“WE are not going anywhere, we are here for good. As Standard Chartered Bank, we have been in Zimbabwe for over a century and that makes us part of the Zimbabwean story and we will make efforts to continue contributing to this economy,” said then Standard Chartered CEO Ralph Watungwa in 2019, but Standard Chartered is pulling out of the market after a successful acquisition by First Banking Corporation.
For years, Société Générale touted its far-flung holdings in Africa as proof of its commitment to sustainable growth. In a 2018, then-chief executive Frédéric Oudéa pointed to a new mobile banking service and an “electronic wallet,” called YUP, which he said would increase Africans’ access to banking.
As late as 2021, the third-largest French bank by market value was advertising its financing of climate-resilient African cities in various media But YUP shut down in 2022, and last year, SocGen, which operated in more than a dozen African countries, signed agreements to dispose of subsidiaries in the Republic of Congo, Equatorial Guinea, Chad and Mauritania.
Earlier this month, Africa Intelligence reported that SocGen had asked the investment bank Lazard to find African buyers for subsidiaries in Tunisia, Cameroon and Ghana though SocGen declined to comment. SocGen’s pullback is partly about conditions specific to the bank, which is seeking to focus on core markets after weak profits.
But it is also part of a wider trend of French and UK bank exits from Africa, where previously they had presented demographics and digitalisation as tailwinds for growth. In 2022, Barclays sold the last part of what had been a controlling stake in South Africa-based Absa Group, which had given it a footprint in 12 African countries.
London-listed Standard Chartered announced in 2022 that it would leave five African countries. Crédit Agricole is now present in just two African countries, Algeria and Egypt, after the sale of its Moroccan subsidiary in 2022 and its South African subsidiary in 2023.
BNP Paribas, France’s biggest bank, closed its South African corporate and investment banking operation last month. Bob Diamond’s Atlas Mara Ltd could not last long as it is selling off its remaining assets as it unwinds an almost decade-long attempt to create a pan-African bank.
A range of factors explain the departures. Firstly, some European banks had not spotted opportunities for “synergies” between Africa and other parts of their operations, and several had decided that higher risks and lower returns from African subsidiaries did not justify an ongoing presence.
For French banks, there is also a geopolitical dimension to their exit, as President Emmanuel Macron’s government rethinks its strategic presence on the continent amid security and political challenges, and as Paris faces growing competition for influence from Russia and China.
It seems like France has entered a “deep moment of introspection” on its presence in the region, leading to a “thinning out of expertise in Paris on the Africa issue”.
Just a few years ago, British and French banks were hyping up Africa as a growth market and a place to burnish their sustainability credentials. But several have since sold subsidiaries across the continent.
This might look like a bad sign for a continent with some of the world’s most urgent sustainable development challenges.
But it leaves an opening for a new crop of pan-African banking groups that could boost financial inclusion and domestic investment. The retreat of international banks may not necessarily be a bad sign for Africa’s sustainable development goals.
Two West African banks have been quick to capitalise on the departures. Burkina Faso’s Coris Group, founded in 2008, and Guinea’s Vista Group, launched in 2016, have both recently snapped up subsidiaries from French banks including SocGen.
Both emphasise their work with small businesses that are frequently overlooked.
“These large banking groups that are exiting — we remain colleagues, and we will continue working together on projects,” Martial Goeh-Akue, director-general of Vista Bank Guinea, said.
“But their departure leaves a field that is not exactly empty,” he said. “It’s up to us to durably finance our African economies.”
The depth and resilience of capital markets and the financial services sector are crucial for development. Local banks can play a critical role in reducing poverty and supporting sustainable growth, from lending to woman-run businesses to financing infrastructure.
Vista Bank Guinea had experimented with “concept stores” and incubators for local businesses, Goeh-Akue said. While Vista and Coris do not rival the scale of Africa’s biggest banks by assets — South Africa-based Standard Bank Group and the National Bank of Egypt — they have been growing rapidly, covering the gap left by UK and French banks.
Vista is present in Guinea, Gambia, Sierra Leone, and Burkina Faso, and if acquisitions agreed last year are finalised, the bank will have a presence in 16 African countries, according to Fitch. Coris currently operates in 10 African countries.
The growth of pan-African bank groups such as Vista and Coris could boost financial inclusion. French and UK banks were subject to tighter regulatory capital requirements than their African counterparts and had a higher cost of capital for routine activities such as compliance and infrastructure systems.
In Zimbabwe, UK-based Standard Chartered’s assets were snapped by a local bank, which is positive for financial inclusion.
The same with UK-based Barclays assets which were acquired by FMB Capital Holdings Plc, also known as First Capital Bank Group, a financial services holding company based in Mauritius.
It operates commercial banks in the southern African countries of Botswana, Malawi, Mozambique, Zambia, and Zimbabwe, which trade as First Capital Bank. UK and French banks have a very conservative risk appetite, so their subsidiaries in Africa tend to shun smaller companies and the lower end of the retail segment.
Their lending criteria were, to some extent, adapted to the local banking sectors, but generally they could not just get rid of their DNA. Société Générale Maroc was acquired by the Saham Group, a Morocco-based private equity conglomerate. And ex-European subsidiaries are now acquiring each other: Absa Group just bought an HSBC subsidiary in Mauritius.
However, merely changing hands to African owners is no guarantee of governance that is better for ordinary Africans.
It is worth asking why Moroccan banks, which have a big existing presence in francophone West Africa, have not been actively snapping up more of these subsidiaries. One risk, in the reshuffling, is disruption to correspondent banking relationships, which facilitate cross-border payments.
French banks with African subsidiaries typically have a dedicated foreign currency line for trade finance, and their exits could disrupt trade financing or remittance payments.
The only new opportunity that could stem from the ongoing shakeup in Africa’s bank sector is the Pan-African Payment and Settlement System, a continent-wide digital payment system using local currencies, and other efforts to grow intra-African trade which is being spearheaded by the African Continental Free Trade Area as we enter an increasingly uncertain global environment.
Free movement of capital should also be buttressed by free movement for people through a unified Visa system as alluded to by Africa’s richest person, Aliko Dangote, during the Africa CEO Forum Annual Summit in Kigali, the Rwandan capital.
*About the writer: Kaduwo is a researcher and economist. Contact: [email protected] whatsapp +263773376128
