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Banking Sector

African Banking: The Productivity Opportunity

African revenues have recovered and are now higher than prepandemic levels, driven by sustained volume increases, higher interest rates, and stable risk costs.



Global Banking - Investors King

In 2022, African banks are showing growth, despite significant headwinds, including macroeconomic uncertainty.

According to new research by McKinsey regarding the productivity opportunity, revenues have recovered and are now higher than prepandemic levels, driven by sustained volume increases, higher interest rates, and stable risk costs.

However, banking return on equity (ROE) in all African geographies except Kenya, still remains one to two percentage points (pp) below pre-COVID-19 levels, despite a strong rebound in 2021. Part of the reason for this is that many of the downward pressures on ROE in African banking predate the pandemic. To return to profitability, banks may therefore need to look deeper to address productivity blocks within the sector.

Profitability in Africa’s five biggest banking markets (Egypt, Kenya, Morocco, Nigeria, and South Africa) has been on a steady decline, decreasing by an average of two pp over the past six years. Egypt has experienced the steepest decline (–9.5 pp), followed by South Africa (–2.7 pp). Coming off of a low base, Nigeria is the only major African economy that has seen an increase in banking ROE since 2016 (3.6 pp), driven by a decline in risk costs following Nigeria’s economic reforms post the 2015–16 recession, a partial recovery of oil prices, early easing of COVID-19 restrictions and Central Bank of Nigeria (CBN) forbearance measures.

“African banks are costly to run, with an average cost-to-asset ratio of between 4 and 5 percent, almost twice as high as the global average. At the same time, the economic environment within which many African banks operate, often characterized by lower bancarization rates and loan-to-deposit ratios, means that the domestic revenue pools offer fewer scale benefits.

This suggests that banks may need to review their cost base and operating models, especially if they want to keep investing into technology and increase access to the banking system,” says Francois Jurd de Girancourt, a partner in McKinsey’s Casablanca office and leader of the firm’s Financial Institutions Group in Africa.

McKinsey analysis suggests that African banks may need to achieve productivity gains of between 25 and 30 percent if they are to restore prepandemic profitability. In many respects, the pandemic and a tightening global economy have already prompted most banks to begin this journey. To help accelerate progress, the firm is suggesting six productivity streams that could be considered as part of a holistic response to the productivity opportunity.

  1. Retail: Embracing the ‘phygital’ reality

For African banking, our analysis finds that digital adoption is between 20 to 30 percent; however, it could be higher. In Latin America and Asia, for example, digital adoption is around 50 percent, while in other global markets, it is as high as 72 percent. As service and sales in digital channels continue to gain prominence globally alongside the more traditional physical channels, there are two key levers African banks could consider driving further digital adoption and embrace the “phygital” reality.

     2. Central and back office: Considering a path to zero operations

One of the key trends shaping the future of central and back office is the hyperdigitization of work. Our research suggests that there is more than 50 percent automation potential across selling, general, and administrative expenses (SG&A) functions and 40 to 60 percent cost-savings potential from using automation in these functions. Leading banks are increasingly moving toward zero-based operations with the implementation of automation and digitization across the banking value chain. Despite several years of investment in lean, digital, and automation, we estimate that a significant part of the banking value chain remains dependent on manual tasks, driving 60 to 70 percent of costs.

    3. Support functions: Moving from transactional to value-added partner

African banks could consider adopting lean ways of working as a basic building block. Embedding an outward-looking and commercially focused orientation in support functions could help banks anticipate and respond more quickly to a rapidly evolving environment. Banks could also deploy digital and analytics technologies to generate relevant insights for the business.

     4. IT: An opportunity to accelerate technology adoption

To move to the next level, IT banking departments may want to consider accelerating their migration of applications and infrastructure to the cloud. Cloud-enabled technology has now reached a tipping point, and McKinsey analysis indicates that banks could double the productivity of their IT engine by deploying newer-age technology platforms. Additionally, by automating infrastructure deployment and switching to a DevOps model that automates manual tasks and enables the management of complex environments at scale, teams can rapidly and reliably implement and innovate for their customers.

     5. Real Estate: Flexibility is the new watchword

Hybrid working is now the norm. This provides African banks with an opportunity to rethink their use of physical assets. For example, banks could offer employees more workplace flexibility with an opportunity to work from home. Cloud platform migration could introduce a work-from-home/anywhere policy for its contact center employees. Such shifts in working conditions have the potential to offer employees a better work–life balance, a more tailored employee experience, and could have a positive impact on diversity, equity, and inclusion efforts as well as performance.

    6. Procurement: Digital collaboration and advanced analytics

Next-generation procurement improvements could include a focus on the acceleration of automation and digital collaboration. Investing in digital capabilities allows banks to automate processes and create transparency. For example, a “control tower” for the procurement function that captures and shares data could help to drive 100 percent visibility across the organization. This, in turn, could enhance efficiency, leading to shorter cycle times and contributing to tighter controls and compliance scalability with the option for immediate decision-making on spend requests. Ultimately, this could help to embed a stronger culture of accountability within the organization.

“If African banks are able to prioritize their productivity in these six areas, they could help optimize their cost base, better allocate financial resources to fuel growth areas, and partially counter ROE erosion. There is also an opportunity to lower cost-to-serve consumers and assist governments in the drive to advance financial inclusion, unlocking the next wave of growth,” says Jurd de Girancourt.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq,, Investorplace, and many more. He has over two decades of experience in global financial markets.

Banking Sector

Zenith Bank Recognised as ‘Best Corporate Governance Financial Services’ in Africa for the Fourth Year Running

For the fourth consecutive year, Zenith Bank Plc has been named as the Best Corporate Governance ‘Financial Services’ Africa 2023 by the Ethical Boardroom.



For the fourth consecutive year, Zenith Bank Plc has been named as the Best Corporate Governance ‘Financial Services’ Africa 2023 by the Ethical Boardroom. The award, which was published in the Spring 2023 edition of The Ethical Boardroom magazine, is in recognition of the bank’s adherence to global best practices and institutionalization of corporate governance, setting an industry-wide example of best practices in that field.

Speaking on the recognition, the Group Managing Director/Chief Executive of Zenith Bank Plc, Dr. Ebenezer Onyeagwu, said: “I am extremely pleased that Zenith Bank has been awarded the Ethical Boardroom Corporate Governance Award as a regional governance champion for the fourth year running. No doubt, the bank’s board has pioneered the exemplary governance culture for which we are now renowned. Indeed, this recognition reflects our steadfast commitment, discipline and high ethos in the conduct of our business and dedication to the principles of good corporate governance. This award will motivate us to strengthen this culture internally and advocate for good governance at every forum”.

He dedicated the award to the Founder and Group Chairman, Jim Ovia, CFR, for providing the template for an enduring and very successful institution; the Board for their vision and outstanding leadership; the staff for their dedication and commitment; and the bank’s customers for their unwavering loyalty to the brand.

Ethical Boardroom is a trailblazing and leading international magazine that delivers in-depth coverage and critically-astute analysis of global corporate governance issues to help boards stay ahead of the governance curve.

Zenith Bank has been generally adjudged a Corporate Governance compliant bank by the Nigerian Exchange (NGX) hence its listing on the Premium Board of the Exchange. The bank continues to sustain this reputation and reappraise its processes to ensure that its business conforms to the highest global standards at all times.

The bank’s track record of excellent performances has continued to earn it numerous awards including being recognised as the Number One Bank in Nigeria by Tier-1 Capital, for the 13th consecutive year, in the 2022 Top 1000 World Banks Ranking published by The Banker Magazine; Bank of the Year (Nigeria) in The Banker’s Bank of the Year Awards 2020 and 2022; Best Bank in Nigeria, for three consecutive years from 2020 to 2022, in the Global Finance World’s Best Banks Awards; Best Commercial Bank, Nigeria 2021 and 2022 in the World Finance Banking Awards; Best Corporate Governance Bank, Nigeria in the World Finance Corporate Governance Awards 2022; Best Commercial Bank, Nigeria and Best Innovation In Retail Banking, Nigeria in the International Banker 2022 Banking Awards.

Also, the bank emerged as the Most Valuable Banking Brand in Nigeria in the Banker Magazine Top 500 Banking Brands 2020 and 2021, and Retail Bank of the year, for three consecutive years from 2020 to 2022, at the BusinessDay Banks and Other Financial Institutions (BAFI) Awards. Similarly, Zenith Bank was named as Bank of the Decade (People’s Choice) at the ThisDay Awards 2020, Bank of the Year 2021 by Champion Newspaper, Bank of the Year 2022 by New Telegraph Newspaper, and Most Responsible Organisation in Africa 2021 by SERAS Awards.

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Banking Sector

CBN Disburses N13.8 Billion to Manufacturing Sector Under 100-for-100 Policy



Godwin Emefiele - Investors King

The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele has said the apex bank has disbursed a total sum of N173.3 billion to various beneficiaries under its 100-for-100 Policy on Production and Productivity since the policy commences.

Emefiele, who made this known in Abuja shortly after the Monetary Policy Committee meeting, said N13.81 billion of the total disbursed amount was for the development of three new projects in the manufacturing sector.

He said, “Under the 100 for 100 Policy on Production and Productivity, the Bank disbursed the sum of N13.81bn to three projects in the manufacturing sector.

“This brings the cumulative disbursement under the facility to N173.31bn, disbursed to 81 projects comprising 45 manufacturing, 23 agriculture, five healthcare, and eight services sector projects with an estimated 23,343 direct jobs created.”

The loan is capped at N5 billion per participant by the central bank, according to the guidelines for the implementation of the initiative.

In the guideline, the apex bank said 100 private sector organisations with projects that could transform the local economy through job creation, improve productivity, reduce imports, increase non-oil exports, and improve foreign exchange generating capacity of the nation will be selected and financed under the 100-for-100 policy.

“The initiative, which shall be bank-led, will be rolled over every 100 days (that is, quarterly) with a new set of companies selected for financing under the initiative,” it stated.

Meanwhile, the Nigerian economy grew at a slower pace in the first quarter of 2023 as Africa’s largest economy expanded at 2.31% year on year.

The National Bureau of Statistics (NBS) attributed this decline in growth to the cash crunch caused by the CBN’s decision to change the Naira notes in an effort to curb counterfeit notes and other national challenges.


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Banking Sector

50% of UBA Earnings Comes from African Operations



UBA House Marina

One of the largest banks in Nigeria and Africa, United Bank for Africa (UBA) Plc has said about 50% of its earnings come from African operations.

Abiola Bawuah, the Executive Director/Chief Executive Officer of UBA Africa, who disclosed this said it was made possible because of the bank’s digital offerings and products that help gain large market shares in key markets in Africa.

Speaking to the press during a hybrid media parley on Thursday, Bawuah explained that while devaluations and rising inflation in Nigeria and other African nations where the bank operates impacted overall performance, subsidiaries remained strong and continue to contribute significantly to the growth and development of trade, infrastructure and finance.

She said, “As of last month, none of our African subsidiaries is making a loss. They have all been turning in profits, this is a testament to the fact that they have navigated successfully and have all found their footing.

Bawuah, a Ghanaian national, who was appointed earlier this year became the first female CEO of UBA Africa, to take the group’s total female directors to eight.

She said, “We need the government to regulate the private sector because the sector is struggling. However, the private sector needs to be strong, and that is where UBA comes in. There have been numerous facility programmes we have come up with for consumers in the corporate sector like the Small and Medium Enterprises, Micro, Small, and Medium Enterprises that are being supported by us.

“It is only in UBA that I know of that you can be an MSME, and once you are faithful to us and you have run the enterprise very well, we are ready to support you, even when you do not have collateral.

“However, Africa must develop the private sector, and when you talk of the private sector, 60 per cent of the private sector in Africa are either SMEs or MSMEs, which would not be able to be developed by the foreign banks, because what they classify as SMEs monetarily is high, and most SMEs in Africa are far below that range.”

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