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In 2007, Nigeria commenced the reform of its payment industry to strengthen this critical element […]
Kenya currently tops the world in mobile money transfers with Safaricom being the most preferred […]
The Kenyan banking sector currently consists of 43 commercial banks, one mortgage finance company, nine […]
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The banking sectors of a number of sub-Saharan Africa (SSA) countries have exhibited significant growth […]
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The recent lack of growth in the developed markets coupled with perceived improvements in political […]
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Nigerian banking continues to face significant headwinds – in relation to both revenue and costs. […]
Very few Africans make use of formal financial services. In fact, only 24% of adult Sub-Saharan Africans had a bank account in 2012, while the global average was 50%, says the Global Findex Database. In the following countries less than 10% had an account that year: Sudan, Senegal, DRC, Central African Republic, Chad, Niger, Madagascar and Mali.
Deal sourcing in Africa is driven largely by deep understanding of local markets, strong local relationships and networks. If used well, it will not only ensure exclusivity during the acquisition process but can guarantee reasonable entry valuation and lay solid foundation for a smooth relationship with the portfolio companies throughout the investment life cycle. Deals that are done through auctions tend to be competitively priced and in the process, create unnecessary distraction for management.
The attraction of PE to Africa is driven largely by many factors such as: the huge market size – Africa is home to over 1 billion people; relatively young population – about 60% are below 40 years of age; favorable demographics – rising middle class, increasing urbanization, increasing disposable income etc; improved democratic rule and governance, increasing public sector reforms, reducing incidences of civil unrests and wars etc and the mobile technology revolution in Africa driving increased efficiencies, productivity and reducing cost of doing business.
As much as 73% of African finance executives believe that the role of finance will increase five years from now, according to the findings of our KPMG Africa CFO Survey 2014. This is compared with the 56% obtained in our Global CFO Survey 2013. Moreover senior finance executives all over want to increase their “Decision Support” capabilities and decrease efforts on “Transaction Processing” in the next two years.
“A growing body of evidence suggests that financial institutions and financial markets exert a powerful influence on economic development, poverty alleviation, and economic stability,” says Martin Čihák, lead economist at the World Bank. Financial sectors on the African continent remain largely underdeveloped, while banking industries continue to dominate the landscape in terms of total assets and services. Nonetheless, financial sector development has been on the agenda of African policymakers for some time.
We were having a meeting with a client the other day, on a peculiar tax situation they were likely to face on a proposed contract. We had expressed our view on the issue, but further suggested that the matter be referred to the Federal Inland Revenue Service (FIRS) for their opinion. But there was a problem. The problem, as pointed out by the client, was how much reliance they could place on the opinion from the FIRS.
Inclusive economic growth is growth that leads to job-creation, causing a ripple effect on the purchasing power of the majority of the populace. The private sector, and in particular SMEs, are the drivers of an economy. SMEs are also the largest providers of direct employment and inclusive growth can be achieved through promotion of policies that would drive their development. According to the Central Bank of Nigeria, 96% of Nigerian businesses are SMEs (uS = 53%, Eu = 65%). Inclusive growth can be achieved by positioning these SMEs to take advantage of the opportunities in the economy.
At the credit application and processing stage, banks need to invest in systems that allow more efficient and tailored risk profiling. Such a system rewards diligent entrepreneurs with lower lending rates and greater access to capital. Post-disbursement, the establishment of dedicated advisory/support teams can help minimise credit risk and improve credit management by educating and advising SMEs on day-to-day financial management, record-keeping and corporate governance. The incremental cost of this will be easily offset by the increased patronage and lower default rates.