African banks take over market share from foreign transnationals
Banking experts argue that lending to small and medium enterprises (SMEs) has been part of the reason for the success of African banks. In East Africa, despite coming at the bottom of the ladder among emerging African banking groups, Kenya Commercial Bank (KCB) leads the pack of homegrown brands followed by Equity Bank and I&M Group at $1 billion. Local banks’ flexibility is in the lower borrowing threshold they offer their customers as opposed to foreign banks’ lending threshold, which is as high as $7,807.
These local banks, now fast expanding into regional operations, as well as others that are pan-African, are driving the development of Africa’s banking industry. Coming against a backdrop of hardships that local banks suffered in the 1990s, the expansion is a major coup against Western banking groups, most of which started operations on the continent during the colonial era.
The most dominant foreign banks in Africa have been Standard Chartered, Barclays, and Citibank, focusing on the corporate consumer segment in Anglophone countries; French giants BNP Paribas and Societe Generale have ruled Francophone West and North Africa. But the tide is turning, with local banks slowly taking over the industry in Africa, a scenario that offers attractive investment opportunities for banking models suited to Africa’s business terrain — lending to the small retail client involved in cross-border trade.
In the 16th edition of Private Sector and Development magazine, published by French lending group Proparco, banking experts argue that lending to small and medium enterprises (SMEs) has been part of the reason for the success of African banks.... Read the full, comprehensive news article and discuss at East African