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What is the Future of Private Banking in Africa?



private banking in Africa

Africa’s growth story may have been hampered by COVID-19, and whilst challenges remain, there are still investment opportunities and wealth creation taking place.

There are, at present, around 136,000 high net-worth individuals (HNWIs) living in Africa, with total private wealth held on the continent amounting to $2 trillion. Those numbers are expected to keep growing too. In fact, the number of HNWIs in Nigeria alone is expected to grow 40% over the next decade[1].

That means private banking in Africa, and in Nigeria, the continent’s biggest economy, will only become more important. Recent reports suggest that wealth in Africa is poised to grow at a stronger level than many other regions around the world.

But, as the number of people needing private banking services grows, these services will also have to adjust to their changing wants and needs. Among other things, that means helping clients with tangible investments diversifying away from their local markets, offering Discretionary Portfolio Management, and balancing traditional and digital banking services.

According to Amol Prabhu, Market Head: Africa at Barclays, families within these brackets, especially those with established wealth, are also looking for access to global networks and corridors, the ability to invest in other entrepreneurs on the continent and globally, and ways to ensure that their children can be educated overseas.

‘Not just private banking’

Prabhu notes that providing access to those global networks often means going above and beyond traditional private banking expertise.

By way of example, he says,We’ve got a family based in Nigeria who are in the goods trading business. The entire family – parents, all three children and their spouses – bank with us. Their business is headquartered in Nigeria but extends across the corridor to Dubai and India, where it is managed by their extended family who happen also to bank with us. Having the ability to support these global families in every location as well as both individually and holistically is critical.”

“Also, as the client’s business grows, their needs change over time and we are well positioned through our Corporate and Investment Banking offering to provide this support. It’s the ability to provide clients with coverage that’s not just multi-location but also multi-business, multi-product and multi-generational that’s important,” he adds. “These types of clients have got complex, global needs, so that’s where real value can be added. Few banks provide this coverage and even fewer do it very well.”

According to Prabhu, another specific area that African clients look for help with is prime and super prime UK real estate.

“That can be people wanting to have a second home in London and spend more time there or wanting London properties as part of their investment portfolio,” he says. “And generally, because people are spending more time in these houses, they want bigger properties too.”

This attraction to the UK, he says, is overlaid by the fact that many clients expect that their children will live, work, or study in the UK at some point in their lives, as many of them have done.

The rush for direct assets

Another significant trend, Prabhu points out, is the growing demand for direct assets.

“What that means is that entrepreneurial families like to invest in other entrepreneurs,” he says. “It can be high-growth technology companies: fintech, medtech, agritech or ones focused on climate change and other issues.” The number of African tech start-ups receiving funding grew six times faster (46%) than the global average (8%), between 2015 and 2020[2], demonstrating the interest in this sector.

“These kinds of companies are typically looking for funding anywhere from $1 million to $200 million and we open it up to our ultra-high net-worth and global families within the Private Bank to give them the opportunity to invest.”

Crucially, these companies are all private, meaning that these investments are not open to the general, public market. By facilitating these investments, Barclays Private Bank not only helps their clients make more meaningful investments on the continent but also help grow the continent’s entrepreneurial ecosystem.

Classic portfolio management

While those trends will undoubtedly shape private banking in Africa for some time to come, Prabhu points out that there’s still significant value in classic asset and portfolio management. The key, however, is to have managers and methodologies that can thrive even during periods of global political and economic uncertainty.

“If you’re sitting in Lagos and you’ve got a portfolio in the UK or Switzerland, you are literally thousands of miles away from your hard-earned money,” he says. “You have got to have real trust in the institution, the portfolio team and their underlying methodology that your money is being managed properly.”

Talent development is crucial

In order to ensure that all those needs are fulfilled, however, the right level of talent is essential.

“A high-quality talent bench is vital,” says Prabhu. “And to service African private banking clients effectively, they should either be from Africa, have lived on the continent, or have a decade+ of Africa private banking experience. Having that deep experience and a high-quality service mentality is critically important to show and deliver value.”

Ultimately, he points out, you are helping people who are typically very good at what they do but may have very little banking and investment knowledge and / or time to look into these things.

“At the end of the day, our role is to help and guide clients to make the right kinds of decisions in the financial context,” he says. “And having the right talent and skills on-hand as well as a quality institution behind you is crucial to that.”

As the number of high net worth and ultra-high net worth individuals in Africa continues to grow, having the right partners with those skills and knowledge will only become more important.

[1] Source: Africa Wealth report

[2] Boston Consulting Group: Overcoming Africa’s Tech Startup Obstacles

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Wema Bank Educates Students on Personal Finance



wema bank mobile branch

By Aduragbemi Omiyale

As part of activities to mark 2023 Global Financial Literacy Day, Wema Bank Plc this week organised a financial literacy programme for students across all states it operates.

The innovative financial institution said the financial literacy sessions for secondary school students aligned with its commitment to championing financial literacy for the next generation.

The Deputy Managing Director of Wema Bank, Mr Wole Akinleye, who led the financial literacy session at Yola Model School, Adamawa State, encouraged the students on the importance of developing financial literacy as a life skill.

Speaking on the significance of Financial Literacy Week, Mr Akinleye emphasized Wema Bank’s commitment to empowering young minds with the skills and knowledge necessary to make informed financial decisions.

“Our hope is that through these initiatives, we can empower more individuals to take control of their finances and achieve financial stability,” he noted.

It was gathered that students were trained on personal finance topics such as budgeting, emergency funds, saving for goal actualization, investment, and donating for positive societal impact, amongst others.

The idea, according to a statement from the lender, is to instil an early understanding of the significance of building a solid financial foundation and achieving financial stability and success from a young age.

The 2023 Global Financial Literacy Day was themed Plan your Money, Plant your Future.

Financial literacy is vital for the achievement of financial stability, and it is essential to ensure that everyone has the necessary tools to manage their finances effectively and achieve their financial goals.

Wema Bank Plc reaffirmed its commitment to providing educational resources and opportunities for children through the Royal Kiddies Account and a range of other savings products, supporting financial empowerment for the next generation.

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Access Bank Gets Regulatory Nod to Merge Zambian Subsidiaries



Two Access Bank employees

By Adedapo Adesanya

Banking regulators have approved the merger between Access Bank Zambia Limited and African Banking Corporation Zambia Limited.

Access Bank Plc announced on October 25, 2021, that it had executed a binding agreement with Altas Maras Limited on a proposed merger between African Banking Corporation Limited (Atlas Mara Zambia) and the bank’s subsidiary in Zambia, Access Bank Zambia.

This was contained in a notice filed by the company by Mr Oyelola Oyeleye, the group’s company secretariat and Mr Sunday Ekwoche, its company secretary, on the NASD Over-the-Counter (OTC) Securities Exchange, where it trades its securities on Friday.

“We are pleased to announce that Access Zambia has received final regulatory approval from the Central Bark of Zambia for the acquisition and merger of Atas Mara Zambia into its existing operations (the Transaction),” the statement read.

It was disclosed that The Central Bank of Nigeria (CBN) and the Common Market for Eastern and Southern Africa Competition Commission had earlier granted their “no objection” to the transaction in 2022.

Following this new development, Access Zambia said it would move towards integrating and merging Atlas Mara Zambia into its operations, which is expected to create one of the top five banks in Zambia.

The transaction is expected to be completed in the third quarter of this year.

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Reps Call for Urgent Overhaul of Electronic Banking Platforms



electronic banking platforms

By Adedapo Adesanya

The House of Representatives has asked the Central Bank of Nigeria (CBN) to direct commercial banks to urgently overhaul their online and electronic banking platforms.

At Thursday’s plenary, the green chamber said this would ease the electronic banking operations that the banks were implementing in line with the cashless/Naira redesign policy of the apex bank and reduce the pains of Nigerians.

The resolution came off a motion on notice moved by a lawmaker from Edo State, Mr Sergius Ose-Ogun, in the lower house.

“The House notes that Section 88 (1) and (2) of the Constitution of the Federal Republic of Nigeria, 1999 (as amended) empowers the National Assembly to conduct investigations into the activities of any authority executing or administering laws made by the National Assembly (like the Central Bank of Nigeria);

“Aware that the Central Bank of Nigeria is established under Section 1 of the Central Bank of Nigeria Act, Cap. C4, Laws of the Federation of Nigeria, 2004 to issue legal tender currencies in Nigeria;

“Also aware that Section 2 of the Central Bank of Nigeria Act saddles the Central Bank of Nigeria with the duty of promoting a sound financial system in Nigeria;

“Acknowledges that in the wake of the recent naira redesign and cash withdrawal limit policy of the Central Bank of Nigeria, there has been an increase in the use of online and electronic banking services to carry out monetary transactions across the country;

“Also acknowledges that the use of online or internet banking services by Nigerians in the past three months or thereabout has been characterized by varying degrees of hitches ranging from unsuccessful electronic bank transfers, point of sale (POS) service failure and a host of others;

“Disturbed that the ineffectiveness or difficulty in using internet banking services across the online banking platforms of most commercial banks in Nigeria has brought untold hardship, suffering and difficulties on Nigerians in the past three months.

“Worried that if nothing is done by the Central Bank of Nigeria and the commercial banks to address these difficulties or ineffectiveness, Nigerians will continue to suffer untold hardships and loss of monies to unsuccessful electronic bank transactions.

“Resolves to urge the Central Bank of Nigeria (CBN) to direct all commercial banks in the country to immediately overhaul their existing online/electronic banking platforms for efficiency and ease of conducting electronic banking operations,” the motion read.

The House Committee on Banking and Currency was mandated to monitor and ensure compliance with the resolution within four weeks.

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