As growth in Sub-Saharan Africa is set to post a steady 5-6 percent per annum to 2017 according to IMF estimates, investors will be taking notes on the region’s growth story not least with the financial sector.
Growth projections have rebounded from forecasts of around a 3 percent rise in 2009 after falling commodity prices have hit one of the region’s main revenue sources. Yet, according to the World Bank’s recent Global Development Finance report, stronger commodities will firm growth prospects in the coming years. In recent weeks, commodities have dipped, dampening the outlook for some resource-rich countries, but as 76 percent of the region’s population do not have access to a bank account, lenders are set to grow their presence in the region.
Julius Baer notes the region’s market potential:
Since 2002, resource-hungry China has swept across a by-and-large grateful African continent, taking oil and minerals in exchange for debt relief, low-interest loans, or much needed infrastructure, such as roads, ports and housing.
The continent’s existing banking sector is nascent, with many payments bypassing traditional deposit methods, instead mobile technologies such as M-Pesa and M-Kesho are the only method of making payments and transfers. On banking Baer had this to say:
The main appeal of Africa’s banking market is that it is potentially enormous – Only 3 percent of Africans have access to a credit card … 76 percent of adults do not have access to a formal bank account.