks: www.aacb.org Financial Action Task Force: www.fatf-gafi.org Making Finance Work for Africa: www.mfw4a.org 67 AFRICAN BUSINESS 2020

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