19 November 2015
Atta Africa Financial Update
Key commercial and political activity in Africa for private equity investors by DCE Partners, UK Private Equity advisors to Atta
Executive summary: Banking in Africa
The banking industry in sub-Saharan Africa can be characterised as a dichotomy between the highly concentrated, oligopolistic examples - with large banks accounting for the majority of market share - and fragmentation, with cases of 20, 30 or even 40 high street banks in some markets all jostling for a piece of an an increasingly larger pie.
Overall the financial sector landscape is generally underdeveloped in sub-Saharan Africa, with banking systems accounting for the preponderance of financial sector assets and activities. In the fragmented markets especially, banks are small in absolute and relative size - they are characterised by low loan-to-deposit ratios and large shares of assets are held in the form of government securities. Lending is mainly short-term in nature - the majority of loans are current.
Banks are also typically high-cost operations in due to a combination of factors, including the small absolute size of banks and banking systems; low income levels, large informal sectors, and low levels of financial literacy.
However, new forces are at work on the continent: targeted policy reforms are beginning to appear, supporting new payment system infrastructure, improvements in
creditor rights and the evolution of information and communication technologies has already shown its potential to widen access to financial services - especially for rural populations.
There is also significant scope for rapid expansion across borders with pan-African banking groups. The development of banking systems in many markets is impeded by the small economic size of national markets, however regional economic integration holds out the prospect for escaping the disabilities of small domestic market size.
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East African property market to attract US$800 million |
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New investment regulations boost Namibian private equity |
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