Private Sector & Development is a bimonthly magazine that compares the views of experts in different fields on issues relating to the role the private sector plays in the development of low-income countries of South countries, particularly in Sub-Saharan Africa.
Each issue includes between six and eight contributions on the same topic from researchers, private sector’s professionals from South countries.
By Claude Périou, Chief executive officer of PROPARCO
The African banking sector is undergoing radical change as regional and pan-African banking groups develop. Are these players contributing to sustainable development on the continent?The African banking sector – largely dominated by the European banks through to the late 1990s – is currently undergoing radical change. Alongside the sector’s traditional players, regional operations are emerging – and steadily evolving into genuinely pan-African groups. These banks, whether they are local, regional or continental, are deploying a more aggressive growth strategy, seeking to penetrate new market segments and reach target groups previously excluded from the banking system. They are growing branch networks and introducing innovative, low-cost services better suited to underbanked populations.Access to banking services is advancing, and retail banking and finance for SMEs are on the increase. Yet while they are targeting higher-risk customers, these banks lack the capital base of the major banking groups. To maintain its growth momentum the African banking sector will need to draw on external expertise and financial resources. The trend towards consolidation which has already begun in some markets will need to continue across the whole continent – driven, in particular, by tougher regulatory standards and banking supervision.To what extent is the banking sector’s development contributing to the development of the African continent as a whole? The new players are undoubtedly adding value – yet might their quest for market share entail a systemic risk for the continent’s still-fragile economies? Will their emergence on the African scene boost efficiency in the banking sector? Issue 16 of Private Sector & Development seeks to answer these questions, in order to outline the conditions for sustainable development of Africa’s banking sector.
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