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BUILDING A WORLD-CLASS AFRICAN FINANCIAL INDUSTRY:
A $1.5 TRILLION OPPORTUNITY

Africa is bearing the brunt of a credit crisis wreaking havoc on the global economy. While inflation eats away at the purchasing power of hundreds of millions of Africans, the highest interest rates in decades and an international financing slowdown are threatening the survival of businesses.

The continent’s political decision-makers are calling forreforms to the global financial architecture that would allow them to respond effectively to the immense challenges ahead. But Africa no longer has time to wait for promises to be kept.

The continent needs to build its own world-class financial industry capable of delivering robust and sustainable development. An industry that is more resilient to external shocks and better able to attract the capital that can transform national economies and finance the energy transition, food security and essential infrastructure.

Africa’s financial industry has made remarkable progress in the last 20 years led notably by its commercial banks, stock exchanges and fintechs.

But the challenges it faces are formidable: from closing a $330bn SME funding deficit, drastically increasing the insurance penetration rate (less than 3% compared with a global average of 7%), and deepening capital markets (approx. 1,100 companies listed on 25 African exchanges vs. over 2,000 on the Shanghai Stock Exchange alone), to fostering excellence in strategic areas such as digital transformation and artificial intelligence.

With major international players paring down local African operations, our continental champions have an historic opportunity to extend their regional influence and consolidate links to global markets. If they succeed, African champions will have the capacity over the next ten years to become the driving force that the real economy has been yearning for. The opportunity available to them could be worth more than $1.5 trillion based on banking, insurance and capital markets penetration to GDP ratios observed in China and developed markets.

On 15 and 16 November in Lomé, AFIS will mobilise more than 1,000 financial industry leaders, policymakers and regulators to work out the course of action needed to develop a world-class African financial industry by focusing on four major challenges:

1 – Attracting the billions held by African institutional investors to local capital markets

2 – Free movement of capital, regulatory harmony, reducing the African risk premium: What will help African financial champions emerge?

3 – Working together to retain and develop talent vital to the sector’s digital transformation

4 – Climate finance, securitisation, tokenisation: Unleashing the sector’s innovation potential