The Joint Chief Executive Officer, Standard Bank Group, Mr. Ben Kruger,has said despite the challenges facing the banking sector in Africa, the banking industry in 16 key African economies will expand 1.5 times faster than GDP by 2020.

Kruger, who made this known at the just-concluded Standard Bank Africa Media Forum held in South Africa, said challenges being faced by banks in Africa, were balanced by positive opportunities.

Quoting the Economist Intelligence Unit (EIU), he said banks’ assets in Nigeria and 15 other African countries would grow by 248 per cent to $1.37 trillion while deposits would expand by 270 per cent to $1.1trillion by 2020.

Kruger emphasised the biggest absolute increase was likely to be in Nigeria, while the strongest growth rates were predicted in Angola, Uganda, Ghana, and Tanzania.

South Africa, Botswana and Namibia, he stated, would certainly grow much more slowly, coming from a much higher base.
He added the banking sector in Africa was subject to on-going change, driven by changes in the global environment, including a substantially more rigorous regulatory environment at the global and national levels.

According to him, “Anticipated industry trends include: Continued disintermediation in capital markets – the US Federal Reserve notes that volume of bonds held by the traditional dealer banks has fallen sharply, from $200 billion in 2007 to $90 billion in 2011 and $45 billion.”

Kruger said the banking sector in Africa also faced growing risks of significant losses from system failure and cyber-crime as IT systems grow more complex.

“Others are“increased retail multi-banking and raised consumer expectations about prices, services and rewards programmes.  Increased importance of social networks as a means of communication between banks and their customers. The need for banks – under growing political, regulatory and social pressure – to define themselves more sharply and successfully as socially and economically valuable, and to earn and defend their value to their customers and to society, “he stated.

Standard Bank, he stressed, was keen to work with regulatory authorities at national and regional level to try to address some of the challenges facing Africa.

“Critically, we would like to see further strengthening of equity and bond markets on the continent, and a stronger savings culture.  We would also like to see African development finance institutions evolving to the point that they are able to share risk with private sector banks, “he said.

Source: Thisday (by Eromosele Abiodun)