In the rush to be part of Africa’s growth story, we can’t turn a blind eye to
the challenges. If Africa is to sustain its rate of growth in the long run,
it needs electricity, roads, ports, deeper capital markets, better jobs,
more credit for SMEs – the list goes on. A recent report we commissioned on
Africa showed the massive, job-creating potential of Africa’s SMEs, with
more than 400 jobs supported for every $1m of bank financing, more than
double the employment created in other sectors. SMEs are crucial drivers of
economic growth, yet lack of credit is still a major constraint for these
Worse, and affecting all of sub-Saharan Africa, is a desperate lack of power.
Africa, as a whole, generates just 4pc of the world’s power and the bulk of
this is in South Africa and the North African region.
As many as 500m Africans don’t have access to modern energy and it’s holding
back their economic potential. Sustained, large-scale investment in power
generation is critical if African countries are to go on delivering
impressive economic growth rates while creating better lives for people.
That’s why we support the five-year Power Africa initiative, launched last
summer by President Obama, to invest in power projects that will deliver up
to 10,000 megawatts of new electricity generation.
We know there is massive demand for this and the programme is proving
successful across a number of African countries. In fact, we’re on course to
exceed our $2bn financing pledge – over 20pc of the total private sector
commitment – significantly ahead of time.
It’s clear banks can help African businesses grow and create jobs, and not
just by investing in infrastructure. We can encourage clients from other
parts of the world to consider investing more in the continent. We can use
our local market knowledge, built up over many decades, to help connect
Africa to the world, supporting trade along multiple corridors – including
with the UK, in line with David Cameron’s goal to catch up on foreign trade,
doubling UK exports and getting 100,000 more UK companies exporting by 2020.
Above all, we can play a role simply by staying open for business, supporting
clients in African markets consistently over the long term. Bank financing
facilitates economic activity, and its impact is not limited to the
businesses and individuals that receive it. Our recent report on Africa
showed that our financing and operations in Sub-Saharan Africa directly and
indirectly support some 1.9m jobs and 1.2pc of GDP in the region.
Other roles are less obvious but also make a difference, such as helping
African governments to build robust banking systems that give African
consumers and businesses better access to finance. This includes making sure
there’s a well-trained financial sector workforce.
Around 98pc of our more than 8,000 employees in Africa are African and many
will go on to build their own businesses or run companies and financial
institutions. While they work for us, we encourage them to share knowledge
with communities, teaching financial literacy to young people or training
small business owners.
Banks can’t attract the capital they need without generating value for
shareholders but nor can this value be a goal in itself. At a time when
banks are coming in for a lot of criticism – some of it justified – it’s
worth remembering these crucial roles banks can play in the societies where
As Africa opens up, attracting interests from investors and business around
the world, I call on bankers to focus their efforts on business decisions
that support long-term growth in communities, as well as commercial success.
Mike Rees is deputy group chief executive of Standard Chartered Bank