STANDARD BANK CHIEF TAKES ON THE UNIVERSAL MODEL
“ Mozambique is a very, very interesting country. Among the most exciting in our portfolio today," he says. That is largely due to the discovery of huge gas reserves off the country’ s coast which could make it the world’ s third biggest exporter of natural gas, after Russia and Qatar. The bank is working with one of the fields’ operators, Anadarko, which is part of the group planning to inject more than $ 30bn into the country, a move that could treble Mozambique’ s 2016 gross domestic product.
While landmark projects such as this have the potential to single-handedly transform countries, scratching beneath the economic surface uncovers more decisive changes; namely, the response of individual entities making up the corporate community.“ You don’ t bank the macro; instead, you bank clients in the economy. And their ambitions to grow their businesses, take advantage of technology, innovation and the growth in the economies in which they operate are unbelievable,” says Mr Munro. Their passion, drive, skills and experience – the latter two having drastically improved over the past decade – will create the employment and opportunities that will see
THE FINANCIALISATION OF SUB-SAHARAN AFRICA, LARGELY DRIVEN BY THE GROWING MIDDLE CLASS’ S NEED TO ACCESS THE FORMAL BANKING SECTOR,, HAS MADE FINANCIAL SERVICES ONE OF THE REGION’ S MOST ATTRACTIVE SECTORS FOR INVESTMENT
Africa prosper irrespective of the commodity cycle and external pressures, he adds.
Controlled destiny
What would help African clients are local currency capital markets. Outside of South Africa and Nigeria, equity and debt capital markets in sub-Saharan Africa are so nascent that investment banking in the region is, by and large, limited to long-term lending kept on banks’ balance sheets. A company needing to raise a relatively large amount of funds typically cannot do so on its local exchange. It must issue a Eurobond( and take on currency risk) or look to its banks.
That said, equity, bond and commercial paper-type markets are advancing in Kenya and Nigeria, and even in the likes of Namibia and Botswana.“ I’ ve been involved in this business for 20 years, and if I look at the development in capital markets over the past five years, the acceleration is incredible,” says Mr Munro.“ But while it makes a vast difference to the development of the markets themselves, and is indeed proving to be transformative in some instances, it is small relative to global capital markets. It is also not yet meeting the needs of each market – and so the potential is quite significant.” In line with its mission statement, part of Standard Bank’ s game plan is to bring these markets closer to reaching that potential.“ Our perspective and role in building local currency capital markets is driven by our view that it’ s the secret to unlocking the real growth dynamic in these countries,” says Mr Munro.“ If they remain tied to and dependent on foreign capital, they are not in control of their own destiny. So for us, the question of local currency capital markets is a vital piece of delivering on our purpose.”
This is encouraged by moves to build a local buy-side community. The financialisation of sub-Saharan Africa, largely driven by the growing middle class’ s need to access the formal banking sector, has made financial services one of the region’ s most attractive sectors for investment. Retail and wholesale banking have received the largest levels of capital, but what is more meaningful is the attention thrust on the pension and insurance industries – both from investors and regulators that want to encourage a savings culture and build funding pools.
2016 | Business Times Africa 43