Africa’s socioeconomic status has been a debated subject for a long time now. The narrative that Africa is on the rise has been tossed between validation and negation for over a decade. However, it appears that top British banks are no longer on the optimistic side of the debate. UK’s financial conglomerate Atlas Mara Ltd (Atma), which had acquired banks in seven African countries, is at the tail end of exiting the continent. It has termed its African investments “risky” and the sub-Saharan African macroeconomic environment as “challenging”. Currency volatility and drying up of liquidity in African markets adversely impacted its operations”. This raises questions around the prospects of banking in Africa, seeing that Atlas Mara isn’t the first British lender to exit the African market.
Africa is a large and underexploited market. The IMF once predicted that the continent’s predominantly young population will become a billion workforce by 2035. Western players see Africa’s growth potential and expand their operations into the continent with hopes of sustainable growth. While there are success stories such as Coca-Cola and Nestle, others didn’t make it to shore. British banks are among those who found it difficult to continue doing business in the African market. The COVID-19 pandemic dealt a huge blow to the banking industry. In its 2021 Financial Access Survey Trends and Developments report, the International Monetary Fund stated that Nigerian banks closed 234 branches in 2020. In the 2021 Regional Economic Outlook Report, the IMF noted that Africa would be the world’s slowest-growing region this year despite a more favorable external environment, mainly due to the health and economic crisis caused by the pandemic.
The World Bank has also projected growth for Africa in 2022 and 2023 to remain just below four per cent. According to the global lender, the continent’s economic recovery continues to lag, compared to advanced economies and emerging markets, reflecting subdued investment in sub-Saharan Africa. It also expands the growth opportunity for fintech in Africa. About 57 per cent of the African population do not have access to financial services. The inability of these British lenders to grow in Africa leaves a void for in-house banking solutions. Foreign investors are also bullish on the future of fintech in Africa, especially mobile money.