Africa: European banks challenged by the expansion of local banks

Apr 23, 2015

Moroccan banks now own nearly a third of branches in Francophone Africa.

The recent expansion of local banking groups in Africa is a challenge for long-established European banks, according to experts.

This expansion comes as banks can expect a 15 to 20 per cent revenue growth in sub-Saharan Africa, according to a recent study by consulting firm Bain & Company.

The region has a growth rate of eight per cent and only between 20 and 40 per cent of the population has access to banking services depending on the country. This shows there is a wide margin of progression.

While European banks still have a strong presence in Africa, Moroccan banks such as Attijariwafa, BMCE and Banque Centrale Populaire (BCP) are on track to take over.

For instance, they now almost a third (30 per cent) of branches in Francophone Africa, while BNP Paribas and SocGen stand at around 15 per cent, according to consulting firm Nouvelles Donnes.

In East Africa, banks like UBA, PTA Bank and Ecobank are increasing their presence. Ecobank has tripled in size over the past seven years, from 400 branches in 2007 to just over 1200 today, and Kenyan group PTA Bank has announced its expansion through ten African countries.

To counter the emergence of local banks, several European banks as BPCE and BNP Paribas, have announced development plans. French banking group Societe Generale has just announced its intention to allocate four billion euros of additional capital to its African operations by 2016.

However, "French banks do not have the same ability on the field to get these less familiar customers than local players," said Georges Ferré, from the Roland Berger consultancy.ADNFCR-2976-ID-801784709-ADNFCR