Will Pan African banks help our businesses compete globally?

It's official, Barclays Plc has divested from Africa just when everyone thought Africa was rising. It, however, retained a 14.9 per cent stake. Regulatory issues in UK are said to be behind Barclays leaving the once ‘‘dark continent.’’

Competition and rise of pan-African banks could have been the other factors. It is official that soon, the nostalgic Barclays blue eagle logo will no longer adorn our buildings.

Barclays was my first bank after Post Bank, which pioneered branchless banking long before the advent of the Internet. This was foresight.

What happened to the “people’s bank”?

The proposed name change from Barclays to Absa, which stands for Amalgamated Bank of South Africa, is interesting. Barclays Plc had bought Absa in 2007 just to reverse the purchase after only 11 years.

The strategic direction of the new Absa is to become a pan-African bank.

Absa CEO Maria Ramos was quoted in 2017 on Barclays Plc divestiture from Africa as saying: “It gives us the opportunity to unlock the potential to do things differently and build energy and momentum for our future as a pan-African organisation.”

Outstanding talent

Pan Africanism seems the way to go. Equity CEO James Mwangi was quoted in 2012 as saying: “As the bank continues to grow in size and footprint, we will continuously seek outstanding talent that will contribute in implementing the lender’s Pan African expansion strategy.”

In 2015, Equity made it ambitions clear, announcing plans to set up in Ethiopia, Burundi, Democratic Republic of Congo, Mozambique, Malawi, Zambia and Zimbabwe in a bid to become truly Pan African.

IMF in a 2015 report listed other pan-African banks, defined as the seven largest groups that have subsidiaries in 10 or more countries. Equity needs to meet this criterion.

Absa is in 10 countries and satisfies IMF’s definition.

Other banks on the IMF list include Bank of Africa, Ecobank and Oragroup from Togo, Standard Bank from South Africa, United Bank for Africa, BMCE, Attijariwafa Bank and Groupe Banque Populaire Centrale (GBPC),

It seems Absa will be following a well-trodden path. IMF notes that “these institutions are occupying a space created by the retreat of several global banking groups from Africa.”

PWC (2017) notes that intra-regional trade linkages have grown increasingly strong in sub-Saharan Africa, with African banks expanding and following their corporate clients abroad.

The pan-Africanism of African banks is one of the best news to come from the continent. It shows that financially, Africa has come of age.

One would wish all the other sectors to follow the banks’ example.

We could also argue that growth of the financial sector is a pre-requisite for the growth of other sectors like manufacturing, agriculture, retail, education, tourism and so on.

Noted how banks in other countries follow their clients abroad. You find American banks or European banks wherever these countries have interests. The presence of your “home bank” in other countries is a source of national and personal pride.

In Africa, we lack a critical number of pan-African firms. South Africa is an exception, with its firms spanning across Africa, some say in a bid to fulfill the dream of Cecil Rhodes.

We hope the pan-African banks will catalyse the growth of pan-African industries and corporations.

Apart from creating jobs and improving our living standards, the pan-African banks will shore up our confidence in the global scheme of things. That would be a lasting legacy from the banks.

We must, however, note that pan-Africanism is not new.

Peter Kuryla writing in Britannica notes that pan-Africanism is the idea that peoples of African descent have common interests and should be unified.

The idea dates back to the 19th century. Some of the key adherents included Dr Kwame Nkurumah of Ghana, Jomo Kenyatta of Kenya, WEB Du Bois (USA), Marcus Garvey (Jamaican), C L R James, and George Padmore - both from Trinidad.

These pioneers had a political union as the lynchpin of their pan-Africanism.

African banks are fulfilling the dreams of these politicians long after their deaths.

The banks must succeed where they failed. Africa still has 55 countries.

Economic front

The banks should ensure efficient financial services are available to Africans wherever they are. That dream, deferred politically, has taken about half a century to take root on the economic front.

The pan-African banks’ dream got a big boost with the launch of the African Continental Free Trade Area on March 21st2018. 44 countries signed the deal with the notable absence of Nigeria.

It is a timely deal considering that intra-Africa trade stands at about 16 per cent, much lower than other regions of the world.

The work for pan-African banks is cut out for them. We need banks to boost trade and create jobs for Africans without having to drown while seeking greener pastures abroad.

The next logical step for pan-African banks would be to become global players.

There are claims that pan-Africanism means South-Africanism, with the country using her well-developed infrastructure to make the rest of Africa “her supermarket.”

Will South Africa in Absa invoke this fear? Will South Africa in Absa be muted to allay these fears? Could Absa have acquired a completely new name? We have enough time ahead to answer these questions.

-The writer teaches at the University of Nairobi