Picture: THINKSTOCK
Picture: THINKSTOCK

GLOBAL business consulting firm Bain and Company says the great winners in Africa’s banking industry will be institutions that can get at least four market-leader positions in select countries, rather than those expanding to every nation.

South African banks have been searching for greater opportunities in the rest of the continent to exploit growth opportunities.

"The true measure of success is not how many countries you are in, but in how many countries you have leadership," Bain and Company partner Innocent Dutiro said in an interview on Wednesday.

Sub-Saharan Africa’s economy is expected to grow 5.5% this year.

Standard Bank operates in 18 African countries using the Stanbic brand. According to Bain, Stanbic has market-leader positions in Uganda, Kenya and Mozambique.

First National Bank, which operates in at least six African countries outside South Africa, is entrenched in Botswana and Namibia.

Absa, which is on the verge of buying Barclays’ Africa operations in eight countries, will have leadership positions in Zambia, Uganda, Ghana, Kenya and Mozambique.

Nedbank has an alliance with Ecobank, but it does not operate the bank. No South African bank has market-leader positions in the lucrative markets of Nigeria and Egypt. In Nigeria, the top players are local banks such as Firstbank, Zenith and United Bank for Africa, and in Egypt they are the National Bank of Egypt and Banque Misr.

FirstRand has publicly said it is shopping for a retail bank in Nigeria. It has recently opened an investment-banking franchise in Lagos.

Stanbic is growing its retail franchise in Nigeria, whereas Barclays does not have a retail presence. Bain said countries with a stronger gross domestic product (GDP) contribution from small and medium enterprises (SMEs) such as Egypt, South Africa and Nigeria, offered great opportunities. In Egypt, about 80% of GDP came from SMEs and in Nigeria and South Africa it was more than 50%.

Bain partner Fabrice Franzen said the cleaning up of the Nigerian banking system and introduction of tighter regulation following the financial crisis made Nigerian banks very attractive. The company added that banks needed to choose countries carefully as 70% of Africa’s GDP was generated by five countries. In non-Francophone countries, the big GDP contributors were SA, Nigeria, Egypt, and in Francophone countries it was Algeria and, Morocco.

On the emerging middle class, Mr Franzen said an additional 20-million households are expected to reach middle class status in Nigeria and Egypt alone by 2030.

Intra-African trade is expected to rise 25% a year for the period 2009-14 from about 15% per year in the period 2000-09, creating opportunities for corporate banking.