Business
Africa has become the fastest growth region for private banking
“In private banking terms, these 16,680 high net worth individuals in Nigeria are collectively worth US$138 billion, a number that is set to rise 22 percent to reach US$180 billion by 2018,” Oliver Williams, analyst at WealthInsight wrote in a note.
“To add gravitas to this data, further qualitative research by WealthInsight into Nigeria’s wealth sector reveals a completely undeveloped market. And, while the majority of high net worth individuals in Nigeria have a wealth of between US$1 million and US$5 million, many newly created dollar millionaires and returning diaspora are relatively un-financially savvy.”
Africa presents a sliver of hope for an industry that is still reeling from a global financial crisis that has rocked reputations. The private banking industry is now at an inflection point and there are two overarching strategic priorities for wealth managers: achieving excellence in client experience; and managing transformational change.
Financial Deepening: Private banking is part of an all-round growth experienced by the banking sector across the Sub-Saharan Africa region. The Economist Intelligence Unit (EIU) estimates bank loans in 16 major African countries will expand by 178 percent to reach US$980 billion by 2020, while deposits will grow by 188 percent to reach US$766 billion.
“Our more likely second scenario anticipates financial sector deepening in addition to high levels of economic growth,” the EIU said in a report on African bank outlook to 2020. “The deepening will result from more households and businesses saving, borrowing and transferring money with banks, and using these services more intensely. To reflect this, we project bank deposits and asset expansion at 1.5 times the rate of gross domestic growth (GDP) growth.
Under this scenario, assets will grow by 248 percent to US$1.37 trillion, while deposits will expand by 270 percent to US$1.1 trillion by 2020.”
The EIU believes growth will be strong in fast developing markets such as Angola, Ghana, Uganda and Tanzania. In each of these high-growth countries, the EIU foresees bank deposits and assets rising at least threefold over the forecast period, and they could grow much more quickly in a scenario that also features financial deepening.
