Top African bankers have been told they have to reduce costs, satisfy clients and become compliant. Parveen Bansal reports.

Within the lush green surroundings of the Safari Park Hotel, on the outskirts of Nairobi, Kenya, more than 150 senior bankers and business leaders from across Africa gathered to discuss the future of banking in Africa.

Organised by Oracle Corporation’s African operations and partner organisations, including Wincor Nixdorf, Temenos, High-tech Payment Systems (HPS), Hewlett Packard and La Solution Bancaire Intégrée (LSBI), i-flex, CIS, and Delta-Informatique the banking and technology summit was the first of its kind held in Africa, and focused on local issues.

Desi Lopez Fafié, managing director, Oracle African Operations said: “There is much opportunity across Africa and more specifically sub-Saharan Africa, and we at Oracle recognise this. This is a critical time for the banking industry in Africa. It is important that African banks learn how to reduce their operational costs, become more customer focused and deal with compliance issues,such as the new International Accounting Standards and the solvency requirements of the Basel II Accord.” Mr Fafié noted that there is already much interest and activity from African banks, which is evidence of their desire to meet the global challenge head on.

Unfortunate realities

Keynote speaker Dr Edward Sambili, deputy governor of the Central Bank of Kenya highlighted some of the challenges and opportunities for banks in Africa. “Despite the rich resource base, African economies remain slow. Poverty is still highest in Africa and the little income is distributed unequally,” he said.

Mr Sambili referred to the “unfortunate realities of Africa – the political instabilities, corruption and poor governance” as the biggest barriers to growth and development of the sub-Saharan African economies. The challenge, according to Mr Sambili, is the need to improve the legal and regulatory frameworks to reflect international standards. He stressed: “The critical element that must be inbuilt in financial service institutions is to enhance their information and communication technology (ICT) infrastructure. Only then will they be in a position to cope with the world standards of information flow, especially in the area of payments and services.”

Challenges ahead

“Progress will only happen if ICT is used effectively,” he added, although he noted that the costs of acquiring and upgrading technology are prohibitive.

African countries need to acquire greater sector knowledge. Mr Sambili highlighted the opportunity for banks in Africa to work together and share the costs by sharing ICT infrastructure. He noted the need to address the lack of credit information sharing and the need to develop the appropriate legal rules and maintain customer trust. “We need to address various cross-border and regional issues. Payment and settlement systems are many years behind. We need to address this and educate everyone on the importance of this.”

He commented that Africa needed to foster a savings culture to combat the continent’s crippling debt burden. Unfortunately, he said, “the propensity to consume is highest among the poor”.

Finally, Mr Sambili stressed that the key to development is the conscious effort to develop the necessary expertise and invest in ICT. He challenged Oracle and its partners as well as other organisations to find ways of developing this expertise and promoting use of ICT, for example, by funding programmes at universities.

But while other technology organisations may be hesitant to invest in Africa, Oracle is definitely pushing the boat out. Their investment plan for the next 18 months is to expand to 100 people in Africa and open 10 offices around sub-Saharan Africa. Oracle is a sponsor of the New Partnership for Africa’s Development, and has contributed significantly to the technological development of Africa. This is not confined to providing software solutions for Africa’s public and private sectors, but also includes training and skills development through participation in various events and academic initiatives.

Knowledge transfer

Mr Fafié said: “Oracle understands that knowledge transfer is the key to all development efforts and so provides software, curriculum, training and certification resources to institutes for advanced education via the Oracle Academic Initiative.” Mauritius, Uganda, Kenya, Botswana and Namibia have used Oracle technologies to build foundations for e-government.

The clear message from the conference was that progress is being made on various issues such as improving the business environment. Most importantly, technology will enable African banks to make rapid progress.

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