Standard Chartered Africa CEO Diana Layfield speaks at the 2013 Reuters Africa Investment Summit in Johannesburg, April 9, 2013. Standard Chartered has opened two new branches in South Africa to target Cape Town and Durban-based companies looking to expand across the continent, its chief executive for Africa said on Tuesday. REUTERS/Mike Hutchings (SOUTH AFRICA - Tags: POLITICS BUSINESS HEADSHOT)

Helen Nyambura-Mwaura

It took Kenyan lender KCB Group less than a year to break even after opening in tiny Burundi, a country better known for explosive violence than explosive growth.

KCB’s success highlights the hunger for financial services that the biggest local banks are turning regional to tap.

Stretching beyond home markets, they are morphing into formidable competition for established international lenders – and becoming potential acquisition targets for outsiders seeking a foothold on the fast-growing continent.

“It’s an incredibly exciting phase,” said Diana Layfield, Standard Chartered’s chief executive for Africa, where the global bank has worked for more than 150 years.

“What you have seen, particularly in some of the newer local regional banks, is an ability to serve emerging mass market consumers where other financial institutions haven’t necessarily been able to cover effectively,” she told the Reuters Africa Investment Summit last week.

Despite being in Africa for so long, foreign headquartered banks such as Standard Chartered and Barclays have tended to focus on businesses and the wealthiest. African banks are seeing more opportunities at the lower end of the market. Innovations such as cellphone banking offer them the chance of getting access to more people more quickly than ever.

KCB opened in Burundi last year, bringing the number of its east African operations to six. Equity Bank, its bigger rival by market capitalisation, is in five countries and is also eyeing southern Africa.

On the opposite side of the continent, Nigeria’s Guaranty Trust Bank announced plans last week to make acquisitions in three east African countries. The $4.4 billion (R39.4bn) bank already has six operations outside its home market.

South Africa’s Big Four banks are also building up to the north. The biggest, Standard Bank, operates in 18 African countries.

While there is an average of pretty much one deposit account for every South African, according to the latest World Bank data, that falls to fewer than 220 accounts per thousand people in Burundi, a 2012 survey showed.

Growth can be dramatic. Between 2006 and 2009, the number of accounts in Burundi’s neighbour, Rwanda, grew more than twentyfold.

Present in the largest number of countries is Togo-based Ecobank Transnational, a $1.6bn lender with branches in 32 nations. It was that wide presence which drew South Africa’s state pension fund manager, the Public Investment Corporation (PIC), to pay $250 million for a stake of nearly 20 percent in 2012.

“It’s African pride to be able to start an African institution from scratch and grow it to compete with large global entities,” said Elias Masilela, the PIC’s chief executive. – Reuters