Financial services sector seen as supportive in Africa’s development
The financial services sector has been identified as a key enabler in advancing economic growth in Africa, KPMG has said in a press release.
The Seventh KPMG Africa Conversation convened in Johannesburg South Africa September 27, 2012 acknowledged that the financial services sector on the continent is playing a critical supportive role in development as a result of increased consumer spend, public and private sector investment in infrastructure, advances in technology leading to greater connectivity and increasing demand for natural resources by the developing BRIC bloc of countries.
The Conversation also identified other factors such as increasing urbanisation across the continent, a greater number of enabling frameworks such as the continued increasing acceptance of the rule of law and the harmonisation of regulatory requirements at national and regional levels also contributing to development.
Citing Nigeria, Bisi Lamikanra, Head of Management Consulting at KPMG Nigeria, said, “In Nigeria, for example, regulatory reform led by the Central Bank has led to consolidation in the banking sector”, adding, “This has led to more focus on retail banking. Further developments have substantially ‘de-risked’ several factors for local and foreign investors entering African markets.”
The conversation noted that different models are also being developed for different financial services being offered in different regions. Globally, there has been a move from de-regulation to greater regulation, it said.
According to Junior Ngulube, CEO of Munich Re Africa, “The South African banking and insurance sectors have been very well-regulated and we didn’t see any of the turmoil that is still playing out globally. The rest of the continent is also very similar to South Africa in that respect. In Francophone countries, for example, there is just one [insurance] code and one currency. That makes it easy to transact business.”
Warning investors of possible risks, the Conversation said although investors should guard against assuming that all markets on the continent are the same, further risk for investors can be reduced through combined expertise.
Making a suggesting Nicholas Young, Africa COO at Citibank, said “Because Africa is an enigma for many investors, a tailored approach should be developed for each market. Combined global and local partnerships work well to unpack different markets.”
Such an approach can act as a key differentiator for investors entering Africa, he added.
By Emmanuel K. Dogbevi