African finance at a crossroads: 11 key insights from the Deloitte-AFIS Financial Industry Barometer
Deloitte and the Africa Financial Industry Summit (AFIS) release essential findings from its latest survey of commercial banks, insurers, fintechs and regulators.
Africa’s financial sector is navigating a pivotal transformation, fuelled by digital innovation and the accelerating shift toward sustainable finance, yet hindered by persistent inflation and the withdrawal of major Western financial institutions.
The fourth edition of the African Financial Industry Barometer, a collaboration between Deloitte and the Africa Financial Industry Summit (AFIS), captures this dynamic landscape, highlighting both opportunities and challenges reshaping the industry.
Drawing on insights from over 60 industry leaders—spanning banks, insurers, fintech firms, and capital markets participants—the report delves into three critical themes: strategic shifts and business models, governance and risk management, and the evolving financial ecosystem.
Cautious optimism amid market pressures
Despite a slight decline in sentiment compared to 2023, 72% of financial institutions remain optimistic about the economic forecast over the next three years. Fintech firms lead the confidence index, rating their outlook at 9.25/10, while capital markets participants remain more cautious. Encouragingly, 65% of firms report improved solvency and profitability, though 28% flag deteriorating asset quality, underscoring ongoing structural vulnerabilities.
Inflation surpasses political and cyber risks
For the first time, inflation has emerged as the sector’s top risk, surpassing concerns over political instability and cybersecurity, with more than half of respondents citing it as their primary challenge. While environmental, social, and governance (ESG) risks remain relatively low on the priority scale, compliance risks have surged to the forefront, ranking ahead of cyber and operational risks.
Innovation vs. Regulation: Policymakers failing to keep pace
The rise of telecom and fintech firms as dominant financial players is overwhelmingly viewed as a positive force, with 95% of respondents recognising their contribution to industry innovation. However, Big Tech and global digital giants (GAFA) are perceived as potential disruptors, though their footprint in the sector remains limited for now.
Regulatory frameworks continue to be a sticking point: 66% of respondents believe current regulations are inadequate for fostering digital finance innovation, reinforcing the urgent need for policy modernisation to support the industry’s evolution.
Declining sector appeal and uneven integration efforts
Despite advances in digitalisation and governance, the financial industry is losing its appeal to international investors and partners —67% of professionals believe the sector is either stagnating or in decline in international eyes.
Regional integration initiatives, such as PAPSS (Pan-African Payment and Settlement System), AfCFTA (African Continental Free Trade Area), and AELP (African Exchanges Linkage Project), are widely acknowledged as critical to the continent’s financial future, but implementation remains sluggish. While PAPSS is seen as 20% operational, progress on AfCFTA (8%) and AELP (7%) lags significantly, highlighting the uneven pace of integration efforts.
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