MOVE over, China. The market that has bankers attending the World Economic Forum (WEF) at Davos excited this year is Africa.
“One market where we see plenty of opportunity is Africa,” Peter Sands, CEO of Standard Chartered, said in an interview.
“It’s a part of the world that doesn’t get so much focus because everyone, quite rightly, is all excited about India and China and the whole ASEAN (Association of Southeast Asian Nations) region.”
Chinese banks were among the first to make their way into the continent, with ICBC, the world’s biggest bank by market value, having bought a 20% stake in Standard Bank in 2007.
Since then, other banks have started making their way into the region, mostly to facilitate trade between Africa and resource-hungry China.
Simon Cooper, HSBC’s CEO for the Middle East and North Africa, said: “There’s a lot of work facilitating companies from China that want to go to Africa and we expect such trade to continue to grow.”
Asian companies such as Chinese telecoms equipment maker Huawei have been in Africa for years, building telecoms towers in countries from Libya to Kenya.
“We’ve invested in companies that are doing a lot of work in Africa,” said John Zhao, CEO of Hony Capital, a private equity firm.
“We see the weak infrastructure in some African countries as an opportunity.”
Acquisitions and other attempts to grow in Africa have often proved difficult to pull off successfully.
In 2011, HSBC walked away from a bid for Nedbank, saying it failed to meet its acquisition requirements. The revenue pie for banks in Africa is also far smaller than in other regions, with total investment banking fees in Africa and the Middle East being about $1bn last year, compared with Asian fees that clocked in at almost 10 times that.
Meanwhile, European Central Bank president Mario Draghi said at Davos on Friday that “positive contagion” on financial markets was not yet feeding into the economy at large, but the eurozone should see recovery in the second half of the year.
Activists protesting against the WEF in Davos have claimed responsibility for explosions that broke a window at a Zurich branch of Credit Suisse and blew up the postbox of former South African Ivan Glasenberg, the boss of commodity trader Glencore.
Glencore’s 2011 stock-market flotation has led to increased scrutiny by environmental and anti-corruption campaigners of the company’s involvement in mining operations in various countries, from Zambia to Colombia.
* This article was first published in Sunday Times: Business Times