Banking On Africa: Social And Economic Impact
All eyes are on Africa. Over the past decade, the continent has consistently grown faster than the world as a whole. And unlike previous resource-driven booms, this time Africa’s success is built on foundations that should be sustainable for the long term.
A new and confident African middle class is emerging, and trade is expanding rapidly, notably with Asia. Meanwhile, Africa is leapfrogging old technologies and embracing the digital revolution, leading the world in innovations such as mobile payments.
Across Africa, the opportunities are compelling. Yet, it would be wrong to deny the challenges – social, political and economic – that face the continent.
Despite Africa’s strong performance, poverty and income inequality continue to be significant challenges. Job creation is not keeping pace with the continent’s rapidly growing population. Lack of investment in infrastructure has left much of Sub-Saharan Africa with an insufficient and unreliable power supply, hampering long-term growth.
Jobs are essential to eradicating poverty and fostering real development in economies. And banking plays an important role in job creation. Banks fuel employment by providing credit and other financial services that help businesses set up, trade and expand – and by working with governments to remove barriers to economic activity.
We commissioned an independent study to measure the role of Standard Chartered, and of banking more broadly, in generating trade, growth and jobs across Africa, and to find out what we can do better.
In many ways, and for a long time, Africa has been home for Standard Chartered. We opened our first branch on the continent more than 150 years ago. We are investing for the long term in our African franchises, using our knowledge of different local economies, our deep and long-standing relationships and our global network, to support the people and businesses driving trade, investment and the creation of wealth across the continent. We also invest heavily in the development and training of our people – over 98 per cent of our employees in the region are African.
By measuring ripple effects through the economy, this study shows that our operations and financing support some 1.9 million jobs in 13 of the 15 markets where we operate in Sub-Saharan Africa. The bulk of these jobs are in advanced, high value-added sectors – the fast-growing manufacturing and service industries that are changing the face of Africa’s economies.
The study also highlights how we help to remove barriers to job creation, by using our relationships and capabilities in Asia, Africa and the Middle East to mobilise offshore capital for crucial infrastructure investment. Last year, for example, we committed to financing $2 billion in African energy projects, as part of the five-year Power Africa initiative.
Yet, our role is by no means limited to provision of finance. We support job creation in a myriad of other ways – by training local talent, or by introducing innovations that make it easier for people and businesses to access finance, or by helping to develop financial markets and infrastructure that underpin economic activity. In the past few years, we have advised the governments of Nigeria, Ghana and Senegal on their sovereign credit ratings, and worked with Bank of Ghana on the country’s national payments strategy.
This is our fourth and most comprehensive impact study to date, following country-specific reports on Ghana, Indonesia and Bangladesh. As before, we are grateful to Professor Kapstein and Dr René Kim for providing their valuable insights. We will use these to guide us as we continue to evolve our business in Africa.
The study confirms, once again, that small and mediumsized enterprises (SMEs) are powerful job creators. We will invest more time in looking at how we can work with our large corporate clients to support more SMEs through the supply chain. This year, we committed under the Clinton Global Initiative to expand our SME training programme to 5,000 SMEs, many of them in Africa.
We will also explore how we can help create greater inter-linkages between different economic sectors, from farming to manufacturing and distribution; it is through these crucial ‘transmission channels’ that banking translates into real development impact.
Done well, banking is the fuel on which prosperous and healthy economies depend. Articulating what banks do and why it matters, is vital in rebuilding the trust between banks and society that was lost in the wake of the global financial crisis and, six years on, has yet to be fully restored.
In all of our markets, Standard Chartered is committed to supporting our clients and customers, creating value for our shareholders and making a broader contribution to society. We are banking on Africa, enthusiastic about the continent’s potential, and committed to being part of its future.