According to a report attributed to the Namibia Financial Institutions Supervisory Authority (NAMFISA), a regulatory body under the Namibian Ministry of Finance, microloans outstanding in Namibia grew by 34 percent during 2011, reaching a total amount of NAD 1.5 billion (USD 183 million). This is reportedly due to an increase in lending for consumption. In the last calendar quarter of 2011, microlending represented 3.4 percent of the total credit offered by commercial banks. This is expected to grow to four percent at the end of 2012 and five percent in 2013. “So the rate at which micro-lending is currently growing, is clearly alarming,” Rudolf Kuschke, analyst at Simonis Storm Securities, reportedly said.
NAD 1.44 billion (USD 175 million) out of the NAD 1.5 billion (USD 183 million) disbursed by registered microlenders during the fourth quarter of 2011 were “term” loans, which have a term of six to 60 months and an average annual interest rate of 22 percent. There was a 60-percent increase in the term loans outstanding from December 2010 to December 2011 reaching NAD 286 million (USD 34.8 million). The average loan amount for term loans was of NAD 11,131 (USD 1,355), which represented a 39-percent increase compared with 2010. The total disbursal of “pay-day” loans, which have a one-month term and an average interest rate of 30 percent, decreased from NAD 62.7 million (USD 7.6 million) in 2010, to NAD 61.6 million (USD 7.5 million) in 2011. The average loan amount for pay-day loans fell from NAD 970 (USD 118) to NAD 944 (USD 114). Registered microlenders offered 25,000 term loans and 135,000 pay-day loans during the fourth calendar quarter of 2011.
Meanwhile, a new report from Standard Bank of South Africa reveals that many financial services remain unavailable to the majority of the people that live in Africa. The report indicates that in Namibia about 48 percent have access to formal banks; in Zambia, 25 percent of the population has access to a bank; in Mozambique and Tanzania the number is reported to be less than a quarter of the population. In Nigeria, with a population of 150 million, 120 million reportedly have no access to formal banking. According to Standard Bank research analyst Simon Freemantle, “Access to finance has been, and in the majority of African countries remains, one of the continent’s largest impediments to swifter socio-economic advance.”
According to Standard Bank, almost all of Sub-Saharan Africa’s top 100 banks—as measured by assets—are in South Africa, Nigeria, Angola and Mauritius. About 80 percent of the continent’s top 200 banks are in Nigeria, South Africa and North Africa.
By Emma Okonji, This Day Live
MTN and Stanbic IBTC Bank- a member of Standard Bank Group- have signed an agreement on the provision of mobile money services to Nigerians.
Speaking at the signing ceremony, which took place at MTN’s Lagos office recently, Chief Executive Officers of the two organisations said the partnership represented a major step in Nigeria’s e-payment segment and will facilitate the provision of secure, convenient and user-friendly mobile money services to millions of people across the country.
According to the Chief Executive Officer of MTN Nigeria, Brett Goschen, MTN’s partnership with Stanbic IBTC Bank was in line with the telecommunications company’s promise to empower its customers by providing them with improved services and more innovative applications. “Deployment of the mobile money service in Nigeria is gradually changing the process of managing financial transactions in the country. We are proud to partner with Stanbic IBTC Bank on facilitating this positive change,” he said.
He added that mobile money, while bringing banking services to the previously unbanked, also opened up a wide range of benefits and value added services to the banked sector, including corporate, small and medium sized enterprises (SMEs) and individual customers.
Managing Director of Stanbic IBTC, Mrs. Sola David-Borha, said the partnership would avail the bank of MTN’s nationwide platform to provide mobile payment services and in the process break down the traditional barriers hindering financial inclusion of millions of Nigerians.
This, she said, would bring low cost, secure and convenient financial services to urban, semi-urban and rural areas across the country, opening a new channel of financial services delivery and complementing the Central Bank of Nigeria’s quest to usher in a cashless economy in the country.
“We are very pleased to partner with MTN on this strategic initiative. Our goal is to increase access to mobile money service through this platform by providing an entry point for people that would not ordinarily come into banking halls. The partnership will also provide the banked with an alternative to handling physical cash by getting them to do basic transactions using the mobile banking network. We are leveraging on our banking expertise, the large subscriber base of the MTN network and the knowledge users have of the mobile phone to deliver non-traditional, low cost financial services to all Nigerians, unbanked artisans, traders, market women and farmers among others, as well as under-banked individuals,” she stated.
The mobile money initiative, an integral part of the broad objectives of the country’s vision 20:2020 was conceived by the Central Bank of Nigeria as a result of its critical nature to achieving a cashless society which, according to the apex bank, is fundamental to the nation’s goal of becoming one of the top 20 largest economies in the world by the year 2020.
By Felix Njini, The Southern Times
The majority of Africa’s billion-plus population is locked out of the continent’s financial sector. This is despite Africa having a booming financial services sector.
Research by Standard Bank, which is among institutions painting a rosy picture of Africa’s economic potential, says growth in the financial sector – while laudable – has not been lock-in-step with the availability of financial services to the rural poor.
Banking services remain, to a large extent, a preserve of urban dwellers.
More middle-income earners have swelled the ranks of Africans demanding more sophisticated banking, thereby supporting growth in the financial services sector.
Coupled with increasing flows of private equity funds into the continent, Africa’s financial sector is well-positioned for growth.
However, there is little evidence that the growth is benefitting the majority of the continent’s dwellers.
Standard Bank research analyst Simon Freemantle argues that banking the unbanked represents both a challenge and an opportunity for transformative financial institutions.
The statistics on the population of Africans left out of the banking systems are startling.
In Zambia, for example, only a quarter of the country’s population has access to a bank or any other formal financial institution.
Freemantle says about 15 percent of Zambia’s population accesses finance outside the formal banking channels and this means that two-thirds of the country’s population is virtually financially excluded.
In Namibia, about 48 percent of the population has access to formal banking channels and the figure is 46 percent for Botswana.
The situation is worse in Mozambique and Tanzania, where less than a quarter of the population access formal banking channels.
Of Nigeria’s 150 million people, 120 million have no access to formal banking channels.
Surprisingly, in regional economic powerhouse South Africa, which is said to have the continent’s most advanced economy, a quarter of the population is excluded.
One in five adults in Africa has an account at a formal or semi-formal financial institution and the ratio of liquid liabilities to GDP on average is around 32 percent compared to East Asia and the Pacific (49 percent) and developed markets (100 percent).
In the majority of African countries, banking penetration levels are as low as five percent.
Freemantle says in Nigeria, 15 percent of adults have access to a bank account and in Uganda, only a one-fifth of the population can access a bank account at a branch.
Micro-finance institutions in countries like Kenya have helped improve access but commercial banking access is still low, analysts say.
Insurance penetration rates are also still low with the exception of South Africa, which reported the sixth highest rates in the world (12.89 percent).
On average, Africa’s insurance penetration rate stands at just 3.3 percent.
‘Access to finance has been, and in the majority of African countries remains, one of the continent’s largest impediments to swifter socio-economic advance.
‘Africa requires not only capital, but also more effective and inclusive means of channeling this capital in ways that are most productive. Robust financial systems are undoubtedly a critical cog in ensuring more rapid, and far reaching growth,’ Freemantle said.
Notwithstanding the failure by banks to spread access, Standard Bank says Africa’s financial services sector will likely make up 20 percent of collective GDP by 2020 (currently 10 percent), with much of the growth coming from retail banking.
Banking in 16 African countries will boost financial assets by as much as US$1.4 trillion by 2020.
South Africa dominates the financial services industry, accounting for 30 percent of all of banking assets on the continent.
Of total assets (US$935 billion) of Africa’s top 200 banks, about 46 percent are held by South African institutions.
Standard Bank says that virtually all Sub-Saharan Africa’s top 100 banking assets are held in South Africa, Nigeria, Angola and Mauritius.
About 80 percent of the continent’s top 200 banks are in Nigeria, South Africa and North Africa.
‘A range of local and international financial institutions have either arisen in or converged on many of Africa’s fast growing emerging and frontier economies, eager to participate in the sector’s nascent, yet compelling growth,’ Freemantle said.
Africa’s banking growth will be anchored on a rising middle-income population though challenges of introducing rural populations to banking services will remain.
The growth of the financial services sector will also be aided by increasing flows of private equity funds into Africa.
Private equity investments as of 2007 were around US$3.5 billion. There are currently 31 large fund managers in Africa and seven private equity funds dedicated to infrastructure financing.
South Africa dominates the private equity market, attracting 80 percent of all Sub-Saharan capital (Nigeria, 10 percent).
The United States and Europe are the major sources of private equity funds into South Africa.
‘The deepening of Africa’s financial sector is both a result and a driver of the strong macro-economic gains reflected across several of the continent’s core markets over the course of the past decade.
‘That said, room for growth and improvements exists in abundance,’ Freemantle said.
‘For Africa’s youthful aspirants, the ability to access finance for vehicle and home loans, to start or expand entrepreneurial ventures, or to fund further tertiary education will prove immensely supportive in driving the next phase of the continent’s erstwhile commercial re-invigoration.’
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Standard Bank plans to start sharia-compliant banking in Nigeria this year to benefit from the needs of Africa’s largest Muslim population. Stanbic IBTC Bank, a unit of Standard Bank, won a licence in principle last month and planned to offer Islamic services at its 160 branches in the fourth quarter, chief executive Sola David-Borha said on July 13.
Standard Chartered, the UK’s second-largest lender by market value, told the central bank it would like to provide the products, David Adepoju, the Lagos-based head of global markets at Standard Chartered Bank Nigeria, said last month.
The west African country, the continent’s biggest oil producer and home to about 78 million Muslims, is competing with Senegal, Egypt and South Africa in seeking to expand in the $1 trillion (R7.1 trillion) Islamic finance industry.
Central bank governor Lamido Sanusi said in June that Nigeria wanted to be a “hub” for sharia-compliant finance in the region and planned to sell its first sukuk, or Islamic bond, within 18 months.
“It is difficult to see how a country with such a large Muslim population will continue for much longer without offering its people an alternative to conventional banking, particularly given the interest in Nigeria shown by some international banks,” Abolade Kehinde, a Lagos-based senior tax manager at PwC Nigeria, said earlier this month.
The country, where about 70 percent have no access to regular banking services, aims to diversify the economy by developing financial services. Africa’s third-largest economy would expand about 7.8 percent this year, driven by the non-oil sector, Sanusi said last month.
Gross domestic product grew 8.4 percent in 2010, according to the International Monetary Fund.
Nigeria is trying to stabilise its banking industry after a debt crisis in 2009 almost led to its collapse. That year, the Central Bank of Nigeria fired the chief executives of eight lenders, pumped 620 billion naira (R28bn) into ailing banks and created a state-owned company to buy bad debt.
The Securities and Exchange Commission aimed to have a framework for Islamic financial products by the end of the year, Arunma Oteh, the regulator’s director-general, said on June 23 in London.
The central bank had granted a licence to the country’s first Islamic bank, Jaiz International Bank, the deputy governor Kingsley Moghalu said in South Africa last month.
Stanbic IBTC had a licence to begin operating Islamic banking branches within six months and if it failed to do so within that time, the lender would need to reapply for approval, he said.
Nigeria’s 155 million people are divided almost evenly between Muslims and Christians, according to the CIA World Factbook.
The central bank has faced criticism from Christian groups that the introduction of Islamic banking may fan religious tension. Saidu Dogo, the secretary of the Christian Association of Nigeria in 19 northern states, said it was unconstitutional for the regulator to define all non-interest banking as Islamic.
“If there is any system in Nigeria that can discriminate against anybody, then it is null and void,” he said on Thursday from Kaduna. “Our children will be discriminated against.”
More than 14 000 people died in ethnic and religious clashes in the country between 1999 and 2009, according to the Brussels-based International Crisis Group.
“This is a financial product,” Moghalu said last month in Pretoria. “It’s got nothing to do with religion.”
Global sales of Islamic bonds, which pay investors returns based on assets to comply with a ban on interest, more than doubled this year to $16.8 billion from the year-earlier period, data show.
The debt returned 6.5 percent in 2011. Bonds in developing markets rose 5.8 percent, JPMorgan Chase’s EMBI global composite index shows.
The Bloomberg Malaysian Sukuk Ex-MYR index, which measures foreign-currency Islamic debt sold by companies and governments in Malaysia, climbed 6.6 percent in the period.
Average yields on emerging market sukuk dropped by 8 basis points this month to 3.58 percent on Friday, according to the HSBC/Nasdaq Dubai US Dollar Sukuk index.
The rate on the Dubai government’s 6.396 percent sukuk maturing in November 2014 has jumped 17 basis points so far this month to 4.71 percent yesterday.
The extra yield investors demand to hold Dubai’s bonds over Malaysia’s 3.928 percent sukuk maturing June 2015 widened 29 basis points to 236, according to Bloomberg data.
Senegal planned to sell $200 million in local currency sukuk this year, Finance Minister Abdoulaye Diop said in June.
Egypt’s financial markets regulator in June agreed in principle on a law allowing companies to sell and trade sharia-compliant bonds.
Absa Group, the South African bank controlled by Barclays, might offer Islamic services in Nigeria if it got a licence, Louis von Zeuner, the deputy chief executive, said on August 2.
Absa opened a representative office in Nigeria in November last year and is eyeing the market potential.
“Africa is more a commercial and investment banking play but if a key market shows some movement we can’t ignore it,” Von Zeuner said. “We are mindful of the challenges.”
London-based Standard Chartered, which is interested in getting an Islamic banking licence, hoped to receive approval from the central bank within 12 months, Adepoju said on July 12.
“I don’t think it’s an accident that it’s the international banks who are pioneers; they have launched those products outside in other markets,” said Lagos-based David-Borha at Stanbic IBTC Bank, which is aiming to add 20 branches in the nation by the end of the year.