NAIROBI — The African financial industry is experiencing significant growth and innovation, alongside enduring challenges, according to a comprehensive survey conducted in the latter half of 2023. This survey, which involved around thirty managers of financial institutions across the continent, provides a detailed analysis of the current state and future prospects of this vital sector. The findings, published in the third edition of the African Financial Industry Barometer, highlight both the achievements and the obstacles faced by financial leaders in Africa.
According to Africa News Agency, a striking 95% of financial leaders remain optimistic about the economic outlook over the next three years, despite global financial uncertainties and macroeconomic challenges. The report underscores the strategic focus of these leaders on asset-liability management, risk management, and capital enhancement, amidst the pressures of inflation and regulatory changes. This optimism is partly attributed to the adoption of pragmatic measures aimed at improving financial stability, though these measures sometimes limit financing for the real economy.
Investment in digital transformation and information technology emerges as a key priority, with a notable increase in digital maturity among African financial leaders. The survey points out a significant shift towards cloud computing, with over a third of respondents actively pursuing or considering migration to the cloud. However, the integration of artificial intelligence into financial processes remains limited, with only 8% of managers reporting its effective use.
Challenges persist in the capital markets sector, with access and market depth issues highlighted by 70% of leaders as a concern, an increase from previous reports. This has implications for liquidity, refinancing, and fundraising activities, particularly in foreign exchange transactions, attributed to stringent regulatory environments.
Green finance emerges as an area requiring urgent attention, with investments significantly lagging behind the continent's climate finance needs. The report indicates a cautious approach to green bond issuance and a slow movement towards carbon neutrality, with only a small fraction of financial institutions having a defined path to net-zero emissions.
The survey also reflects on the evolving landscape of the African financial industry, noting the withdrawal of major international players and the consequent rise of local banks. These local champions have capitalized on the opportunity to expand and innovate, becoming competitive on a continental and global scale.
Furthermore, the report emphasizes the critical need for regional integration and the realization of pan-African initiatives such as the African Continental Free Trade Area (AfCFTA) and the Pan-African Payment and Settlement System (PAPSS). A harmonized pan-African regulatory framework is supported by the majority of respondents, highlighting its importance for the industry's future.
In conclusion, the African Financial Industry Barometer sheds light on the complex dynamics of the sector, underscoring the need for continued innovation, digital transformation, and regional cooperation. The industry's commitment to addressing both immediate challenges and long-term sustainability goals positions it as a key player in the global economy.