In any economy, banks play the critical role of re-allocating capital, from surplus areas into deficit areas. It is a role that sees them take deposits from the public and use the same to issue loans to businesses, both large and small. But that process hasn’t been happening much in Sub-Saharan Africa. Instead, banks, motivated by risk-aversion, have been funneling liquidity into the coffers of governments through government-issued debt securities. SSA banks must get back to the business of lending to the private sector if they are to escalate shareholder returns.
Economies dependent on oil exports have been devastated by the sharp drop in oil prices, including Africa’s second-largest oil exporter, Angola. Despite the gloom, Banco Angolano de Investimentos, the country’s largest private bank, has swum against the down currents of its banking peers by delivering net income growth and successfully exploiting numerous rewarding market opportunities.