Banner 4
Sector Details
Select a country

South African banks have long dominated the African banking industry in terms of size and progressiveness. Standard Bank of South Africa, for instance is by far the largest bank in sub-Saharan Africa with tier 1 capital of just over US$8 billion. According to statistics published in 2008 First Rand Bank became the second biggest bank in sub-Saharan Africa, up from fourth place the previous year. A significant development over the past few years has been the growing presence of Nigerian banks as a result of the central bank governor’s new capital requirements. Banks have been becoming bigger through multiple mergers and acquisitions and the total number of banks in the country has dropped to less than 25 from nearly 90 in 2004.

In 2008, the total tier 1 capital of Nigerian banks in the Banker Top 1000 banks worldwide more than doubled to US$11.29 billion from us$5.38 billion in 2007. This took Nigeria’s share of the sub-Saharan pie to 34 percent of total tier 1 capital, up from 24 percent in 2007. South Africa’s share of the pie has in the meanwhile fallen from 71% last year to just 62% in 2008. Despite such tremendous growth, Nigerian banks’ return on capital has fallen from 21.9% in 2007 to 18.6% in 2008. In South Africa, however, return on capital leaped from 38% to 42% in the same period.

Kenya has over 40 banks, most of which are small or medium sized. The industry is as such dominated by three large banks, two of which are foreign owned. The government is strongly pushing the industry towards privatization and is also focusing on financial sector reforms to improve the soundness of the Kenyan financial system. The Egyptian banking industry in the meanwhile is dominated by three state-owned institutions, National Bank of Egypt, Banque Misr and Banque du Caire, and one private institute - Bank of Alexandria. Together they represent approximately half of the Egyptian banking system’s assets.


Banks in the region are facing high levels of competition not only from other domestic banks, but foreign banks and regional banks as well. In South Africa for instance, Barclays Bank from the UK took a controlling stake in ABSA. As such, Barclays is present in around 12 countries in Africa and in 2007, the continent accounted for over 13% of the group’s profits. Other foreign banks such as Citi, JPMorgan and Deutsche Bank too are active in the continent. In the meanwhile, Standard Bank has been spreading its wings in the sub-Saharan region. In 2007 it purchased CFC Bank in Kenya and IBTC Chartered Bank in Nigeria. Incidentally, in October 2007, the International Commercial Bank of China (ICBC) took a 20% stake in Standard Bank, the largest ever investment by a Chinese company.

Unbanked Market

The bank branch infrastructure present in Africa at the moment is inadequate to serve its population. Apart from major urban areas, banks have a very low penetration. Hence there is a huge unbanked population in Africa. In a country like Kenya for instance, where the total population size is over 30 million, the banked population is estimated to be only around 2 million. South Africa, however, has managed to be relatively more successful in providing entry level products such as the Mzansi Account. According to the Banking Association South Africa, in October 2004 about 13 million South Africans were “unbanked”. The Mzansi Account, launched during this period, is based on a minimum standard of functionality and interoperability. At end of the first week in February 2005, more than half a million Mzansi Accounts had been opened and in 18 months there were over 3.3 million Mzansi account-holders. The account was conceived out of the requirements set out in the Financial Services Charter (FSC) and is supported by ABSA, First National Bank, Nedbank, Standard Bank and the PostBank. In line with the goals of the FSC, 90 percent of the Mzansi Accounts opened are held by previously unbanked clients.

Back to top>