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Keeping Banking Safe (African Banker Magazine)

News & Analysis

Keeping Banking Safe (African Banker Magazine)

The amount of money lost through bank fraud globally is colossal. It is difficult to establish exactly how much since banks are not keen to publicise this aspect of their industry but it is estimated to be second only to the volumes generated by illegal drug dealings. We can safely say it is at least in the tens of billions of dollars.

Bank fraudsters, like other crooks, are internationalist in their approach and they have been paying very uncomfortably close attention to the African banking system. While the industry in Africa has been growing robustly and is expected to expand faster over the next five years as Africa’s economies grow, the industry is still relatively fragile. It cannot afford to sustain the expensive life-styles of big-time crooks.

Our cover story this quarter focuses on the problem of bank security and we explore the variety of ways in which our institutions can protect themselves and safeguard their depositors’ money.

With the continent enjoying the most sustained period of economic growth since the early days of independence and with future projections expected to be even better, the role of the continent’s capital markets in financing a good deal of this expansion becomes critical. But are our capital markets, as currently constituted, fit for purpose?

We analyse the performances of the continent’s stock-markets and report on the latest developments.

Angola has rapidly moved to become Africa’s third-largest financial centre. The country is the continent’s second-largest oil producer. However, while its banks are very well capitalised, the industry is still narrow in terms of its national outreach.

The industry is now gearing itself to cope with what promises to be a cash windfall when new legislation will compel oil companies in the country to route all their local payments through Angolan banks. While this will no doubt generate capacity challenges for the banks, it might also encourage them to widen the scope of their activities domestically and bring the benefits of modern banking to a larger proportion of citizens.

Our Special Focus this month is on North African banks. We take a detailed look at the industry since the Arab Spring revolutions in that part of the world. How has the industry in various North African countries fared? How much influence has the political dimension exerted on the performance of the industry and what are the medium-term prospects?

On a related theme, we explore the growth of Islamic banking in Africa. Supporters of this system of finance claim that, especially in the wake of the global financial crisis, it is a superior system and that it is perfectly adaptable to all countries. We examine this claim and report on its increasing importance in some areas of the continent.

The Nigerian banking landscape is always replete with interesting, if at times, alarming developments. In this issue, however, our correspondent in Lagos focuses on the fortunes of three banks that had to be rescued and put under supervision of a specialised body. We look at how the banks have coped with changes of management and if they are on track to be able to function independently in the near future.

We then move to the other side of the continent to Kenya, which pioneered the mobile money transfer system and discover that it is not only well and thriving but that mainstream banks are now jumping on the bandwagon and offering their own mobile transfer products.

We take a turn southwards to look at the thorny issue of excessive bank changes – a perennial source of irritation and even anger among the customers. South African banks had been given warnings that they would feel the full weight of the regulator unless they tempered their charges. Our correspondent investigates if there has been any progress on this as yet of if the banks are continuing to sail close to the wind.

Finally, we pay a visit to Ecobank’s London offices to discuss their increasing interest in financing the continent’s energy sector. This is one of the critical sectors that has hitherto been largely beyond the reach of indigenous banks. Will Ecobank’s foray into energy be a game-changer for other indigenous banks?

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Written by Anver Versi

Award-winning journalist Anver Versi is the editor of New African magazine. He was born in Kenya and is currently based in London, UK.

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