Egypt, Angola, Nigeria, South Africa and Morocco have taken the lion’s share, which is estimated to be 68% of the continent’s banking revenue. According to a news report on Al Bawaba, variables such as income levels, low banking penetration and cash-based economies are listed as significant roadblocks to Africa’s banking development.
The McKinsey report based on performance data derived from Africa’s 35 leading banks, and surveys on bank executives and customers, shows the rise in number of African banks from 170mn in 2012 to 300mn in 2017.
The report reads “We expect the banked population in Africa to swell by more than 150 million people, from nearly 300 million in 2017 to 450 million by 2022, and much of this growth will be at levels of income lower than $5,000 per year.”
“Globally, the banking industry is facing disappointing returns and sluggish growth…Africa’s banking sector provides a refreshing contrast. Its markets are fast-growing and nearly twice as profitable as the global average.”
Interestingly, the report has identified four classifications: Relatively mature, fast-growing transition market, sleeping giants and nascent market. In the first category, Egypt is positioned along with South Africa.
The listed markets have higher branch penetration by comparison with African markets, that is “17 branches per 100,000 adults, versus the African average of five. They also have higher credit bureau penetration of 22% of adults, double the African average. Retail banking tends to be a higher share of the revenue pool in these markets, and more sophisticated financial services such as asset management and mortgages are also more prevalent.
This is partly because the share of adults earning more than USD5,000 per annum is higher at 51% on average, versus 15% for Africa as a whole,” the report says.