Published on 25 Apr 2022

Major European banks are quitting Africa

Their exit leaves a void in the retail market for other banks to fill

or customer at bank office

Africa’s banking industry is seeing the exit of major international banks. British bank Standard Chartered is the latest to reach for the door. On 15 April it announced its decision to pull out of Angola, Cameroon, Gambia, Sierra Leone, and Zimbabwe. It will also relinquish its retail banking operations in Tanzania and Cote d’Ivoire, and focus exclusively on corporate, commercial, and institutional clients.

Standard Chartered’s decision follows a series of exits made by international banks in the past six years. The proverbial floodgates were opened in 2017 when Barclays PLC reduced its shareholding in Barclays Africa Group – now rebranded as Absa Group Limited – from 62.3% to 14.9%. In April 2022 Barclays reduced its African footprint further by selling 7.4% of its stake – 63 million shares – for US$ 687m on the Johannesburg Stock Exchange. In October 2021, Atlas Mara exited the continent, divesting from seven markets including Mozambique, Rwanda, Tanzania, Botswana, and Zambia. It was followed in February 2022 by Credit Suisse, which also shuttered its operations across Africa barring South Africa. The same month BNP Paribas of France decided to reduce its exposure in Africa by selling its Senegalese subsidy, Banque Internationale pour le Commerce et L’industrie du Senegal (BICIS) in which it has held a 54.11% share. The move followed BNP’s departure from several markets across the continent such as Burkina Faso, Guinea, Gabon, Mali, and the Comoros.

All these banks have claimed in some way or another that they are finding it difficult to do retail banking in Africa, which is seen as a high-risk low-yield undertaking. The difficulties have multiplied in the wake of recent economic shocks, regulatory uncertainty, and the disruption caused by digital technology in the retail banking sector in Africa.

In the early 2000s many foreign banks had hedged their bets on the African retail banking market based on the continent’s economic growth and the rise of its middle class. The African Development Bank (AfDB), for one, noted in 2012 that the size of the middle class had tripled in the previous 30 years to 355 million and would accelerate in the coming decade. It estimated retail banking earnings to grow by 15% per year by 2020. But a series of shocks starting with the 2008 global financial crisis put paid to such expectations. It affected foreign direct and portfolio investments in Africa, reduced the earnings of the middle class, made capital scarce for entrepreneurs and raised interest rates across the board. In 2015, Africa was dealt a second blow by the commodity crunch, which ravaged the balance sheets of the continent’s many resource-dependent markets. Then came the COVID-19 pandemic which again shrank the fiscal space of various African government pushing them further into debt. Unlike their peers in the developed world, central banks in Africa struggled to provide sufficient liquidity support to commercial banks. Monetary assistance often came at the expense of their profit margins. Regulatory overreach in markets such as Nigeria, Tanzania, and Zimbabwe have not helped matters either.

It is not all gloomy in the African banking sector, especially for those that are familiar with the terrain and have knowledge on how to navigate its complexities. A recent report by PwC claimed that major banks in South Africa registered a 99% increase in headline earnings in 2021 relative to 2020. This came on the back of an economic rebound in the country and productivity gains made through digital banking service. Mobile finance has gained prominence across Africa. According to the World Bank, as much as 57% of Africa’s population is unbanked. Filling this void are an array of contenders, including fintech companies, telecommunications providers, and tailored products from local banks.

The problem, therefore, may not necessarily be that Africa is no longer investable. Instead, reaping gains from the continent may requires a certain kind of nous and dexterity that some international banks may not necessarily possess.



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StanChart cuts seven minnow businesses in Africa and Middle East’, Reuters, 14 April 2022

Sub-Saharan Africa is no longer a priority for BNP Paribas’, The Africa Report, 01 April 2022

Good news for banks in South Africa’, BusinessTech, 25 March 2022

SA to see big uptick in new banks as brands cash in on customer loyalty’, IOL, 09 March 2022

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British banks are leaving Africa, what does it mean for the banking sector’, Ventures Africa, 09 November 2021

British banks exit Africa as unstable currencies and ‘risks’ raise costs of operations’, The East African, 28 October 2021

Meeting the growing demand for retail banking services in Africa’, AfDB, 23 July 2012

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