By Babajide Komolafe

Africa is a bundle of growth challenges and opportunities. Those who focus on the challenges write off the continent as a “Hopeless Continent” like the Economist Magazine did some years ago. Some, however, focus on the opportunities and see the continent as a rising economic power.

Sola David-Borha

Standard Bank Africa, the parent bank of Stanbic IBTC in Nigeria, belongs to the latter group. “Africa is on the rise”, says Terry Moodley, the bank’s Chief Executive, Personal and Business Banking Africa.

Using a series of data and charts which indicate a continent with rising economic growth rates, rising middle class, increased urbanisation, rapid growth of mobile phones and huge size of uncultivated arable land, he explained to a group of journalists from different African countries why the Standard Bank Group believes that the continent is the best place to invest and do business.

“Africa is our biggest and preferred market. It represents our future”, he said at the 4th African Media Forum organised by the bank in Johannesburg.

The facts are compelling. Only diehard pessimists would disagree with the bank that in spite of the plethora of challenges that have held down the economic growth of the 53 African countries for years or centuries, Africa is on the rise.

Despite global economic crisis, African countries have been growing at 5 per cent on the average since 2002. Six African countries, having economic growth rates ranging from 7.6 to 11.1 per cent, are among the ten high growth countries in the world from 2001 to 2010. Similarly, seven African countries, having growth rates ranging from 6.8 to 8.1 per cent, have been predicted by the Economist Magazine to be among the 10 high growth economies from 2011 to 2015.

Also the International Monetary Fund (IMF) predicts that 19 African countries would enjoy economic growth rates ranging from 6.0 to 8.5 per cent over the next two years. With these growth rates, the collective gross domestic product (GDP) of African countries is expected to rise to $2.6 trillion by 2020, from $1.6 trillion in 2008.

This spectacular growth is driven by increased urbanistion and rising population of middle and working class Africans.

“More Africans are now living in the cities”, said Moodley. “Today, 40 per cent of Africans live in cities, up from 28 per cent in 1980. This is projected to rise to 50 per cent by 2030”, he added. Increased urbanisation increases productivity, income and demand for goods and services.

Also is the emergence of an increasing number of Africans in the middle class, presently estimated to be 350 million, who are upwardly mobile, educate their children, buy or build homes, purchase consumer products, save and create wealth.

These coupled with increasing population dominated by working class and youths as well as increasing number of entrepreneurs reflected in the 40 million Micro, Small and Medium Enterprises (MSMEs) across the continent translates to prospect of increased demand for more goods and services, which in turn would enhance productivity and income generation.

According to Hannah Edinger, Head of Research, Frontier Advisory, 128 million African households would have discretionary income in 2020 while Africa would have combined consumer spending power of $1.4 million by the same year. This is expected to rise further by 2050 when the continent is projected to have population or consumers of two billion.

Furthermore, with 60 per cent of the world’s uncultivated arable land in Africa, and the increasing demand for food across the world and shortage of arable land in other countries, a huge number of the over six billion people on earth would be relying on the continent for their supply of food. Hence there is huge prospect for agribusiness on the continent.

This implies Africa is a market too huge for any investor to ignore. That is why Standard Bank has pitched its tent with the continent, despite the challenges of inadequate power supply and other infrastructure coupled with bureaucratic network and land ownership system, which hinders access to credit.

The strategy of the Bank is to be a catalyst to the emergence of the continent with products and services needed to facilitate the expected boom of Africa’s economies. “We want to be the agent of change”, Moodley said, “by building the banking network that would enable us to reach every African irrespective of age, class or professional”. “We are opening more branches, deploying more ATMs, employing more staff, expanding into more countries in Africa through acquisition and also investing in our brand.

Wherever we are located our goal is to be the local bank and the customer’s first choice in terms of affordability, accessibility, convenience, and simplicity of our products and services. The commitment of the Bank, which has over 1 257 branches and more than 12 million total customers and also present in 17 African countries as well as in 13 emerging countries is reflected in wide range of products and services which caters for rural and urban dwellers, big corporate, small and medium enterprises, micro businesses, agriculture businesses, banked and the unbanked.

To Standard Bank, the banking needs of the continent are as huge as the challenges. And though its mission is to be the leading African financial services organisation, it welcomes the regional expansion moves by other African banks especially Nigerian banks. According to Sim Tshabalala, Group Deputy Chief Executive of the bank, “The competition is good for banking clients and would enhance the growth and expansion of banking across the continent.”