Africa: New Frontier For Private Banking

A rising entrepreneurial class is fueling the growth of African private banking, and competition is heating up.


Since the early 2000s, sub-Saharan nations have been increasing their ranks of wealthy citizens through a phase of rapid economic growth that shows little sign of stopping.

The growth has been driven in part by a rising tide of tech-savvy entrepreneurs and local business owners who are transforming their ventures into larger, better-established businesses. Examples range from Nigeria’s Landwey, a real estate development and management company that now has a yearly turnover of about $14 million and employs 370 realtors, to Zimbabwe’s Spidex Media, a digital-advertising company that now holds brand portfolios approaching $1 billion in Zimbabwe, Zambia and South Africa.

Even the collapse of the commodities market served in part to stimulate local efforts to diversify away from commodity-export reliance. Biomax, an Egyptian biogas and biofertilizers company, and UMT, which invented a non-blood malaria test, are among many young companies innovating to address local problems, rather than trying to serve a global market. And the global financial crisis of 2008 brought home many talented Africans with new technical skills and management experience.

At the same time, there are growing numbers of multinational expatriate executives and managers based in Africa who are earning the kinds of salaries required to qualify for private banking services—R1.5 million ($106,000) per year at Nedbank or FNB (First National Bank). Their ranks are generating new business for private banks as well, says George Guvamatanga, a former managing director for Barclays Zimbabwe, which is now First Capital Bank.

Country # of Millionaires % Growth (2006-2016)
South Africa 40,400 8
Egypt 18,100 -15
Nigeria 12,300 40
Kenya 9,400 93
Angola 6,100 82
Morocco 4,600 -10
Algeria 4,500 -18
Mauritius 3,800 230
Namibia 3,300 21
Ethiopia 3,100 219

These growing groups of wealthy and ultrawealthy individuals are fueling a lively expansion of private banking across the continent. At the end of 2016, individual wealth on the continent totaled $2.2 trillion, according to Africa Wealth Report 2017, a study by Johannesburg-based consultancy New World Wealth on behalf of Mauritius-based AfrAsia Bank. That included $800 billion held by the continent’s 145,000 high-net-worth individuals (HNWIs), defined as those with net assets of $1 million or more.

While some banks—notably Barclays—have withdrawn from Africa or from specific countries, many financial entities new and old are battling for larger shares of the growing pie of Africa’s wealthy. Absa Bank, which has operations across the continent, is one of several expanding its private banking operations from local to regional to continentwide. In South Africa, a host of new digital banks serve HNWIs, with Investec Digital Private Bank emerging as a leader in this category and Discovery Bank a 100% digital newcomer. Regional, global and digital private banks are wooing African clients not just with high-end financial services, but with perks such as loyalty cards and access to private clubs.

Wealthy Africans expect high-quality financial services and products. They seek, for example, “cash-based investments, investment in government-issued securities and broad-based equity mutual funds,” says Rahul Shah, head of Financial Equity Research at Tellimer.

Investec Private Bank combines investment banking and wealth management, offering international banking and cross-border transactions. Its South African clients can open sterling-based accounts in the UK that can be used to make and receive payments there or simply as offshore accounts. Standard Bank offers portfolio management and discounted access to the bank’s Online Share Trading platform.

But wealthy Africans also want more. “Our relationship approach focuses on both the client and the family, offering wealth management, private banking solutions and advice that addresses the full spectrum of our clients’ lifestyle needs,” says Dineo Molaba, communications manager at South Africa’s FNB.


Demand for offshore banking is expanding from established markets like South Africa to smaller countries such as Zambia. Stanbic Bank Zambia says its private banking service offers access to offshore products and facilities through Standard Bank Offshore, a Standard Bank subsidiary located in three offshore centers: Jersey, the Isle of Man and Mauritius. Technological advancements are making it easier to offer offshore and after-hours services to private banking clients via mobile, online and telephone, says Absa’s Kumar.

In Nigeria, tax and advisory firms are partnering to offer tax seminars to high-net-worth individuals. Earlier this year, Andersen Tax, a global consultancy, partnered with Fidelity Private Banking to deliver a program on changing trends in Nigeria’s tax landscape.

Whither the Wealthy?

South Africa is hands-down the leading market for private banking services. “You need to follow the countries with the largest economies,” says Eric Enslin, head of Private Banking at South Africa’s FNB Wealth. “Outside South Africa, you have the East and West African domains, which are looking very attractive. If you look at Nigeria, it’s always a contributor.”

Country 2006-2016 2016-2026
Mauritius 230 130
Ethiopia 219 100
Rwanda 107 100
Uganda 97 100
Kenya 93 80

But tiny Mauritius has the most wealth per capita; World Bank data puts it at $97,018 as of 2014 (latest available), almost four times the sub-Saharan average of $25,562. Mauritius is also currently minting the most new millionaires (see chart). The island attracts wealthy individuals from across the continent and around the world set up offshore portfolios in this haven of no taxes on capital gains, dividends or estates, and no capital controls.

Enslin sees opportunity even in Zimbabwe, where the financial-services sector is in disarray owing to a currency crisis.

Of course, banks nowadays can serve anyone anywhere, and Africans seek to benefit from the same advanced digital tools the rest of the world enjoys. “Internet banking has also been particularly popular in the private banking segment,” says Faith Mwangi, senior Financial Sector investment analyst at Tellimer, a London research and asset management company.

Vimal Kumar, chief executive of Retail and Business Banking for South Africa-based Absa Group’s regional operations, says technology is key to scaling private banking in Africa. Absa recently moved its technological banking platforms from Barclays’ servers in the UK to its own servers in South Africa as part of Barclays’ divestment from its African operations.

All this will not be enough for private banking clients in Africa, however, Kumar cautions. As business expands, customer service is becoming an issue as well, with some clients complaining of sluggish service and exorbitant fees. They are taking to social media to vent their frustrations.

“Customers are going to demand more value-added services,” he says. “They are becoming more sophisticated, and traditional banking services are no longer sufficient.”

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