The above topics were among those discussed at this year’s #AfricaFinanceForum, hosted by the Corporate Council on Africa. The annual event featured high-level speakers, such as Rhoda Weeks-Brown, IMF General Counsel, who pointed to increased expected economic growth rates of 3.5% in 2019 (half a point higher than in 2018) and a faster per-capita income rise in Africa than in rest of the world. “Also up for debate was the dichotomy of investment vs. development assistance as the key driver of economic development on the continent,” notes Andreas Stargard, who attended on behalf of Primerio Ltd.
Ms. Weeks-Brown noted the rise of pan-African (vs. purely domestic) banks, observing the added benefit of improved competition, as well as the steady rise of fintech on the continent. The latter is especially important as the continent is still under-banked and relies heavily on the informal sector (less than 20% of sub-Saharan Africa’s population has a bank account). Yet Africa leads the world in mobile money. Mr. Stargard noted that “[s]he and many other speakers on subsequent panels agreed that there was a delicate balance to be struck by regulators and legislators of weighing innovation against the proper level of FinTech regulation and its integration benefits against anti-competitive effects thereof. The IMF attorney was careful to point out that banking & financial integration must grow in conjunction with, and to support, economic and trade integration, as financial stability is a public good. Africa requires strong sector regulators that must remain free from undue political or industry interference.”
Kalidou Gadio, a lawyer at Manatt, provided a sanguine assessment of the state of banking in Africa, noting that it is not up to par globally, but better than it was a decade ago, before and during the financial crisis. He also pointed to the net positive effect of banks facing increasing competition from newcomers to the space, such as Orange, M-Pesa and other telecom firms.
Dr. Maxwell Opoku-Afari, First Deputy Governor of the national Bank of Ghana observed the difficulties in setting proper licensing rules for fintech companies by central banks, and commented on the concentration risk in banking.
Phumzile Langeni, special investment envoy of the RSA, gave an objective speech on the investment opportunities in South Africa, including the President’s FDI incentive programme. She answered difficult questions with aplomb — for example those about the country’s land reforms, infrastructure troubles, and unemployment — and spoke of the enormous growth potential and the “youth dividend” in South Africa and the continent in general.
The half-day event was rounded out by a panel focussed on central banks’ handling of the unique foreign-exchange problems faced by certain African nations, notably Mozambique and Angola, whose central banks had representatives on the panel, including the issues of ForEx reserve allocation and pegged rates.