http://www.economist.com/news/finance-and-economics/21572768-across-africa-banks-are-expanding-their-returns-arent-continent-dreams
Africa's banking market is in its beginning stages of development, which attracts a lot of banks from around the world. Some parts of the continent like banking district of Johannesburg are at their top development, comparing closely to Western European countries. The regions that offer world-class services are limited and the majority of the continent still consists of poverty-ridden townships where people never used banking services. Bankers typically start expending into new regions where GDP per-person reaches about $10,000, which has been a significant hurdle for most of the continent. Additionally, banking technologies developed by firms such as MasterCard provide domestic and regional banks with tools necessary to run credit-card business, which makes it even harder for the foreign competitors. Foreign competitors face a problem of staring from the scratch or acquiring local banks, making it costly and not profitable. Another approach that some international banks take is the top-down strategy, where they help governments sell bonds and offer banking services to the biggest companies in the region. Even though this approach helped built geographically vast networks their local presence is very limited. Foreign banks have to work in the light of uncertainties as well as compete with specialist rivals that concentrate on emerging markets. There are certainly numerous opportunities to earn high returns, but foreign bankers have to take risks and go against uncertainties.
This potential expansion of banking in Africa could do wonders for several countries. I hope some African banks can successfully expand into other countries to get their economies running. It should be interesting to see if our economic models for money creation will apply or if we will have to reevaluate the models.
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