2012 – As Good As It Gets? (African Banker Magazine)

What does 2012 have in store for Africa’s finance industry? Will the economic crises in Europe affect African economies? Will the euro hold its value in relation to other global currencies? How will this affect the CFA franc, which is tied to the euro, and does the proposed devaluation of the CFA later this month still make economic sense? We can expect exciting, and distracting, times as events play themselves out over the course of the year.

Despite the increasing leaning towards the East over the past decade, Europe still looms very large in Africa’s scheme of things and it is likely to continue playing a very important role in the foreseeable future. This is particularly true for the Francophone zone, which is much more intimately bound up in the French sphere of influence than its Anglophone or Lusophone counterparts.

Leaving this issue aside, Africa can look forward to another great year in term of economic growth and investment. Our cover story this month (page 14) details why Africa has now become a magnet for investment banking and why the world’s giant financial institutions are jostling for prime position on the continent. The continent’s economy is expanding inexorably and demanding increasingly sophisticated financial products. The need is being met by both global multinationals and thrusting local institutions who are paving the way for big-ticket projects and underwriting even larger mergers and acquisitions. 2012, at the very least, looks like another excellent year for Africa’s bankers.

But of course Africa’s development pattern is very uneven – understandably so for any region in transition. Ultra-modern state-of-the-art business structures are cheek by jowl with the Jua kali (hot sun) micro enterprises. These humble businesses are the muscle and sinews of all economies and together can provide more jobs and income than all the big enterprises can.

For decades, small enterprises of this nature in Africa were dismissed as the ‘informal’ sector, hardly worth meriting any attention. Things have changed considerably since, with the SMEs now regarded as an essential part of the growth trajectory of African economies.

But the biggest change in their fortunes has been the mobile phone. It has transformed lives and it is now transforming fortunes through the great innovation – mobile banking – which is the subject of our special report in this issue.

Still on the subject of the small business, we learn that an ingenious computer-based test has cleared the way for mainstream banks like Standard to approve (or otherwise) loan applications based on the character, determination and inherent business skills of those looking for finance, rather than on their assets or other collateral. This invention is truly revolutionary and appears to have finally broken the barrier that keeps

millions of budding entrepreneurs locked out of access to finance because they lack the requisite collateral.

Our second special report in this issue focuses on banking in East Africa. While the industry here is not as highly developed or sophisticated as that in South Africa, Nigeria or in North Africa, it is growing very rapidly and generating handsome profits. HSBC is the latest of the global giants to stake a claim in the enormous potential of this territory.

The London Stock Exchange, perhaps the oldest and most famous of them all, is an icon in the world of finance. A listing on the exchange opens doors throughout the world – but who can list? We set out to find out and discovered that the exchange has rolled out the welcome mat for African companies.

Finally, we visited Hong Kong to participate in one of the most important investment conferences for emerging markets organised by Renaissance Capital. The immediate future of the world, we learnt, was in the East, and Africa and its resources lie at the heart of the growth strategies in that region. We close this issue with a candid guest column by Stephen Jennings, the CEO of Renaissance, who bet everything on the potential of emerging markets when everybody else was looking the other way. Events have proved what a brilliant vision that has been.

A very happy, prosperous and successful New Year to all our readers and advertisers!