International banks have for the past few years been divesting from Africa. Though the continent is still brimming with potential for growth, these institutions have chosen to concentrate on their core markets. At least nine international banks have withdrawn from 32 African countries, according to an Oliver Wyman analysis.
Taking a closer look at the market, retail banking has faced a range of challenges, including economic shocks, regulatory uncertainty, currency depreciation, sovereign debt crises, technological disruptions and the rise of dominant local players. The high capital costs required to maintain operations in Africa have compelled some banks to exit the market and reassess their geographical footprint to enhance shareholder value.
Nonetheless, significant opportunities remain in Africa for banks that adapt to the evolving market. South African banks, which already have a strong presence across the continent, are particularly well-positioned to capitalise on the opportunities, especially as they seek growth outside their stagnating home market.
Africa presents a major growth opportunity
Sub-Saharan Africa still offers considerable potential. According to the World Bank, GDP growth in the region is expected to rebound to 4.2% in 2025, opening up new opportunities for financial institutions.
The World Bank estimates that the Africa Continental Free Trade Area (AfCFTA) could increase incomes on the continent by 7%, or $450bn (R8-trillion), by 2035. As individual wealth rises, so will the need for more diversified financial services and the demand for banking services.
While one or two large banks dominate many markets in Sub-Saharan Africa, there are also many smaller banks competing for limited market share, especially in countries like Kenya and Tanzania. As regulators tighten requirements — such as increasing capital reserves and enforcing stricter compliance — smaller, less stable banks may struggle to keep up. This pressure is likely to lead to consolidation, with smaller banks merging or exiting the market. For well-capitalised African banks, the exit of international players creates a unique opportunity to step in, capture their market share, and expand operations as the competitive landscape evolves.
South African banks already seeing success in Africa
Several South African banks have already found success expanding into other African markets. Institutions such as Nedbank, Standard Bank, FirstRand, and Absa now have a presence in several African countries. Factors including higher interest rates, capital optimisation strategies, and a focus on corporate and investment banking (CIB) have been key drivers of revenue growth.
In fact, South African banks with significant operations outside the country have demonstrated stronger overall growth, highlighting the benefits of regional expansion. For example, analysis of 2022 financial results shows that Standard Bank achieved the highest revenue growth in Africa (28%) among South Africa’s biggest banks; driven by balance sheet strength, higher interest rates, and relatively stable currencies. The same analysis shows that Standard Bank’s revenue from African markets has grown from 20% of its total revenue in 2014 to 39% in 2023. Similarly, Absa reported 21.3% revenue growth across 12 African markets in 2022, further demonstrating the success of its African expansion.
Scaling strategies for growth in African banking
As African banks concentrate on sub-Saharan Africa to fuel their growth, they have multiple avenues available to expand their operations across the continent.
One approach is to specialise in particular target segments, such as businesses or high-net-worth individuals. This enables banks to focus efforts and investments, while also concentrating on high-growth areas and creating innovative products for these segments.
Another strategy is to adopt a digital-first approach. By leveraging digital tools, banks can streamline processes, reduce costs and improve service delivery. This strategy can also drive digital transformation across all business units, improving both customer experience and operational efficiency.
Banks can also pursue an ecosystem and platform-based approach, which allows them to distribute third-party products more efficiently and reach new customer segments.
Banks can tap into the rapidly growing African fintech landscape by either offering similar services or partnering with fintech companies. This provides immediate access to a larger customer base, introduces new technologies and enables banks to differentiate themselves in the market through deeper market insights and innovative solutions.
With South Africa’s sluggish economy, the country’s banks must look beyond their borders to achieve medium-term growth targets. The African banking market offers enormous potential, especially in light of the recent exit of international players. If South African banks fail to seize this opportunity to expand and innovate, they risk letting others take the lead.
• Romagny is partner, financial services, at Oliver Wyman
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