Investigations by BMI-TechKnowledge into the wholesale banking sectors in South Africa, Botswana, Namibia, Angola, Mauritius, Tanzania, Kenya, Ghana, Nigeria, Egypt and Morocco reveal that wholesale banks in these countries have experienced significant growth in terms of profit and assets.
Stable political conditions, the introduction of sound macro-economic and banking policies, increased economic activity, as well as improvements in risk control and management have been the main facilitators of growth.
Banking sectors in Africa have often been adversely affected by challenges such as unstable economies, domestic conflicts, limited infrastructure, an inadequate capital base and poor risk management.
However, according to BMI-T's latest report, "Wholesale banking in selected African countries", a number of positive developments in several African countries have been taking place, largely driven by governments and central banks, resulting in the banking sectors in these countries gaining appeal for both African and foreign investors.
Phuculwa Lupuwana, research analyst and author of the report, says that countries such as Angola, Egypt, Ghana, Mauritius, Morocco and Nigeria have all undergone banking sector reform processes which involve, among other things, increased capital requirements, improved corporate governance, transparency, disclosure and openness to foreign banks.
An example of the success of these banking sector reforms is in Nigeria's banking sector, where banks were driven to merge and consolidate in order to meet the new capital requirements, resulting in the emergence of stronger capitalised banks.
Lupuwana said that in order to encourage economic diversity and sustainable economic growth, most African governments have been implementing economic reforms with new strategic plans and policies being introduced and implemented, resulting in increased activity in the countries' economies.
These involve the encouragement of foreign investors, incentives for investments in certain industries, the removal of foreign exchange controls and exemption from export and import duties in specific areas.
"All these activities are positively impacting the demand for wholesale banking products and services such as capital, asset and project finance, as well as trade and export services, including bank guarantees and letters of credit," adds Lupuwana.
BMI-T believes that as more business investors stream into African countries, as a result of the improved risk controls, transparency and growing confidence in these countries, an increased demand for various wholesale banking products and services will manifest.