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African insights 28 September 2022

Africa remains firmly rooted for investment success

Have you ever wondered how palm trees survive hurricanes? Where other trees have broken branches or even snap in half, the palm tree survives seemingly unscathed. Its survival secret is hidden in the way it has adapted to its environment.

Unlike traditional trees, palm trees are not made of wood but rather a spongy tissue that contains malleable cells. These form cylinder-like rings, which give the trunk incredible strength while allowing the palm tree to bend up to 50 degrees without snapping. The canopy of large leaves also acts as large feathers rather than stiff resistance to further withstand the onslaught of fierce winds.

There are some lessons in the humble palm trees adaptation to the forces of nature as we look at the future of the African continent as an investment destination.

Overcoming the winds of change

Our continent has faced severe headwinds over the last few years. Although the worst of COVID-19 has passed, 2022 saw the effects from the pandemic replaced by new challenges. The Russia/Ukraine conflict and high inflation have caused financial market volatility, higher commodity prices, global supply chain disruptions, and a heightened sense of uncertainty. These come at a time when many of our economies are struggling with high financing costs and debt burdens as well as a difficult environment to raise new or refinance existing debt.

Despite these challenges we believe the continent remains an attractive investment destination. Growth themes across the continent are intact. Population growth, coupled with urbanisation, higher secondary education levels and a median age that is moving into its most productive range continue to support higher growth levels relative to the rest of the globe. The needs of a rapidly expanding middle class are leading to continued demand for infrastructure spending, growth in the consumer and savings sector as well as the expansion of new companies and industries to support these.

Key to continuing to unlock and support the rapid development we see across the continent may require us to reflect on how the Palm Tree has adapted to its environment. We need to recognize the challenges and circumstances we face and evolve to ensure the continued flow of capital to support industries and societies needs as well as providing solid investment returns.

Standard Bank – Partnering to develop

At Standard Bank, we believe that what separates the uncertain investor from the confident one when it comes to investing in the continent is foresight and practical local knowledge. As the African proverb goes, “There are no shortcuts to the top of the palm tree.” With in-depth research and an understanding of Africa’s investment environment, combined with an understanding of the local regulatory, economic, logistical and market environment, there are immense opportunities for local and global investors. It simply requires looking at Africa through the right lens and working with the right partner.

This is where our Standard Bank Global Markets Division plays a key role within the Standard Bank Group. Through our in-depth knowledge of our markets, we can support the right investment decisions. More importantly our deep presence in 20 countries across the continent positions us to provide the insight and financial tools to help enter, manage, and monetise the financial investments made.

Our business model with in-country financial markets expertise coupled with a wide global presence and partnerships, allows us to craft unique solutions to allow investors and businesses to participate in and support what we believe is a phenomenal growth and investment opportunity. We can connect our clients to unique opportunities while providing exceptional risk management to ensure financial ambitions are turned into investment impact.

We do this by:

  • Creating unique funding solutions to channel global and local capital into infrastructure and industrial development
  • Supporting trade and investment management in providing liquid financial markets
  • Supporting the growth of the savings sector with knowledge and appropriate diversified investment alternatives
  • Working with partners across the continent to create new channels to deliver more price competitive transactional and investment products to previously unbanked customers
  • Supporting decision making with insight from our research teams

Reaching new heights

By putting our clients requirements at the heart of everything we do, the GM team is confident that the customised financial tools we create and our leading market making function will help them capitalise on the immense growth opportunities this continent has to offer. At the end of the day, as a bank, we are committed to driving Africa’s growth. Combined with our confidence in the continent’s resilience, and an intimate knowledge of the African investment landscape, we look towards Africa’s future and working towards reaching new record-breaking heights.