Africa Economic Forum

Banking Industry in Africa

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This brief includes just an overview of the most notable advances in the development of the fnancial sec-tor in Africa since the 1990s. The transformation was accelerated after the fnancial crisis of 2008 with the progressive replacement of the European and American banks that dominated the sector by a dynamic group of pan-African entities, mainly from SouthAfrica, Nigeria and Morocco.This same dynamic was translated to the insurance sector and fnancial markets.The number of stock exchanges have grown from 9 in 1989 to 30 in 2020 and the biggest ones are at a very advanced stage of interconnection that has increased liquidity and product diversif-cation. Two other highlights of the process have been the advancement of fnancial inclusion thanks to the penetration of telephone banking in which Africa is the world leader and the strengthening of regulation and supervision systems.

This fnancial transformation is favour-ing the process of economic integration at the continental level and interconnection with fnan-cial markets on a global scale.


The financial sector in Africa has known a very positive development following the first generation of reforms that took place in the 90s with the liberalization of interest rates and the privatization of state-owned financial intermedi-aries.Coupled with the removal of many barri-ers to entry and exit in the sector, as well as greater transparency and accountability and re-inforced supervision since the crisis situation faced by the sector in the 1980s, financial sys-tems across the continent have experienced a substantial transformation. Existing analysis of African financial sector relies too heavily on the comparison with more developed markets around the World.

Africa has, since the 1980s, faced a myri-ad of challenges affecting the development of its financial sectors. Macroeconomic and so-cio-political instability in the late 1970s and early 1980s sparked an unprecedented banking crisis which worsened financial stability and fiscal imbalances. Financial distress was especially acute among government-owned commercial banks and development banks. As a result, many countries fell into financial turmoil as the resolution of this cri-sis imposed very large costs on govern-ments, while financial development suffered major setback. However, the crisis at also prompted far-reaching policy reforms. Most African countries implemented structural adjustment programmes championed by the International Monetary Fund (IMF) and the World Bank with the introduction of widespread financial sector reforms as a key policy commitment.

These policies have successfully halted major banking crisis and led to the emer-gence of a more diversifies financial systems with efficient deposit-taking institutions, more dynamic insurance industry and security markets. The experience of failed state-owned banks and other DFIs, led African governments to also focus on other financially viable approaches to providing finance. Developments in the financial sector over the past two decades were also characterized by the proliferation of foreign banks following the early 90’s privatization programs, as well as the development of Pan-African financial in-stitutions (mostly banks and insurance compa-nies).Pan-African banks have tripledin number acrossAfrica between 2002 and 2017.The rapid rise of PABs was predominantly driven by the retrenchment of traditional European and US banking groups after the global financial crisis (GFC) in 2007/2008.This surge increased competition in financial intermediation and sig-nificantly stimulated Africa’s interbank markets as a result, turning pan-African banks into a positive driving force of regional financial integration.

Significant progress has also been made in terms of stability.MostAfrican banking systems showed remarkable resilience to the 2008 glob-al financial crisis, reflecting not only their low exposure to risk emanating from the subprime crisis, but also major improvements in the quality of banking regulation and supervision of the past two decades.African governments em-barked on aligning financial regulation and su-pervision to international best practices.As a result, financial systems became very stable will well capitalized and over-liquid banking sectors.

Financial sector deepening in Africa also came with additional risks emanating from new product and service offerings, more complex financial markets regional financial sector integration and deeper links with global financial market Large gaps still remain.Today finance in Af-rica remains insufficient in scale, too expensive and heavily geared towards the short end of the market.Banking systems are too small and concentrated, with low levels of savings mobili-sation to finance productive activities in the real sector.Market imperfections such as information asymmetry and inefficient operations lead to high cost of borrowing, to the exclusion of large parts of the population.Insufficient depth, liquidity and market infrastructure inhibit the ability of capital markets to play their role as intermediators of finance. Despite these constraints, theincreasein di-versity financial service providers Africa offers a tremendous opportunity for innovative ways to deliver financial services to the unbanked and underbanked.These trends, en-abled by digital technologies and new business models, offer a glimpse of hope that finance in Africa is slowly starting to realize its potential as the engine of inclusive and sustainable economic growth.

Many African countries have seen signifi-cant growth and deepening of their banking systems.Today, the continent is the sec-ond-fastest-growing banking market in the world, taking both retail and wholesale banking together.Commercial banks continue to domi-nate the banking sector in Africa, apart from SouthAfrica, banks dominate the financial sector and therefore financial intermediation across the continent.The depth and coverage of finan-cial systems, as measured by the ratios of pri-vate sector credit and broad money (M2) to GDP, albeit lower compared to other emerging economies, has increased over the past few decades.

Access to finance has improved, but disparities remain.According to the Global Findex, the percentage of adults in Sub-Saharan Africa with access to an account has increased from 34 percent in 2014 to 43 percent in 2017, still below the global average of 67 percent.The spread of mobile money servicesin particular, has helped boost account ownership in many countries, surpassing traditional accounts.The percent-age of mobile money accounts in Sub-Saharan Africa almost doubled from 12 percent to 21 percent between 2011 and 2017, highlighting the key role of technology and innovation in ex-panding access to finance in the continent.


The weight of the financial sector in Africa is still very low both in absolute terms compared to the rest of the world and in relative terms with respect to the GDP of each country. There is great room for growth and the previous sections have outlined the main advances that have occurred in the last two decades and that are laying the foundations for a sustained and inclusive development of financial services that contributes to overall economic development.It should be noted, by way of conclusion, that most of the aforementioned aspects are fa-vouring greater regional integration both through the expansion of private financial groups and the interconnection of markets as well as public collaboration for the adaptation and improvement of regulation and supervision on a continental scale.


African Development Bank (2020).Developing Africa’s Workforce for the Future.African Economic outlook 2020.

Chironga, M., Cunha, L., De Grandis, H., y Kuyo-ro, M.(2018).Roaring to Life: Growth and Inno-vation in African Retail Banking.Global Banking Practice.McKinsey and Company.

AEF Banking Industry Core Group

The Banking Industry committee of the AEF brings together the top 100 Banking companies in Africa as ranked by the AEF Industrial Index, and to others by invitation only. The perspective of Banking in Africa will bring together leading minds from around the world to explore the state of Africa’s financial markets and the prospects for the internalizing banking system. Another developing perspective of banking is in the infrastructural and investment project considered another area of development in banking that can be growth to the continent.


Global advisory committee

A standing committee of the AEF Banking industry committee (DCIC). It provides global advisory and related industry insights to the Banking Industry Committee on how to globally scale-up the operations and impact of the Banking industry in Africa; to promote its global competitiveness and improve its collaboration with science and technology Research Institutions in Africa and other parts of the world. It would also help to build collaborations with other partners in other parts of the world.
It would be made up of the following:

  • 2 Co-chairpersons
  • A Vice chiarman
  • 9-15 other persons
  • Membership would reflect the 5 sub-regions of Africa and the 5 major regions of the world.

Oversight Committee

Oversees the activities of the AEF Industry Committee on Oil Field Services Industries.
It Comprises:

  • Chiarman
  • Vice chiarman
  • I and II nominated by the selections committee of the AEF.

  • Official Executive Representatives of the top 15 Oil Field Industries in Africa.
  • Two Technical Consultants approved by the Technical Committee of AEF.
  • Lead Analyst (Banking and Allied Industry).
  • The Oversight Committee meets at least two times in the year.

Technical Committee

Responsible for making the Technical, Scientific, Research and Technology issues related to the Banking and Allied Industry in Africa. It would also advice the industry.
Committee on such related issues, It Consist of:

  • Chairperson, been a member of the Oversight Committee
  • Four other members
  • Membership is determined by the AEF Technical Committee.

Public Private Partnership (PPP) Committee

Would be responsible for the smooth engagement of new Banking perspective in Africa with relevant Government Agencies/regulatory bodies concerned with the setting up and or operations of the Banking industry in Africa. It will ensure continued the good relationship of members of the Banking industry committee and various public agencies concerned with regulation and or operations of the industry in Africa. It would ensure the creation and operation of appropriate platforms for promoting good understanding between the industry members and those of the relevant publics in Africa.
Membership of the Committee:

  • Chairman, being a Vice-Chairman of the oversight committee.
  • Vice-Chairman
  • 7 - 9 other members, 3 of which must be members of the oversight committee.


Nominations are invited for membership of the following committees.

  • Membership of the Global Advisory Committee for the Banking Industry Committee.
  • Membership of Banking Industry oversight committee.
  • Membership of the Banking Industry Technical committee.
  • Membership of the Banking Industry Strategic committee.
  • Membership of the Banking Industry PPP committee.