Banking

Africa’s Banking Market Second Most Profitable, Fastest Growing—Report

Published

8 years ago

02/03/2018

By Dipo Olowookere

A new report released by McKinsey & Company has revealed that the banking markets in Africa are among the most exciting in the world.

According to the McKinsey Global Banking report, the continent’s overall banking market is the second-fastest-growing and second most profitable of any global region, and a hotbed of innovation.

Nearly 300 million Africans are banked today, a number that could rise to 450 million in five years, the report said.

The report illustrates four segments of African markets – from the advanced markets like South Africa and Egypt, to fast-growing transition markets such as Kenya, Ghana and Cote D’Ivoire, to sleeping giants like Algeria, Nigeria and Angola, to nascent banking markets like DRC and Ethiopia.

The report finds that Africa’s top quintile banks – the so-called “winners” – are simultaneously 4 times more profitable and over 2 times faster growing than bottom quintile banks.

The report’s key findings are that these “winners” are defined by employing one or more of five winning practices.

The first is ‘draw the right map.’

In Africa, geography matters. About 65 percent of African banks’ profitability (measured by RoE) and 94 percent of their revenue growth are attributable to their geographic footprint. Importantly, the report highlights a shift in exchange-rate adjusted revenue pools North Africa, East Africa and West Africa, and away from South Africa.

The second is ‘right segments, compelling offers.’ It was discovered that 70 percent of revenue pool growth will occur in the middle segments, defined as earning between $6,000 and $36,000 in annual income. The mass market – individuals earning less than $6,000 per annum – accounts for 13 percent of the growth, but is the fastest growing segment. Whichever segment banks choose, having the right proposition is key. Its survey of 2,500 banking customers in 6 African countries finds that 25 percent of customers choose price as the most important factors in choosing banks. Equally important is convenience, also cited by 25 percent of customers. Service is the third most important factor, selected by 12 percent of customers. We also find huge cross-sell opportunities – while 95% of Africans have transaction products, fewer than 20 percent have lending, insurance, investment or deposit products.

The third is ‘leaner, simpler banking.’ Commenting on this, the report said ehile African banks’ cost: income has been falling, it found out that this is due to rising margins for banks, and their cost-to-assets ratio has actually been worsening. At 3.6 percent, Africa has the 2nd highest cost-to-assets ratio in the world. However, rapid efficiency gains are possible, and the research spotlighted eight African banks that have made strides in efficiency in the last five years, through a combination of three levers – end-to-end digitisation; sales productivity improvements fuelled by advanced analytics; back- and middle-office optimisation.

For the fourth point, it is ‘digital first.’ It was observed that 40 percent of Africans prefer to use digital channels for transactions. In four major African countries – South Africa, Nigeria, Kenya, Angola – a higher proportion of Africans prefer the digital channel for transactions to the branch channel. Given low branch density in Africa, banks need to employ a digital first approach. The report hones in on four themes of innovation emerging in Africa on digital – end-to-end digital transformations (e.g. Equity Bank); partnering with telco companies (e.g. CBA in Kenya or Diamond Bank in Nigeria); building a digital bank (e.g. ALAT in Nigeria); and building an ecosystem (e.g. Alipay in China).

The first point is ‘innovate on risk.’ According to the report, African banking still has the second highest cost of risk in the world. Poor data availability is part of the problem: 11 percent of Africans are on credit bureaus, compared to in excess of 90 percent in advanced markets. However, we are seeing innovations such as banks partnering with data and analytics fintechs like Jumo to improve credit underwriting; banks partnering with telcos to leverage telco data to issue small-ticket loans on mobile; and players employing payroll lending across countries.

This new report draws on the experience of McKinsey’s partners and colleagues serving banks across Africa; McKinsey’s Global Banking Pools research; a proprietary database of the financial performance of 35 of Africa’s leading banks; a survey of executives from 20 banks and financial institutions across Africa; and a broad-based survey of 2,500 banking customers from 6 African countries – South Africa, Egypt, Nigeria, Morocco, Angola and Kenya.

Banking

Sagecom N225bn Case: Apex Court Cuts Fidelity Bank Judgment Debt to N30bn

Published

7 hours ago

15/12/2025

Adedapo Adesanya

By Adedapo Adesanya

A five-member panel of the Supreme Court, led by Justice Lawal Garba, last Friday ruled in favour of Fidelity Bank in its appeal against Sagecom Concepts Limited.

The judgment brings definitive closure to a legacy case that has attracted attention across the financial sector for more than two decades. It also marks a significant victory for Fidelity Bank in a long-running legal dispute.

In a motion dated October 8, 2025, Fidelity Bank sought clarification from the Supreme Court, requesting a consequential order that the judgment debt be paid in Naira. The bank also asked that the interest rate be set at 19.5 per cent per annum rather than 19.5 per cent compounded daily.

It also requested the exchange rate used for conversion be the rate applicable as of the date of the High Court judgment, in line with the Supreme Court’s decision in Anibaba v. Dana Airlines.

Fidelity Bank further requested the judgment debt be fixed at N30,197,286,603.13 and that interest on this amount be payable at 19.5 per cent per annum until full settlement.

In the judgment delivered by Justice Adamu Jauro, the apex court granted the bank’s first three prayers but declined the fourth and fifth. As a result, the judgment sum will be paid in Naira at an annual interest rate of 19.5 per cent, rather than the daily compounded rate previously awarded by the High Court.

The Supreme Court equally affirmed that the applicable exchange rate should be the rate as of the date of the High Court judgment, consistent with its earlier decision in Anibaba v. Dana Airlines.

The dispute originated from a legacy transaction involving the former FSB International Bank, which merged with Fidelity Bank in 2005. It stemmed from a 2002 credit facility extended to G. Cappa Plc and subsequent legal proceedings tied to the collateral.

This ruling provides finality for years of litigation and confirms a significantly lower liability than the N225 billion previously speculated in the review of decisions leading up to the decision.

Banking

CBN Delists Non-Compliant Bureaux De Change Operators

Published

4 days ago

11/12/2025

Adedapo Adesanya

By Adedapo Adesanya

The operating licences of all legacy Bureau De Change (BDC) operators who failed to meet the new licensing requirements have been revoked by the Central Bank of Nigeria (CBN).

This happened after the central bank streamlined the BDCs to 82 in order to sanitise the foreign exchange (FX) market in the country.

The latest development was revealed by the apex bank in its Frequently Asked Questions document on the current reform of the bureau de change, published on its website on Tuesday.

According to the document, the CBN has now enforced the final cutoff, declaring that any BDC that did not meet the requirements by the end of November is no longer recognised.

“The guidelines provided a transition timeline of six months from the effective date, 3 June 2024, with a deadline of 3 December 2024, for all existing BDCs to meet the requirement of the new Guidelines or lose their licence(s). However, the management of the CBN graciously extended this deadline by another six months, which ended 3 June 2025, to give ample time for as many legacy BDCs desirous of meeting the new requirements to do so.

“Consequently, any legacy BDC that failed to meet the requirements of the new Guidelines as of 30 November 2025 has ceased to be a BDC, as its licence no longer exists. Please visit the CBN website for the updated list of existing BDCs in Nigeria,” the apex bank said.

According to the CBN, before its latest decision, an extended compliance window was granted under the revised BDC Guidelines. Existing operators were initially given six months, June 3 to December 3, 2024, to satisfy the new regulatory conditions.

The CBN later granted an additional six-month extension, which elapsed on June 3, 2025, to allow more operators to align with the updated standards.

The new measures form part of broader efforts by the CBN to strengthen transparency, compliance, and stability within Nigeria’s foreign exchange market.

The new CBN regulatory framework for BDCs, introduced in February 2024, mandated BDC operators to meet higher capital requirements. Tier-1 operators are required to meet a minimum capital requirement of N2bn, while Tier-2 operators must meet N500m as MCR.

The bank added that it would continue to receive applications on its Licensing, Approval and Requests Portal from prospective promoters, and those that meet the criteria will be considered for a license.

However, the CBN said it reserves the right to discontinue the licensing of BDCs at any time.

Banking

O3 Capital to Unlock N95bn Festive Spending Boom With Blink Card

Published

5 days ago

10/12/2025

Modupe Gbadeyanka

By Modupe Gbadeyanka

A non-bank credit card issuer, 03 Capital, has introduced a travel card designed to unlock the N95 billion festive spending boom in Nigeria.

The new initiative, known as the 03 Capital Blink Travel Card, promotes economic participation among returning Nigerians, expatriates, and tourists.

A statement from the financial technology (fintech) firm is available instantly to use at over 40 million merchants and ATMs nationwide.

The Blink Card, to be issued in both digital and physical form, is loaded with currency from any foreign bank card, converted to Naira, enabling transactions to be completed in the local currency.

The card offers tap-to-pay and cash withdrawals at over 40 million merchants and ATMs nationwide, making it the ideal solution for visitors to Nigeria.

It also avails Nigerians in the Diaspora to spend like locals when they return to their country of origin.

Payments for goods and services can be completed via the virtual Blink Card, linked to the O3Cards app. Funds can also be transferred instantly to all local banks and other financial institutions.

According to the World Bank, remittance inflows account for approximately 5.6 per cent of Nigeria’s gross domestic product (GDP), and the resultant spending power is unlocked when the Diaspora returns home for the festive period.

In December 2024, about N95 billion was injected into the Nigerian economy by inbound passengers – 90 per cent being diasporic Nigerians – spending on short-let accommodation and hotels, events and hospitality, nightlife and dining, and vehicle rentals. The launch of the Blink Card promises to spur this spending further, providing a significant boost to local businesses.

Blink Cards are available for collection at all Nigerian international airports, offering an immediate and hassle-free route to financial empowerment for people arriving in the country.

Blink Card carriers benefit from increased convenience, flexibility, and safety by not needing to carry large amounts of physical cash, while the ability to pre-load cards promotes smarter budgeting practices.

“We are excited to launch the Blink Card to promote greater economic participation among visitors to Nigeria.

“The card removes the needless friction and costs involved in legacy foreign exchange and cash payment processes, offering a quicker and more transparent option for spending in the country.

“As Nigerians begin travelling home for Christmas – combined with the regular traffic of arriving tourists, expatriates, and businesspeople – this is the perfect time to launch a solution catering to the financial needs of visitors, tapping into the seasonal spending boom which provides an annual lifeline for local economies and SMEs,” the chief executive of 03 Capital, Abimbola Pinheiro, stated.