Africa offers new territory for banks

CASABLANCA, November 2012 - A basic problem is holding back many countries in Africa as they go for growth – the low level of bank penetration. In the mostly French-speaking countries of the West African Economic and Monetary Union zone, where the currency is linked to the euro, fewer than one in 10 people are reckoned to have a bank account.

A number of reasons can be given for this, including low literacy levels, the big role played by the informal economy, low household incomes, ignorance about the banking system, and the lack of infrastructure such as branch networks. Banking collapses in some countries the late 1980s also caused a serious loss of credibility for banks.

Banks themselves play a key part in the level of penetration. Experts say they need to ensure their services are secure and then adapt them to different parts of the population to facilitate access.

As long as the number of people with bank accounts remains small, these countries have unused savings potential which could enable banks to exercise their role in financing the economy and creating growth.

“African countries have low bank penetration and small branch networks, which  offers very attractive opportunities for banks,” a report by Attijari Intermédiation, a stock market offshoot of Morocco’s Attijariwafa Bank, said.

The report focussed on countries such as Senegal, Ivory Coast and Cameroon, prominent players in the West African and Central African single-currency zones.

For example, Attijariwafa Bank’s control of Senegal’s CBAO has enabled it to take a leading position in the West African zone’s banking sector and gain access to several neighbouring countries thanks to CBAO’s strong presence in the region. The bank has for some years been expanding its African network.

The conquest of African markets can take the form of wide-scale branch openings, but also through the use of mobile telephony for payments. Mobile banking can lead to a rapid increase in access to banking services, the pioneer being Kenya’s M-Pesa, operated by the Safaricom telecom company. However, expert say, governments need to undertake reforms to further this objective.