UK-based banking group Standard Chartered has been present in sub-Saharan Africa for 150 years, with a current footprint in 15 countries in the region. At the recent Ernst & Young Strategic Growth Forum event in Cape Town, Standard Chartered CEO for Africa, Diana Layfield, outlined four reasons for the bank’s success in Africa.
Market information on Africa is often not easily accessible. “Not everything is available on-screen through different agencies, as it is in much of Western Europe and the USA. It is a very, very different world where actually understanding at a deep local level is critically important.”
She said that because Standard Chartered has been active in Africa for so long, it has been able to acquire market information, which helps it with risk mitigation as well as to identify opportunities. “[It] gives us a depth of knowledge and understanding in a region where information is not perfectly transmitted.”
Operating as a local player
Another reason for Standard Chartered’s success is that it operates as a local bank in each African market. Thirteen out of the bank’s 15 sub-Saharan Africa CEOs are from the continent. Ninety-seven per cent of the bank’s staff are also locals. “We are absolutely an international bank, but we are very much a local bank as well. We’ve done that consciously,” said Layfield.
“So for us it is incredibly important to train people in the local market,” she added.
With the continent’s perceived political and economic risks, some companies might be tempted to make a quick buck and get out. However, Layfield explained that African countries are increasingly demanding from foreign companies to invest for the long-term. “People want to see long-term investment. They don’t want to see … someone who drills an [oil] well and then leaves tomorrow. You have to be prepared to ride some of the volatility in the market.”
She said companies also need to clearly communicate the value they bring to a country. “We did a study with a business school to look at what contribution we made within Ghana, one of our key markets. It transpired that we were directly or indirectly responsible for about 3% or 4%… of employment in the country, through both the work that we did, and the work that we funded for our clients. We represented 2.6% of the Ghanaian GDP. So we could show that by funding local businesses, employing people and training others, that we actually made a meaningful difference to the economy. And it is that point about being very clear on your contribution, and working with the government, and with communities, that probably has made the most difference for us over time.”
“Bringing something different is important if you are an international institution. What is it that you bring, that a local business can’t? In some cases that is skills, in some cases that is product. We have to be clear on what we do. In our case it is being this bridge between the international banking world and the local banking world,” she added.
Portfolio of investments
Layfield said that because Standard Chartered’s sub-Saharan African operations are spread out over 15 countries, it allows the company to absorb short-term volatility in certain markets.
“For us having a wide portfolio of countries across Africa has made a big difference in terms of the consistency of our results… It isn’t necessarily the same markets that perform well every year. So having an understanding of your risk across the continent, or knowing whether or not you want specific risk just in one or two markets, or whether you want a broad sweep of the continent – I think makes a big difference.”