Africa’s financial sector offers great opportunity – says DHL

The Sierra Leone Telegraph: 18 April 2014

dhl logoDHL – the global market leader in the logistics industry, announces today that retail banking in Sub-Saharan Africa (SSA), is projected to grow at a compound annual rate of 15% over the next five years.

The company says that they are witnessing robust growth from their financial services customers in Africa.

Whilst the banking sector continues to play a significant role in economic development for the continent, the sector also fuelled DHL’s expansion into Africa in 1978, when global banks needed to get documentation to Africa.

sumesh of dhlAccording to Sumesh Rahavendra of DHL Express SSA, the continent’s growing economy, increased political stability, and willingness to trade with international partners, present a significant opportunity for financial service entities to expand their customer base and derive revenue from traditional banking products.

Rahavendra believes that retail banking, in particular, is a key focus for both international and regional banks, and requires these entities to extend their footprint and make financial services products available in regions previously unexplored.

According to KPMG’s 2014 Financial Services in Africa report, retail banking in Sub-Saharan Africa (SSA) is projected to grow at a compound annual rate of 15% between now and 2020.

This projected growth will see the sector’s contribution to the continent’s collective GDP to 19% – from an estimated 11% in 2009.

According to Rahavendra, opportunities for financial service companies moving into Africa include; trade finance for corporate customers, and retail banking for private individuals, which appear to be the region’s most immediate need.

“Retail banking in particular is a key opportunity, as the demand for formal banking services that enable the provision of credit and loans for vehicles and homes are growing,” says Rahavendra.

world bank in africa -NigeriaHe adds that: “This can be attributed to the burgeoning middle class in Africa, which according to the African Development Bank, has tripled over the past three decades to 355 million or more than 34% of the continent’s population.

“Whilst interest rates remain high in most countries across the continent, having access to structured banking products, and credit in particular, enables economic growth.”

The DHL chief also says that: “There is also a trend where multinational banking institutions partner with local entities who are familiar with the region, which allows them to meet the needs of their customers across diverse regions.

“Similarly, having access to partners that are familiar with the continent is the key to success for many banks expanding into the region. It is necessary to partner with suppliers that have the security, flexibility and reliability to offer quality and reliable service, despite the many challenges that the region may present.

AFRICA lab_tech“Being open to opportunities in historically unattractive countries is also key to success in Africa. Whilst perceived risks may be high, the rewards are equally so, since Africans are discerning consumers and readily pay for quality products and services.”

Rahavendra explains that despite the many opportunities, financial service providers are also likely to experience challenges in the region.

He says that: “Customs clearance can present challenges in some markets, with varying regulations and tariffs that may impact the movement of physical goods such as IT equipment, marketing material and bank cards.

“Understanding these regulations, anticipating the impact of customs clearance and the related customs charges such as VAT and duties will assist the sometimes difficult processes.”

He concludes that: “Despite new technology to enable document transmission, real document shipment numbers within the region continue to grow year-on-year.

“The financial services industry therefore continues to make a significant contribution to our overall shipment volumes, and investment in innovative solutions for this sector remains a priority for DHL Express across Sub-Saharan Africa and across the world”.

DHL says that it commits its expertise in international express, air and ocean freight, road and rail transportation, contract logistics and international mail services to its customers.

It has a global network composed of more than 220 countries and territories and about 285,000 employees worldwide; offering customers superior service quality and local knowledge to satisfy their supply chain requirements.

The company believes that it accepts its social responsibility through supporting environmental protection, disaster management and education.

 

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