From a new Accenture report titled At the tipping point: Financial services in Africa comes of age:

The Accenture research study… highlights new growth triggers for financial services, pointing to rapid market development in some countries. While the paths to growth vary, these triggers often include innovation through (very) low-cost offerings and distribution, dramatically opening up access to financial services; investment in physical infrastructure and financial infrastructure development through more sophisticated regulations, and institution building; strong economic growth and inward investment in the economy, including by financial institutions following their clients into new countries; and growth in consumer markets driven by demographic change, including the rise of the urban middle class, and the growth in microfinance-supported businesses in rural areas.

In Accenture’s view, banks and insurers will not achieve sustained success in Africa’s fast-developing markets simply by replicating traditional business models from developed countries. New strategies are needed — including adapting retail banking models to local cultural needs, and finding new ways to serve low-income customers profitably. Contributing to nationbuilding and the development of local communities is a further prerequisite in many countries. And attempts to roll out standardised models must take into account differences in local business and regulatory environments.

The report [pdf].

According to a report by Bain & Company, quoted in a Reuters article:

Bain Partner Andrew Tymms said the continent’s financial services industry will continue to grow at a compound annual rate of 15 percent to 2020, outpacing gross domestic product growth.

“Retail banking will grow faster than corporate banking … to make up 38 percent of banking revenue by 2020, bringing in the previously unbanked population and shifting the experienced to sophisticated products,” Tymms said.

The study, “Financial Services in Africa: A Decade of Opportunities” reckons financial firms will make up 19 percent of Africa’s gross domestic product by 2020, compared with 11 percent in 2009.

H/T @AfricaResearch, whose blog you should check out.

Mallam Lamido Aminu Sanusi has been named as the Central Bank Governor of 2010 for both the African continent and the entire world, by the prestigious Banker Magazine.

The editor of the magazine, Brian Caplen, says that few candidate names generate an overall consensus on judging panels, and yet, when it came to finding the best global central bank governor of the year, Mr Sanusi was chosen unanimously.

From the BBC.

If you have been following the news, you know about the shake-up, the rescue and the proposal to buy off bad loans. Reuter’s report on the current state of the industry:

Two of Nigeria’s nine rescued banks are in talks with foreign investors about recapitalisation but most of the others are more likely to be taken over by local rivals, banking sources said on Thursday.

Sub-Saharan Africa’s second-biggest economy rescued nine lenders deemed to be dangerously undercapitalised in a $4 billion bailout last year. The central bank has been trying to find new investors to help recapitalise them since then.

Nigeria has set up a state-run asset management company (AMCON) to help absorb up to 2.2 trillion naira of bad bank loans, but this will only bring the rescued lenders back to zero shareholder funds.

“AMCON will do the non-performing loan purchase but after that there will still be a hole, and that hole will have to be filled through mergers,” one senior banking source said.

Banking sources said two of the lenders — Bank PHB and Union Bank — were in talks with foreign investors.

Four more are talking to local banks, one has raised funds and will scale down to survive, while two others have yet to find potential suitors, the sources said.

Read in full here.

Apparently, the fairly fragmented but resilient world of money transfer is getting consolidated:

Sigue, a US money-transfer company strong in Latin America, is buying the money-transfer business of Coinstar for $41.5m. Coinstar’s network allows users to transfer cash to 23,000 points worldwide – and Sigue’s CEO, Guillermo de la Viña, says the acquisition will make his company “one of the largest global money transfer companies with pay out locations in over 130 countries.”

More deals may follow this year. Unistream, a Russian money transfer company with 30 per cent market share in former Soviet countries, is looking towards the Gulf, the second-largest source of private financial transfers after the US. Reuters recently reported that Western Union and MoneyGram were looking at ways to expand into Asia.

The moves testify to remittances’ resilience. Flows to developing countries shrunk in 2009, down 6 per cent to $307bn, as immigrants in the US and elsewhere lost jobs (particularly in construction) and, in many cases, returned home. However, a new World Bank report forecasts that remittances will rise by over 6 per cent in 2010 and over 7 per cent in 2011.

All that is well and good, but how long is it going to take for someone to figure out how to include everyday Africans in the global, ‘borderless’ world of finance? I am thinking of payment services, not remittances services. In the past one month, three friends who are based in Nigeria have asked me whether I can help them open a Paypal account. Some people they are doing some work for agree to pay only through Paypal. They refuse to use Western Union because, well, they don’t trust the Nigerian end of the service.

Don’t tell me that nobody thinks that there might be some money to be made in Africa from that. Or that they are too scared of bad, fraudulent Nigerians to try and introduce such services there. We all know that no matter how sophisticated and bad you think Nigerian fraudsters are, the ones in developed countries are much worse. If those services can be made to work securedly in developed countries, there is no reason they shouldn’t be able to get them to work in African countries.

Or am I missing something?

A Lagos High Court has given nod to 80 aggrieved investors, bonded in a class action suit, to seek legal remedies against a Lagos asset management company, BGL Ltd., for an alleged N30 billion financial fraud in a private placement offer.

In the nation’s first class action lawsuit in the margin loan crisis, Justice Charles Archibong of the Federal High Court, Ikoyi, Lagos, certified the suit and appointed two investment houses, EP Staff Investments Ltd. and Gold and Gate Resources Ltd., to act as representatives for “all the investors” who subscribed to BGL’s PP.

How did it happen?

In November 2007, BGL Limited (now Plc), a registered broker and capital market operator, advertised a Private Placement offer of 4.3Billion Ordinary Shares at N7 per share to raise N30.1Billion ($250million).

BGL approached some staff of Shell Petroleum Development Company (SPDC) in Port Harcourt whom they considered “a select list of potential investors” with the capacity to subscribe to “a minimum of 1,000,000 shares and multiples of 100,000 shares thereafter”.

After only few of them purchasing the minimum N7million share units, BGL encouraged others to form a Special Purpose Vehicle (SPV) in order to avail them funds it had obtained from First Inland Bank (now Finbank), the lead underwriters for the Private Placement.

BGL promised them that “within the next 18-24 months”, it would be listed on the Nigerian Stock Exchange via an Initial Public Offering and that the value of the shares would increase to between N15-N30 by December 2008. It also said that allotment of shares and share certificates would be issued soon after the placement.

BGL’s stock broking subsidiary, BGL Securities Ltd., said it would provide an Over the Counter (OTC) market on “Bloomberg” and “Reuters” for shareholders seeking liquidity, while it was promised that an Annual General Meeting (AGM) would hold after the placement.

But

By August 2009, Finbank Plc. was found guilty of excessive non-performing loans. BGL with Finbank officials then decided to shift its debt unto BGL shareholders who received margin loans, by allegedly forging documents authorising a facility from the bank to them.

To achieve this, a staff of BGL’s Corporate Treasury, Bolaji Oyemade, said “there is urgent need for BGL to provide Finbank with the passport photographs of our shareholders who took advantage… to invest in BGL PP.” The photographs were said to be needed to update KYC (Know-Your-Customer) requirements with Finbank.

Mr. Oyemade scheduled a meeting between BGL, its shareholders and Finbank at the bank’s head office in Lagos on August 31 and September 2, 2009 where EFCC operatives led by Wakili Mohammed, an Assistant Commissioner of Police, allegedly intimidated, harassed and detained the shareholders so as to force them sign documents and issue post-dated cheques showing their perceived indebtedness to Finbank.

Read the whole story here. Have to keep my eye on this.

From FT reporter Tom Burgis:

Two of Nigeria’s most prominent bank chief executives are to be forced to stand down under new rules introduced by the central bank as part of the governor’s ongoing tussle with some of the country’s most powerful tycoons.

Lamido Sanusi, who took over as governor in June, has already rocked the financial sector in Africa’s second largest economy, dismissing the executivesof eight banks during a debt crisis brought on by reckless lending. The central bank bailed out stricken banks to the tune of $4bn.

In the latest move, the country’s 24 banks have been instructed to place a 10-year limit on the tenures of chief executives. “All CEOs who would have served for 10 years by July 31 2010 shall cease to function in that capacity and shall hand over to their successors,” the central bank said.

The purpose of the new rules was to address “corporate governance issues”, the bank said.

Full story.

Check here for reactions from Nigerians.

At the Association of Social Anthropologists Blog: Most notably, banking conferences – like marriages – provide a chance for a social group to assemble iin one place, in a way that reaffirms their common identity and enabled them to forge new alliances, often in opposition to others. It also provides a forum for the group to restate their core assumptions and ideas in a manner that allows the group to reproduce and disseminate a cognitive map, over time. Some of this is done overtly, and self-consciously, with power-point presentations on a podium, or deliberate, carefully chosen branding and marketing campaigns. However, the most powerful forms of intellectual ‘reproduction’ occur through more informal means: the gossip around the bar about bonuses (that reinforces the dominant assumption that bigger pay is tantamount to success); the use of complex mathematical language to discuss credit (which makes it acceptable to talk about money for hours on end, without ever mentioning a human being); the sartorial conformity, as bankers all wear chinos and expensive watches/ear-rings (which underlines the idea that wealth is unifying source of identity, but only when it is not overtly displayed); the widespread use of speaker ‘biographies’ (which also stress the common educational, quasi-kinship bonds that link the group), or the use of ‘on-the-record’, or ‘off-the-record’ conventions for journalists, (which reinforce the assumption that bankers have a right to control information flow to the outside world.)

However, the other feature which makes investment banking conferences oddly similar to marriage rituals is that they are also one of the few occasions when ‘outsiders’ have a chance to slip into the banking world, and properly observe the interactions of the group, and the way that they discuss and display themselves. This is not always possible: just as some weddings might be limited to a tiny group of invited guests, some conferences will tightly control the members, and ban outsiders, such as the media. Yet, the bar to entry can often be overcome, since investment banking conferences are so big, and bankers are meeting away from their own, private space in the office or trading floor. So I, for one, plan to keep attending as many of these events as possible – only this year, in a symbolic nod too the new mood of austerity, the conferences are no longer being staged in holiday resorts such as Barcelona, Cannes, Boca Raton or Las Vegas (which used to be hot destinations of choice), but instead in the more humdrum, ’serious’ locations of Washington, or Edgware Road, London.

The full post is here.

Stephen Gudeman’s post on the Association of Social Anthropologists’ Globalog series on the financial crisis:

Economists may see economies as flat or smooth plains consisting of markets and market-like behavior that lead to equilibrium situations, but I think they consist of overlapping and conflicting spheres of value and practices. I label these fuzzy-edged spaces House, Community, Commerce, Finance, and Meta-finance. The domains are separate but mingle; individuals and cultures emphasize them differently; their prominence changes over time; and they represent contesting interests and perspectives. The market part of economy, consisting of commerce, finance and meta-finance, often colonizes or cascades into the other two spheres, influencing them to conform to its pattern, although they also help structure market practices. These five domains – from house to meta-finance – exhibit increasing reach in space and inclusiveness of material activities, services, and institutions. They also are increasingly liquid: the speed and number of transactions multiply in the upper domains, especially in meta-finance. This liquidity and ability to shift resources and insert them into different parts of the economy give the upper spheres greater control of the economy and opportunities for sequestering value from elsewhere. Today, in high market economies the financial domains tend to dominate the others for they encompass all value or asset forms, such as land, manufacturing capacity, technology, capitalized human skills and ideas, as well as house production and community sharing.

And

My story is not finished. With other anthropologists, I have recorded how a house and communal economy that partly relied on self-sufficiency was destroyed by market expansion through the arrival of a cash crop, which was an innovation in the service of efficient production. This shift was driven by the search for profit through commercial operations. More recently we have lived through a commercial outsourcing revolution in high market economies, which includes downsizing to core corporate activities that produce a financial profit; it too is a revolution in efficiency and an example of creative destruction with task specialization. Now we are living through a crisis in the financial sector, done again in the name of enhancing efficiency in the use of capital, and fueled by a focus on “alpha.” Sophisticated professionals talk about the “search for alpha,” which was one of the mantras of Goldman Sachs in New York. Alpha is the label for the excess return relative to a benchmark index; or it is the abnormal return above the expected financial return. A calculated return about other returns (meta-finance), the profit of alpha lies at the center of the finance of finance sphere. Securing alpha became the core competence of financial firms. This ultimate profit on profit was the Holy Grail of Wall Street and the City of London. Economists may not speak about economic bubbles, but certainly we experienced one in the mortgage market, in the stock market and even in high-yielding instruments. But I think they were all facilitated by the bubble in meta-finance, which was the innovation or creation of new instruments, one after another, in an uncontrolled, competitive bout to out-do others and soak up finance. That bubble burst. For example, in 2007, Goldman Sachs’ supreme, task specific hedge fund, the Global Alpha Fund, managed12 billion dollars. But with the crisis, by mid 2008, it was worth 2.5 billion dollars, or 20% of that amount. By April 2009, Goldman Sachs had dismissed its founding managers, who had been lauded as the drivers of this “Cadillac of funds.” I think back to Marcel Mauss and his characterization of the Kwakiutl potlatch as the “monster child” of gift-giving. To gain prestige and out-do others, chiefs ultimately would burn blankets and throw pieces of copper into the sea. Was this destruction different from the financial potlatch in our metropoles?

Read it in full here.

1. Remember the list of debtors that was published a last week by the Central Bank of Nigeria? Well, some of the money is now recovered

2. It seems that the Nigerian stock market is getting over the initial shock of the banking reform

3. More on the effects of the rescue of Nigerian banks by the Central Bank

4. Now to the US, 1,000 Banks to Fail In Next Two Years: Bank CEO

5. How does one modernise the Middle East’s Economies?