AN overwhelming 95% of financial industry leaders are optimistic about the economic outlook over the next three years, despite macroeconomic uncertainties and tensions in financial markets.
This information is contained in the recently unveiled third edition of the African Financial Industry Barometer produced by the Africa Financial Industry Summit (AFIS) and Deloitte.
AFIS director Ramatoulaye Goudiaby said: “The third edition of the African Financial Industry Barometer highlights significant progress and persistent challenges in the African financial industry.
“As the sector continues to navigate a complex global environment, this study underscores the importance of innovation, digital transformation, and regional integration in shaping a resilient and prosperous African financial future.
“The commitment to green finance and carbon neutrality, albeit nascent, is a positive step towards sustainable development.”
Deloitte Francophone Africa financial industry leader Aristide Ouattara said: “By capitalising on pan-African opportunities and overcoming structural obstacles, the African financial industry is well positioned to play a leading role in the global economy.
“Deloitte and AFIS remain dedicated to providing key insights and supporting the development of this vital sector for Africa’s future.”
The barometer revealed that the industry is strengthening its asset-liability management (ALM), risk management (cyber security in particular), and capital management in response to persistent inflation and the potential for tighter interest rates and regulation.
“Many players are taking pragmatic measures – such as adopting more selective distribution approaches, creating guarantee funds, and improving internal capital generation – in some cases to the detriment of financing the real economy,” it said.
According to the barometer, industry leaders perceive that their digital maturity has increased, propelled by open banking/insuring, which has been the key driver of digital transformation.
“Information technology is meanwhile the investment priority for the majority of respondents (33%), with more than one in three executives saying they have launched or are ready to launch migration to the cloud.
“The industry is also keeping a cautious eye on artificial intelligence, with 8% of business leaders reporting that this technology has been effectively integrated into their processes,” it revealed.
The barometer showed that there was room for improvement in green finance and carbon neutrality.
“Despite Africa’s $250 billion annual climate finance needs, investment in green finance remains limited, with only 10% of respondents committed to green bond issuance.
“The industry will also need to explore realistic paths towards the zero-carbon objective, given that only 22% of financial institutions have a clear net-zero trajectory,” it said.
The barometer showed that the African financial industry’s perceived attractiveness has been severely impacted by political turmoil in the region and divestments by major international players over the past five years, such as Standard Chartered, BNP Paribas and Société Générale.
“Only 48% of respondents consider the industry more attractive, compared with 61% in the last barometer. Nevertheless, international banks scaling back African operations has benefited several local banks, which have not only increased in size and geographical presence but have reworked their business models to become true continental champions that can compete on an international scale,” it said.
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