Responsible Banking and Investing in Africa

We are well into the tail-end of the second month of the year, and it is beginning to be clearer on the prospects and what we should expect, from an economic recovery perspective. As is, the COVID-19 pandemic remains the biggest determinant of the recovery process across Africa.?

Africa was the world's fastest-growing continent prior to COVID-19. Now, the continent struggles to finance economic recovery while simultaneously addressing underlying development challenges and the mounting impact of climate change.?

COVID-19 has made the situation even more difficult, and its effects are likely to last. However, Africa’s banking sector remains relatively resilient.

A liquidity crisis was averted partly because most banks were well capitalized even before the crisis. The proactive support offered by policymakers also helped ensure that the financial sector remained stable and sound.?

However, research by economic surveys shows that firms across Africa have been badly affected by the crisis. This means that the banking sector’s asset quality is likely to fall as support measures are withdrawn, which will reduce the ability of banks to offer financial solutions to the private sector as they seek to maintain and rebuild capital buffers.?

These risks are widening the already large funding gap facing African firms, with small and medium-sized enterprises (SMEs), startups and innovative firms affected the most. Africa’s banking sector is the main source of finance for private firms across the continent, but micro, small and medium-sized enterprises (MSMEs) still face a significant financing gap.

Banks and micro financial institutions provide the required finance needed to jump-start key sectors for communities to rise and build back better.

Africa’s financial sector must position itself to play an important role in supporting a sustainable, smart and inclusive recovery by helping to attract foreign investment and allocate domestic finance efficiently and responsibly towards low carbon, capital intensive economies.??

Responsible banking has solidified its position during the pandemic to become the social safety net on which communities rely. The beauty about this is that it is here to stay and it will be driven by the 4th industrial revolution- digital banking.

Digital banking provides endless opportunities for lenders to reach the unbanked and provide the much-needed fuel to power resilient communities and improve standards of living.?

The banking sector across the continent is relatively small, suggesting that significant numbers of firms in local communities may be underbanked. Digital banking is the panacea to reach them and unlock endless possibilities that will accelerate the Africa Renaissance story, which was put on hold by the pandemic.

We need to believe in our people and support communities by not only becoming responsible bankers, but by also walking with them just as they have done with us.?

At KCB Group, we believe that communities are central to our mission as we undergo this transformation to become a responsible digital bank. The bank will allocate 25% of its loan portfolio to green investments by 2025, including supporting social protection programs such as Inua Jamii and our Mifugo ni Mali programme, as well as developing banking products that meet the people at their point of need, consequently lifting people out of poverty.?

We believe Africa is the place to be and we play our role to ensure we live and walk the Africa Journey.??