There is a new “economic scramble” taking place in Africa. But, unlike previous investment drives, which were internationally led and concentrated on the continent’s mineral wealth and prospects for infrastructure development, this one is being led by Africans as intra-Africa trade takes hold, businesses move across borders and entrepreneurs identify new opportunities.
The moves take place in two directions: from Africa into South Africa and increasingly from South Africa into Africa. The moves are being made by many mid-tier companies and family-owned enterprises — with annual turnovers of up to R2bn — which are finding the opportunities offered in sub-Saharan Africa increasingly attractive.
Within this changing environment are South African companies that have joined the expanding group of larger enterprises that contribute about 60% of South Africa’s GDP. Many of these are intent on reducing the risks of local market saturation and are looking beyond South Africa’s crowded markets. Their focus is Africa, which they believe offers growth, long-term sustainability and manageable risk.
Backing the move, in the case of Standard Bank Business and Commercial Banking (BCB) clients, is the seamless transition that facilitates business expansion by offering support across 15 African markets in which Standard Bank provides local knowledge and expertise, as well as technology links that offer access to information about all companies within a group operating across several markets, while also offering access to relationship managers. New opportunities for expansion further into the network are continuously being assessed.
Our support for companies within our footprint is bolstered by our top-three status in mature markets, mainly in the southern and central regions of Africa, and to attain a 10% market share in our growth markets, typically in the western and eastern regions.
Improved macroeconomic indicators, which offer the prospect of greater profitability and increased market shares, add to Africa’s appeal, especially from the standpoint of bodies such as the Economic Commission for Africa which points out that Africa is home to what is expected to be some of the world’s fastest-growing economies in 2024.
Kenya, for example, reported a GDP growth of 5.6% in 2023, in contrast to South Africa, which, despite a GDP of about $400bn, grew by only 0.6% in 2023.
The compelling case for intra-African trade and expansion into new markets by South African companies is also being driven by countries such as Nigeria and Kenya which are becoming hubs for tech innovation and investment, allowing South African companies to capitalise on tech advancements, while becoming competitors operating from an expanded African base.
Policy and regulatory challenges to trade are steadily being swept aside by the establishment of the African Continental Free Trade Area (AfCFTA). The treaty has become a significant force for change by encouraging greater economic integration, development, and prosperity in Africa; while opening markets worth $3-trillion and representing a total population of about 1.3-billion people.
As African companies benefit from sourcing supplies and materials from neighbouring countries, BCB is opening additional opportunities for trade growth outside Africa.
African businesses are increasingly driving intra-African trade and entrepreneurial activities across the continent
Through its partnership with the world’s biggest bank, the Industrial and Commercial Bank of China, the bank links clients to opportunities offered by the African and Chinese economies. Where required, clients can be connected to Chinese trade agents to assist with negotiating prices and trade conditions.
BCB also participates in the yearly China International Import Expo (CIIE), introducing African businesses within its 20-country footprint and offering them a chance to identify opportunities at an event that attracts more than a million visitors and 400,000 registered buyers.
African businesses are increasingly driving intra-African trade and entrepreneurial activities across the continent. We are proud to be the only South African bank that has used the CIIE as a platform to help our export-ready African clients gain access to the Chinese market through exhibitions and matchmaking to pre-vetted Chinese importers. This movement underscores the potential within African markets and highlights the role of institutions such as Standard Bank in facilitating seamless business expansion.
By leveraging local expertise, technological advancements and international platforms such as the CIIE, we will continue supporting companies wishing to take advantage of new opportunities across the continent. As regulatory barriers are reduced and economic integration strengthens trade opportunities, we will actively help businesses venturing beyond their home borders to grow and prosper.
• Blackie is CEO of business and commercial banking at Standard Bank
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