Banks in Ghana, others in Africa to up financial assets to $1.3 trillion by 2020 – EIU
Banks in Ghana and other key African economies south of the Sahara are projected to increase their financial assets by more than a 150% in the next decade, according to the Economist Intelligence Unit’s (EIU) latest report.
The EIU says these countries are poised to enjoy a surge in growth in their banking systems during this decade and describes the development as a ‘boom’.
The report, “Banking in sub-Saharan Africa to 2020 Promising frontiers,” published August 4, 2011, indicates that “high rates of economic growth, financial deepening to fulfil huge unmet needs for basic financial services and new technologies to provide them—particularly over mobile phones” are the three main drivers of this development.
Giving two scenarios – exclusive economic expansion and both economic growth and financial deepening, the Unit said “In the conservative scenario, driven exclusively by economic expansion, we project that the industry in 16 key African economies will boost its financial assets by 178% to $980 billion by 2020. In the more likely scenario, driven by both economic growth and financial deepening, we foresee assets expanding by 248% to $1.37 trillion at the end of the decade.”
The countries to enjoy this surge are Ghana, Nigeria, South Africa, Tanzania, Angola, Botswana and Namibia, Senegal, Mozambique and Uganda.
The rest are DR Congo, Cameroun, Ivory Coast, Kenya and Ethiopia.
In the Ghana case, the EIU noted that banks’ assets will at least triple in the next ten years.
“Banks in a number of other economies—including Ghana, Tanzania and Uganda—will expand assets at least threefold over the same period and they could grow much more quickly in a scenario that also features financial deepening,” it said.
Total assets of the banking industry grew by 27.2 per cent to GH¢18.1 billion at the end of May 2011, on top of the 29.8% growth achieved during the corresponding period of 2010, said Mr. Kwesi Amissah-Arthur, Governor of the Bank of Ghana July 6, 2011 during a Monetary Policy Committee (MPC) press briefing in Accra.
“The industry continued to be highly liquid and profitable. Total liquidity relative to deposits increased to GH¢10.8 billion in May 2011, up from GH¢7.2 billion in May 2010. Bank profitability also increased by 21.9 per cent to GH¢199.9 million, on top of the 53.3 per cent growth recorded in May 2010,” he added.
The EIU data shows that if Ghana’s economic growth and financial deepening expands, then total bank claims will reach between $24 billion and $39.9 billion by 2020 from $8.09 billion in 2010.
Mobile banking in Africa is also said to the pillar behind the drive of this forecast which banks are using to get new customers.
“The continent’s industry is a leader in mobile banking and other innovative approaches to reaching new customers. Most of its markets are also unusually open among emerging markets to foreign banks and microfinance firms,” it says.
The boom will vary markedly across the continent with banking likely to enjoy its most rapid expansion in Angola, increasing assets at least fivefold by 2020, as that country experiences a surge in petroleum production, it adds.
By Ekow Quandzie