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	The African continent has benefitted from the service it receives from Pan African banks.
	The African banking system has also benefited from competition that has been brought by the growing presence and participation of foreign banks across the continent.
	The value of insurance premiums in Africa is about $USD 45 billion.
	Low insurance uptake on the African continent can be attributed to low income levels.

Banking & Financial Services

Identifying sources of finance for projects in Africa has long been a challenge for both Africa based enterprises and those interested in doing business with the continent. Today, however, there is unprecedented capital available for transactions in Africa and a growing number of financial institutions emerging in a wide variety of areas (venture capital specialists, lease financing specialists, bond financing specialists, corporate financiers, capital markets specialists, merchant financiers, infrastructure finance specialists, and traditional asset-based financiers).

Just as the continent has overall commercial centres and regional engines of economic growth, it also has regional financial centres where institutions have clustered with an aim toward providing capital for projects not just in the host country but within each region. Today, Johannesburg, South Africa is Africa’s leading financial centre where four of the continent’s largest banks (Nedbank, ABSA, Standard Bank and First National Bank) are headquartered. In addition to these institutions, Johannesburg has also attracted a variety of global financial players who have made South Africa their regional base for expansion on the continent. Among these institutions are global banking giants such as HSBC, Citigroup, Deutsche Bank, Barclays Bank, Standard Chartered, JP Morgan, Morgan Stanley and Discovery Bank.

The African banking system has also benefited from the growing presence and participation of foreign banks across the continent, including Pan African Banks such as Ecobank and Bank of Africa that have expanded beyond their parent countries. Ecobank currently operates in 36 countries across the continent, particularly in Western and Central Africa, while Bank of Africa Group has activities in about 14 African countries. A key outcome of the wave of banking reforms and consolidations that swept across the continent in the 1990s is the increasing presence of foreign banks. They have helped bolster competitive pressure in the industry and allowed global banking innovations, good practices, and good corporate governance ethos to be adopted by  domestic banks.

Evidence suggests that the presence of larger foreign banks is usually associated with greater access to finance for small and medium scale enterprises. However, unfair competition can arise in cases where foreign banks disproportionally dominate the banking industry in terms of assets and branches. Foreign banks with the capacity to obtain both hard and soft information about borrowers and businesses can embark on anticompetitive schemes while worsening the remaining credit pool for small domestic banks. This can have an overall negative effect on small businesses and mitigate the positive effect of foreign bank entry experience.

Sub-Saharan Africa’s banking environment is as competitive as those in Latin America and the Caribbean and not far from the competitive environment that exists in high-income OECD countries. Within the sub-regions, West Africa’s banking environment is much more competitive than that of other regions including North Africa. This is partly due to the relatively more competitive environment in the Nigerian banking sector.

North and East Africa have higher Lerner indices. This signals lower competitive banking environments as compared to other African regions. Foreign banks in those regions also have the least share of total banking assets (24% and 58% respectively) and the lowest degree of asset concentration among the top 5 banks (78%). However, Southern Africa is a market with significantly less competition than other African regions. This is due to high asset concentration among the top 5 banks (90%) and the relatively large asset ownership of foreign banks (66%) making it harder to conclude whether foreign presence increases or decreases competition in the banking sector across the continent.

The insurance industry in Africa represents less than 1% of insured catastrophe losses worldwide, although it’s home to almost 17% of the global population. However, despite the low levels of insurance uptake, there continues to be increased interest and focus from major international brokers, insurers, and reinsurers. In 2017, the value of insurance premiums in Africa amounted to almost $USD 45 billion.

Low insurance uptake in Africa can be attributed to low-income levels. In the mid to late 2010s, South Africa dominated the non-life insurance industry in Africa, while Morocco was responsible for about 23% of the life insurance market on the continent.

Major Western insurance firms have more recently begun to especially pay attention to the increasingly attractive Sub-Saharan African insurance industry.

In recent years, Zambia, Nigeria, Ghana, and Uganda recorded some of the highest growth rates within the insurance industry in Sub-Saharan Africa.

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Despite a volatile Rand, downgraded status and a sluggish economy, South African Banks remain among Africa’s most vibrant.  Five of the top ten banks in Africa are based in South Africa. At USD45 billion in Net international reserves, Egypt has the fourth largest external account of African nations. This fact coupled with the strength of its banks demonstrate Egypt’s leadership in this critical sector. With 26 million registered users, mobile money is a huge contributor to Kenya’s role as an industry leader in Banking and Financial Services.