“As our economies in Africa have grown there’s an increasing demand for the sophistication of financial services products,” said David Cooke, director at Actis in a recent KPMG Africa Conversation Series entitled ‘Financial Services: Enabling Africa’s Growth’. The discussion brought together a panel of experts from across the continent to examine the critical role that financial services plays in unlocking Africa’s full potential.

Africa’s growing consumer base and its US$1.9 trillion total purchasing power, means that the continent’s comparatively immature financial services sector offers considerable growth opportunities.

Junior Ngulube, CEO of Munich Re Africa, said that these growth opportunities are related to the recent developments and trends witnessed across the continent. “What we are seeing happening now with economic growth and disposable incomes going up, is that we see people coming into the financial services market. They are buying assets, they are buying their first homes and first cars some of them, and they need to protect those assets. That’s a growing market for us as insurance companies, and the insurance penetration in this market is increasing as a result.”

Nicholas Young, COO for Citibank Africa, agrees. “I think the increasing wealth and affluence and consumption that people have is driving different behaviours. People can afford more, and they can save more.” He added that the continent’s natural resources and growing investment from the BRICS are both interrelated and key to the economic developments seen across Africa.

“There is a lot of rapid change going on in the financial services sector, right down to at the consumer level,” added Cooke. “But we’re starting to find some really interesting opportunities in this cross-over between how consumers are – if you will – consuming financial services products. The rise of debit cards, credit cards, is just tremendous.”

One of the opportunities lies in the ability to focus on different regions in Africa, as opposed to relying on one country. “Invariably, given the size of the economies in Nigeria, in South Africa, and for us in Egypt as well, that is where a lot of our time and effort goes into looking for new opportunities, but I think what is happening is quite interesting in terms of those exciting businesses are now starting to take a much more regional view, and those for us really are the gems,” continued Actis’s Cooke. “We like the benefit of not relying on any one specific country on the continent to generate returns from investors.”

Bisi Lamikanra, head of management consulting at KPMG Nigeria, said that one of the dimensions of growth that she has seen from working with banks is in the retail banking business. “It is clear, if you talk to every bank now, that the future is the bank that can grow its retail business in spite all the challenges that we have,” said Lamikanra.

So what are some of these challenges and how can they be overcome? According to Young, Africa is often seen as an enigma by outside investors. “It is very big, there is a lot of dynamics … it is broken up into a lot of different geographies and countries and there are a few economic groupings that are easier to do business in or make more economic sense and people can target those. However, the reality is that one needs to almost have a tailored approach for each market and each country. So having the flexibility to tailor your investment strategies, say for Kenya or Nigeria, they can be similar but they need to be different because the realities of the market in which one operates is different,” said Young.

He added that “global partners can be useful in many ways in terms of understanding how to get things done and being effective very quickly upon investing in the country, but one also needs to have local partners with the knowledge of how to get things done because that can be your differentiator.”