Standard Bank remains optimistic

HARARE - Stanbic Bank Zimbabwe (Stanbic) parent company Standard Bank (Standard) says it remains optimistic in its expansion thrust despite weak commodity prices prevailing in Sub-Saharan Africa where it is predominantly domiciled.

Standard head of Transactional Products and Services in South Africa Vinod Madhavan said the group’s future projections remained strong.

“Although there are some testing times ahead, there are still a number of unique opportunities across the continent. Our growth rate for sub-Saharan Africa is still one of the fastest in the world,” Madhavan said.

The Standard boss said while trade flows were facing headwinds on the back of weaker commodity prices, demand from corporates for transactional and trade financing solutions is actually on the rise owing to varying market performance across Sub-Saharan Africa.

The International Monetary Fund (IMF) recently cut Sub-Saharan Africa’s growth forecasts to four percent for this year and 4,7 percent for next year in their report in January, off prior expectations of 4,3 percent and 4,9 percent respectively.

Madhavan said it had become important for banks to understand the regions and countries in which trade is being done to navigate risks and seize the opportunities when they arise.

“When looking at data points about Africa from the outside, the level of perceived risk will certainly be higher than those levels of risk as perceived by someone who is on the ground and understands the local nuances and fundamentals,” Madhavan said.

Madhavan added that due to the high perceived risks in the continent, Africa faced the challenge of foreign institutions and investors de-risking their African exposures.

“Falling commodity prices are real and there is a belief commodity prices will continue to remain at subdued levels, which does create fiscal stress for our countries.

“But any de-risking that takes place in these conditions does not mean the financial system will halt, rather creates opportunities for others,” he said.

He said regional African banks had an “almost a moral obligation” to step in and fill the gaps created by the de-risking.

“There is certainly an opportunity for regional and local banks, but apart from local banks who know the markets best, there is also a role for government in the various markets to encourage change by ensuring policies support the growth of local markets and financing whereby more public private partnerships are encouraged,” Madhavan said.

The banker said in current conditions, risk mitigation and meeting compliance standards would be even more crucial than before.

“You can only truly pick up risk if you are on (or) close to the ground in Africa with local understanding.

“Closer ties and trust helps a bank like Standard Bank, with its large footprint across 20 countries, take a more informed view on risk and thereby support our clients to get through the storm and achieve their growth objectives,” he said.

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