Barclays upbeat about expansion in Africa

By AGENCIES

IGNORE Africa at your own peril," says Kennedy Bungane, the recently appointed Barclays Africa CE whose responsibilities include heading Absa ’s Africa strategy.

Seven out of the world’s 10 fastest-growing economies are in sub-Saharan Africa, which is teeming with investors in sectors such as financial services, retail, infrastructure and mining.

They are being lured by the potential to make money from a growing middle class out of a population of nearly 900-million with an estimated purchasing power of $1-trillion.

SA’s big banks, which are already invested in the region, want to expand into more untapped retail markets in countries such as Nigeria, Kenya and Ghana where large swathes of their population either have limited access to banking or are not banked at all."For us, we think we have a window of opportunity to combine the global expertise of Barclays and our ability to use local insights to provide a relevant and unique product and service offering," says Mr Bungane in his first interview since joining Absa from Standard Bank .

"And I am glad to say at the recent Barclays executive committee meeting, where (Absa CEO) Maria Ramos sits, (they) reasserted the importance of our One Africa strategy and urged (Ms Ramos) and her team to move with speed to implement that strategy," he says.

Banking analyst Faizal Moolla from Avior Research recently said he did not believe the resignation of former Barclays CEO Bob Diamond over the Libor scandal will affect Barclays’s strategy to partner with 55%-owned Absa to expand into Africa.

A career banker, Mr Bungane has taken over a role that Ms Ramos sees as key to co-ordinating the Africa expansion efforts of Absa and Barclays.

Absa has retail units in SA, Mozambique and Tanzania, as well as insurance businesses in Botswana and Mozambique under Absa Financial Services, and launches a new life insurance venture in Zambia on Thursday.

"There is still power to be unleashed by the combined Absa and Barclays partnership where we can use the best in class in terms of product insights with the local market insights to meet this opportunity," Mr Bungane says.

"Having said that, Africa is a one big complex place and not one homogenous entity and therefore requires different strategies."

However, analysts say competition is formidable as rivals such as Standard Chartered Bank also plan to expand both their retail and corporate and investment banking businesses.

Global banks such as Citi and JPMorgan are also looking for opportunities but mostly focused on investment banking, while Chinese banks are also eyeing acquisitions. Mr Bungane says there are also large regional banks in the markets that Absa is targeting.