Banking in Africa
Continent of dreams
Across Africa, banks are expanding. Their returns aren’t
Mar 2nd 2013 | JOHANNESBURG |From the print edition
“JAM yesterday, jam tomorrow, but no jam today.” That was a shareholder’s complaint at the recent results presentation of Investec, a specialist bank that was founded in South Africa and now operates globally. The lament is a familiar one to investors in many of Africa’s fastest-growing banks. The region’s lenders are promising spectacular returns as they expand across the continent. Their ambitions have created a group of home-grown regional powerhouses. Yet the costs of building networks of branches and of investing in growth mean that such returns remain in the distant future.
The main allure of Africa’s banking market is that it is potentially vast and virtually untapped. Banking penetration among the continent’s 1 billion inhabitants varies significantly from country to country, but swathes of the population in Senegal and Tanzania, for instance, have virtually no access to banks (see chart).
The differences within countries are striking, too. South Africa, for example, offers world-class service and technology from the air-conditioned offices and verdant lawns of Johannesburg’s main banking district. Yet just a short bus ride away is the poverty-ridden township of Alexandria, where many people still stuff cash under their mattresses.
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