1、Financial Services PracticeAfrican banking:The productivity opportunityAfrican banks can increase their productivity to enhance competitiveness,build resilience,and deliver new value to customers even in the face of a tightening global business environment.by Omar Dayi,Franois Jurd de Girancourt,Ahm

2、ed Fjer,and Zandile MakgathoDecember 2022In 2022,African banks are showing growth despite significant headwinds,including macroeconomic uncertainty.Revenues have recovered and are now higher than prepandemic levels,driven by sustained volume increases,higher interest rates,and stable risk costs.1 Ho

3、wever,in all African geographies except Kenya,banking return on equity(ROE)still remains one to two percentage points(pp)below pre-COVID-19 levels,despite a strong rebound in 2021(Exhibit 1).Part of the reason for this is that many of the downward pressures on ROE in African banking predate the pand

4、emic.To return to profitability,banks may therefore need to look deeper to address productivity blocks within the sector.In this article,we identify six focus areas where better resource allocation could help turn the corner on productivity and deliver new value to customers.The declining profitabil

5、ity of African banks is a long-term trendSince 2016,profitability in Africas five biggest banking markets(Egypt,Kenya,Morocco,Nigeria,and South Africa)has been on a steady decline,decreasing by an average of two pp over the past six years.Egypt has experienced the steepest decline(9.5 pp),followed b

6、y South Africa(2.7 pp).Coming off of a low base,Nigeria is the only major African economy that has seen an increase in banking ROE since 2016(3.6 pp),driven by a decline in risk costs following Nigerias economic reforms following the 2016 recession,a partial recovery of oil prices,early easing of CO