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Growth of mobile money transfer a threat to traditional banking

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By Mwaura Kimani

Posted  Saturday, December 1  2012 at  16:55

In Summary

John Gachora, Barclays Bank Africa managing director, head of corporate and investment banking

Age: 44

Current position: Managing director (head of corporate and investment banking), Barclays Africa, Johannesburg

Recent roles: Served as CEO, Absa Africa (2010-2011), managing principal (head of Africa), Absa Capital (2008-2011), MD-Group head (2007-2008) Bank of America Investment Banking.

Board membership: National Bank of Commerce, Barclays Bank Mozambique, Absa Bank Ltd, Namibia, Absa Capital Nigeria Representative Office.

Education background:

  • MBA (Finance and Management)- Wharton School (University of Pennsylvania)
  • Master of Engineering in Electrical Engineering and Computer Science-Massachusetts Institute of Technology (MIT)
  • Bachelor of Science (Electrical Engineering and Computer Science)- MIT.
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Banks in Africa are under pressure to make money even in the wake of a slowdown in economic growth as well as political pressure to reduce lending rates and growing bad debts. The EastAfrican’s Mwaura Kimani spoke with the Barclays Bank Africa managing director, head of corporate and investment banking on the continent’s banking sector and trends. Excerpts:

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Africa is going through massive infrastructure transformation. Traditionally, it has been the preserve of development institutions like the World Bank to finance such projects. Are commercial banks now capable of playing a bigger role in financing projects?

Commercial banks are increasingly getting into financing big projects. With East Africa increasingly becoming a hotspot for oil and gas, banks are playing a key role be it in providing funding, arranging big financial transactions or offering advisory services on such deals.

There is a lot of focus on energy, road and railway infrastructure. Most African economies are growing, presenting financing opportunities for banks.

Local businesses require financing to grow. Barclays was among the financiers of the $900 million Bujagali hydropower plant in Uganda. Other big projects Barclays has been involved in include Thika power project, and advisory work for Kenya’s power firm KenGen.

What are the next growth drivers in Africa’s banking sector?

The key drivers of growth in the sector will be a deeper focus on infrastructure, resources, agriculture and consumer services. The middle class is quickly driving up consumption and as such, they too need banking.

In Africa, the unbanked population remains high at an average of over 80 per cent save for countries like South Africa and Kenya. Banks will also ride on growing demand for new products like deepening risk management, documentary trade and currency risk management.

While some of these products exist in bigger markets, in Africa, the demand is growing. The clients we serve in the global markets are getting to Africa and as such requiring support in navigating the continent.

As a business, our biggest focus is these clients whom we already serve in the global markets. The shifts we are seeing are that more businesses are seeking services to boost their ability to manage liquidity and payments.

Agriculture is now a big bet for commercial banks. What is Barclays game plan in this field?

Agriculture is a key growth driver. Across Africa, Barclays has an exposure of £400 million invested in agriculture outside South Africa.

There is room for growth. We are keen to finance the sector at an organised level with commercially viable projects.

We are in discussions with several partners and development organisations to work together in this sector. It may not be dealing with farmers directly but also getting into actual farming. In Kenya, we are into tea and flower farming.

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