Banking
McKinsey Research Shows Big Prospects Ahead In Africa
By Modupe Gbadeyanka
Although Africa’s growth has slowed, the long term fundamentals are strong, big business opportunities lie ahead and the overall outlook is positive. These facts are contained in the latest McKinsey Global Institute Report just released today titled, Lions on the Move II: Realizing The Potentials of Africa’s Economy.
According to the MGI’S new report, four fundamentals are likely to underpin Africa’s economic growth. Firstly, Africa has the fastest urbanization rate in the world. Over the next ten years, 187 million more Africans will live in cities—equivalent to half the US population today.
Secondly, it has the biggest working-age population in the world of 1.1 billion in 2034—larger than in either China or India. Thirdly, it has the largest reserves in the world of many key natural resources (e.g., 60 percent of the world’s unutilized but potentially available cropland, and the largest global reserves of vanadium, manganese, and many others).
Additionally, Africa has the chance to leapfrog old technologies using mobile and digital (e.g., penetration of smartphones expected to hit 50 percent in 2020 vs. 18 percent in 2015).
The new MGI report confirmed that spending by consumers and businesses in Africa today totals $4 Trillion. By 2025, the total could be $5.6 Trillion. Household consumption is expected to grow by 3.3% a year and reach $2.1 Trillion by 2025.
The total could be $5.6 Trillion, reflecting an expanding African consuming class. Business spending is expected to grow from $2.6 Trillion in 2015 to $3.5 Trillion by 2025, and Africa has an opportunity to nearly double manufacturing output from $500 Billion today to $930 Billion in 2025.
AFRICA’S economies are no longer a story about exporting commodities- but about tapping into vibrant domestic demand. Accelerated industrialization could lead to a steep change in productivity and the creation of 6-14 million stable jobs over the next 10 years.
AchaLeke, a McKinsey Senior Partner and Report Co-author, said: “Our new research shows how in coming years Africa will benefit from strong fundamentals including a young and growing population, the world’s fastest urbanization rate, and accelerating technological change. These will help drive rapid growth in consumer markets and business supply chains, and will offer opportunities to build large, profitable industrial and services companies.
“Tapping Africa’s consumer markets will require companies to have a detailed understanding of income, demographic, and category trends.
“Thriving in business markets will require businesses to offer products and develop sales forces able to target the relatively fragmented private sector. But what our research also shows is how much work needs to be done both by companies themselves and by Africa’s governments to translate opportunity into tangible economic benefits.”
To make the most of the opportunities, Africa needs more large companies. MGI’S new database of Corporate Africa, shows that the continent has 700 companies with revenues of more than $500 million, of which 400 companies have revenues of more than $1 Billion.
AFRICA’S companies are growing faster and are generally more profitable than their global peers. “Africa’s top 100 companies have achieved success by developing strong positions at home, staying the course to build their businesses over decades, integrating what other companies would usually outsource, and investing in building and retaining talent.
Further success is possible in six high-potential sectors with high growth, high profitability, and low consolidation. These are: wholesale and retail, food and agro-processing, health care, financial services, light manufacturing, and construction.”
Governments need to play a stronger role in unleashing renewed dynamism. Six priorities emerge from this research. Firstly, mobilize more domestic resources, taking bold steps to mobilize more of its own funding to finance development.
Secondly, aggressively diversify economies, encouraging growth in high-potential sectors in close cooperation with business, based on a clear understanding of their countries’ comparative advantages. Then accelerate infrastructure development and deepen regional integration.
Additionally, create tomorrow’s talent, ensuring that educational and training systems build work-relevant skills, and that students are aware of, and encouraged to enter, these vocations and that the private sector builds on best practice.
Finally, ensure “healthy” urbanization, so that cities grow with the infrastructure required to make the biggest positive economic and social impact possible. Delivering on these six priorities will require the vision and determination to drive far-reaching reforms in many areas of public life—and capable public administration with the skill and commitment to implement such reforms.
By Adedapo Adesanya
Access Bank Plc, the banking subsidiary of Access Holdings Plc, has entered into a binding agreement with South African-based Bidvest Group Limited for the acquisition of 100 per cent equity stake in Bidvest Bank Limited.
The deal for the 24-year-old South African lender is due to be completed in the second half of 2025, upon regulatory approval.
This shows Access Bank’s further expansion plans in line with goals set by its late founder, Mr Herbert Wigwe.
The agreement to acquire 100 percent stake in Bidvest Bank reflects Access Bank’s commitment to strengthening its footprint in South Africa and consolidating on its position as the continent’s gateway to global markets as it seeks to optimise the benefits of recent acquisitions and accelerate its transition towards a greater focus on efficiencies.
Bidvest Bank, founded in 2000 is a niche and profitable South African financial institution providing a diverse range of services, including corporate and business banking solutions and diverse retail banking products.
As of its year ended June 2024, Bidvest Bank reported total assets equivalent of $665million and audited profit before tax of $20million.
Upon conclusion of this acquisition, Bidvest Bank will be merged with the bank’s existing South African subsidiary to create an enlarged platform to anchor the regional growth strategy for the SADC region.
This is coming just as the bank opened a new branch in Malta as part of efforts to focus on international trade finance after obtaining a banking licence from the European Central Bank (ECB) and the Malta Financial Services Authority (MFSA).
Access Bank said the licence marks a transformative milestone in bolstering Europe-Africa trade flows.
The Maltese branch was established by Access Bank UK Limited, the subsidiary of Access Bank Plc, which is also the subsidiary of Access Holdings Plc, which is listed on the Nigerian Exchange (NGX) Limited.
By Modupe Gbadeyanka
To strengthen Europe-Africa trade ties, Access Bank has opened a new branch in Malta. It will focus on international trade finance, employing approximately 30 people in its initial phase, with plans for controlled expansion over time.
It was learned that this Maltese branch was established by Access Bank UK Limited, the subsidiary of Access Bank Plc, which is also the subsidiary of Access Holdings Plc, which is listed on the Nigerian Exchange (NGX) Limited.
Access Bank Malta Limited commenced operations after obtaining a banking licence from the European Central Bank (ECB) and the Malta Financial Services Authority (MFSA).
Access Bank said the licence marks a transformative milestone in bolstering Europe-Africa trade flows.
Malta, a renowned international financial centre, and a gateway between the two continents, is strategically positioned to play a pivotal role in advancing commerce and fostering economic partnerships.
This strategic expansion into Malta enables The Access Bank UK Limited to leverage growing trade opportunities between Europe and Africa.
It underscores the organisation’s commitment to driving global trade, financial integration, and supporting businesses across these regions.
“By establishing operations in Malta, we will gain a foothold in a market that bridges European and North African economies, moving us one step closer to our goal of becoming Africa’s Gateway to the World.
“It further enhances our bank’s capacity to support clients with innovative solutions tailored to cross-border trade and investment opportunities,” the chief executive of Access Bank, Mr Roosevelt Ogbonna, stated.
“Europe has emerged as Africa’s leading trading partner, driven by initiatives such as the Economic Partnership Agreements between the EU and African regions and the African Continental Free Trade Area (AfCFTA).
“With Europe-Africa economic relations entering a new phase, The Access Bank Malta Limited is ideally positioned to deepen trade and meet the financing and banking needs of our clients in these expanding markets,” the chief executive of Access Bank UK, Mr Jamie Simmonds, commented.
Also speaking, the chief executive of Access Bank Malta, Renald Theuma, said, “Malta is uniquely positioned as a bridge between Europe and Africa, making it an ideal location for our subsidiary. This move allows The Access Bank Malta Limited to engage more closely with customers in Europe and deliver tailored financial solutions that drive growth and connectivity across both continents.”
By Adedapo Adesanya
The International Finance Corporation (IFC) and Goldman Sachs have announced a new partnership with African banks, including Nigeria’s Zenith Bank and Stanbic IBTC Nigeria to support the Goldman Sachs 10,000 Women initiative, a joint programme launched in 2008 to provide access to capital and training for women entrepreneurs globally.
The two Nigerian banks are part of nine financial institutions from across Africa which have agreed to join the 10,000 Women initiative committing to leverage the business education and skills tools the programme provides to create more opportunities for women entrepreneurs across the continent by providing access to business education.
Others banks include Stanbic Bank Kenya, Ecobank Kenya, Ecobank Cote d’Ivoire, Equity Bank Group, Banco Millenium Atlantico – Angola, Baobab Group, and Orange Bank.
Speaking on this, Ms Charlotte Keenan, Managing Director at Goldman Sachs said – “10,000 Women has had a powerful impact to date, but we know that there are more women to reach and more potential to be realized.
“We are delighted to partner with IFC to supercharge the growth of women-owned businesses across Africa, and mainstream lending to female business leaders. We remain committed to supporting entrepreneurs with the access to education and capital that they need to scale.”
Since 2008, the 10,000 Women initiative has provided access to capital and business training to more than 200,000 women in 150 countries.
“This expanded initiative marks a significant step forward in creating equitable economic opportunities for women in Africa, enabling them to build stronger, more resilient businesses and to realize their entrepreneurial goals,” said Ms Nathalie Kouassi Akon, IFC’s Global Director for Gender and Economic Inclusion.
Goldman Sachs’ 10,000 Women initiative complements the Women Entrepreneurs Opportunity Facility (WEOF), launched in 2014 by Goldman Sachs and IFC as the first-of-its-kind global facility dedicated to expanding access to capital for women entrepreneurs in emerging markets.
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