Africa is a dynamic hub of opportunities driven by innovation, leadership, and change – and also filled with challenges. Operating any business on this complex continent requires a deep understanding of its landscape. While Africa faces challenges in some sectors compared to the global north, it has powerful advantages in others.
In the banking and finance industry, Africa’s unique landscape, characterised by limited transport connections between rural and commercial areas and the absence of landline communications, has driven significant digital innovation. This in turn has led to the enormous opportunities for neobanks, and other non-traditional banking and business models to proliferate on the continent. In addition, Africa has the youngest – and fastest growing – population on the planet and its digital natives are looking to break traditional moulds and to find new ways of solving their own particular modern African challenges.
New entrants into the African banking sector and existing traditional financial institutions that have successfully transitioned their services online and extended their product offering, are those whose leaders have a vision and a mission and who are able to align multi-disciplinary and multi-cultural teams behind that vision.
This sentiment was echoed at EFT Corporation’s inaugural Banking on the Future conference in May 2024, where Dr Adrian Saville, Professor of Economics, Finance, and Strategy at the Gordon Institute of Business Science and Founder of Boundless World, delivered the leading session titled ‘Banking and Business in Africa: New Markets, New Models, New Mindsets’. His presentation addressed exactly this imperative for leaders in the banking sector to understand their operating environment and to embrace change.
Understanding market nuances
Africa’s unique market dynamic make it one that is rich in opportunity for bold leadership. By adapting tailored models for local market conditions, the banking and finance sector can exploit these opportunities, ensuring viable and sustainable operations. Saville emphasised the value of leveraging big data and machine learning in this market evaluation process, to identify successful business patterns, saying “Drop all assumptions at the door; work with big data and machine learning to identify the ingredients that are common to countries that transition and transform and also to identify industry drivers and catalysts.”
Adopting the right models
Fintech innovation is crucial in this evolving sector. Mobile banking is revolutionising the landscape, and a significant percentage of the continent’s previously unbanked population now enjoys financial inclusion. Businesses must be agile and their products flexible and adaptable to changing economic environments and consumer demands. Adopting the right model for the right market requires leaders to ‘stop doing’ and to start leading with strategic purpose.
Cultivate a success-oriented mindset
Leaders that invest in continuous learning and personal development and who model a success-oriented mindset are the ones who are best able to bring their teams along with them in achieving company goals and objectives. In entrepreneur led organisations, transitioning from being part of the operations to stepping into a more strategic role can be difficult, requiring a fundamental shift, but in any size organisation, leaders need to drive innovation and creative problem solving. But promoting a company culture of curiosity, says Saville is meaningful only when curiosity is turned into action.
In addition to these key elements, Saville’s presentation focussed on the six key ingredients essential for the success of business and banking in Africa, drawing on a rich and deep dataset covering 160 countries over 60 years of growth and development, and more than 1,200-line items per country.
1. Savings & Investment
Sustained investment in infrastructure, from highways and harbours to schools and fibreoptic cable, is crucial. This not only boosts productivity but also enhances the overall economic environment. However, investment has to be funded by saving, and businesses and economies that prioritise savings and continuous investment tend to flourish; this is the single most-powerful driver of elevated, and inclusive growth.
2. Demography
Africa’s diaspora has reached 200 million people. While many of those living outside the continent give back in many ways, the outflow of talent needs to be stemmed. Population dynamics, particularly workforce replenishment, play a significant role in economic success. Sustainable population policies ensure a steady pipeline of talent and innovation.
3. Policy & Institutions
Stability in economic and political policies creates a conducive environment for business growth. Predictable policies reduce risks and attract foreign investments. This is an important aspect in policy consideration – policy stability is arguably even more important than the policy itself. This underlines the important of “rules of the game” being established, clearly defined, and well protected.
4. Education
Africa has the lowest enrolment rates into secondary and tertiary education in the world, resulting in an under-educated work age population. Saville maintains that a well-educated workforce is the backbone of any successful economy. Improving educational systems and increasing access to quality education can drive innovation and economic growth. The foundation for any thriving economy is its people, and education equips them with the skills to innovate and lead. Notably, though, the most impactful education happens in the first 1,000 days – this lays the foundation for everything that comes afterwards in terms of human capital.
5. Health
Africa bears 25% of the global health burden with only 3% of the world’s healthcare workforce. Healthy populations are more productive and contribute positively to the economy. Investments in healthcare particularly, just like education, in early development stages, ensure a robust workforce capable of driving business success. Notably, healthcare is a leading indicator of education outcomes – put simply, it’s impossible to educate an unwell workforce.
6. Openness
Connectivity and collaboration with other markets create opportunities for mutual benefit. In today’s digital environment, connectivity is indispensable. Enhancing internet and telecommunications infrastructure facilitates business operations and opens new market opportunities. Embracing openness facilitates innovation, trade, and growth, making economies more resilient and globally competitive. “Connecting with others means we are both better off – it’s about creating win-win situations,” Saville told the conference’s audience.
Leadership is central to sustainable growth
Effective leadership is the linchpin that brings together all these elements. Leaders who can navigate complexities, inspire their teams, and drive strategic initiatives are essential for the future of banking in Africa. Attributes such as agility, strong central controls, innovative processes, and talent retention are more indicative of success than traditional factors such as company size. Leadership has a pivotal role to play in the transformation that the business and banking sector is undergoing. Going beyond the doing and the execution and moving into a role that inspires and empowers multi-skilled teams and develops strategic initiatives is the kind of leadership that will take Africa’s banking and financial sector into the future.
