As if they had passed the word, foreign banks have decided to sell their African subsidiaries. These include Barclays, Bnp Paribas and Standard Chartered. Specialists analyse these decisions in various ways, even if they believe that the consequences on competitiveness are not obvious.
After Barclays and Bnp Paribas, Standard Chartered is selling its African subsidiaries. In a press release published last week, it expressed its intention to withdraw completely from « seven markets in Africa and the Middle East and to cease its retail banking activities in two markets, including Côte d’Ivoire ». These departures, according to financial expert Meïssa Lô, are due to the lack of value creation, the lack of solid and competitive companies on a national and international level, the absence of large-scale innovative projects as well as the low rate of bank penetration in certain countries, which averages between 10 and 15 percent. « If you have 10 banks sharing 20 customers, it is not conducive to the development and growth of a bank, » says Lô. Among the reasons for the sale of subsidiaries, the expert also cites the lack of innovation in West African states compared to North Africa. The expert believes that the difficulty of dealing with the many structural and economic challenges is one of the reasons for the choice of Egypt and the Middle East countries. This is precisely because Egypt is cited as the African country that receives the most foreign direct investment (FDI) thanks to the progress noted in sectors other than oil and gas, including ICT, real estate and tourism, says Meïssa Lô.
To these reasons, the consultant in banking/insurance Ismaïla Diouf adds the breakthrough of local banks which accentuates the competition. « Several factors can explain this departure. The first reason is the fact that local banks have fallen behind the big foreign banks like BNP Paribas and Société Générale. The latter have seen their market share eroded by local banks on the African continent, especially in the SME segment, » he said. For Mr Diouf, there is also the insecurity that can surround the activities. « The second reason that concerns BNP Paribas is its conviction in the United States. So, with the insecurity that can surround its activities on the African continent, Bnp took this precaution to avoid future convictions by selling shares in Africa. As for Standard Chartered, the reason is different since it is apparently in relation to the weak weight in the various banking systems of the countries in which it is present, » explains the banking and insurance consultant.
Threats to certain activities?
Will the activities in some of the countries concerned be strongly impacted by these departures? For financial expert Meïssa Lô, the consequences may be felt by certain economic activities. « They are talking about partial cessions of their activities, but not about a total closure. Nevertheless, it is clear that given the sectors sold, commercial banking, retail and private banking, there will necessarily be, by ricochet, consequences on the activities of economic actors used to working with these banks and to have certain facilities for the management of their cash, » explains Mr. Lô. According to him, these economic actors will turn to other banks that will have new strategies and banking offers that may not correspond to their expectations, which will probably impact their economic activities. Citing Standard Chartered, which was interested in government bonds, Meïssa Lô fears « a disruption in future bond issues ». « On the financial market, the Chartered bank invested a lot in government bonds. So, consequences will also be noted on this level, because nothing ensures that the buyers of its activities will follow the same approach and banking strategy. This could be felt in future government bond issues, » fears the financial expert.
No fear for jobs and competitiveness
For the banking/insurance consultant Ismaïla Diouf, one of the major weaknesses of the African market is the weakness of the banking system’s involvement in the economic circuit, unlike what happens in Europe and Asia. « The European continent has more than 100% involvement of banks in the constitution of the GDP, while Africa hardly reaches 30%, » he says. Diouf said the departure of the Bank will not have a definite impact on the competitiveness of African markets. « I don’t think it will have any impact on the continent, because it has major assets in terms of human capital and natural resources. There would be little or no impact on competitiveness. Dry recoveries will be made in the weeks and months to come. So there will be no impact on economies and jobs, » he adds. As for jobs, Meïssa Lô prefers to observe the buyers. « We will have to observe and see the purchaser or the buyer of these activities, to see what will be its strategy of recovery and evolution. It will also be necessary to see in the transfer clauses what fate is reserved for the human resources of these entities that are withdrawing from Africa, » he says.
An opportunity for local businessmen
The vacuum, if any, will have to be filled. The chance may be for local people, according to Ismaïla Diouf. « This is an opportunity for local businessmen to strengthen or reinforce their investment portfolios. It is an open chance for African businessmen or companies, » says Diouf. Meïssa Lô sounds the same trumpet. He speaks of a godsend for local people, if they are in a position to find a definitive solution to this scourge by creating banks that are 100% African capital. This, he says, will support the development of the African economy and meet the demands of Africans.
BANK TAKEOVER
Nationals come forward
Until now the preserve of multinationals, the banking sector could see a new impetus if the wishes of some players in the Senegalese private sector are fulfilled. This is the case of Pathé Dione. According to information, the founder of the Sunu Group is strongly interested in buying the shares of Bnp Paribas. The negotiations were very advanced. Contacted by us, the main person concerned, through his collaborators, preferred « not to give an opinion for the moment ».
ABDOULAYE LY, EXECUTIVE DIRECTOR OF THE CLUB DES INVESTISSEURS DU SÉNÉGAL
« The bank is also a matter of social ties
The Executive Director of the Club des investisseurs du Sénégal (Cis), Abdoulaye Ly, « tries to provide » a response to the departure of some banks from the African market. For him, the Africanisation of the banking landscape, marked by the rise of banks from the continent that take more risks in granting loans, reduces the place of Western groups known to be more cautious. « This phenomenon is linked to a more important societal anchoring that brings them into the territories and to greater proximity with their clients. The result is that African banks (Cbao, Ecobank, Boa), despite their youth, have been in the lead for the past five years, particularly in Senegal. As if to say that banking is also a matter of social ties », summarises Mr. LY.
