Global Economy Watch

Each month PwC's Macroeconomics team presents the Global Economy Watch, a short publication that looks at the trends and issues that are affecting the global economy and details our latest economic projections for the leading economies of the world.

Is the rise of Pan-African banking the next big thing in Sub-Saharan Africa?

A healthy banking system is a vital ingredient for inclusive and sustainable growth in any economy. When functioning well, banks mobilise savings and allocate credit to growing sectors, helping to increase productivity.

Sub-Saharan Africa (SSA) hosts 550 million people of working age, but doesn’t have a banking system to match. For example, the latest data from the World Bank shows that the median credit to GDP ratio in SSA’s low and middle income countries was just 25% — 20 percentage points below the global average for countries with similar incomes.

In this edition, we have looked in more detail at trends in pan-African banking in SSA, which have been driven by two primary factors:

  • First, since the 2007 financial crisis, SSA has experienced the withdrawal of several Western banks. They provided a majority of pan-African services and African financial institutions have had to plug this gap.
  • Second, intra-regional trade linkages have grown increasingly strong in SSA. This has seen African banks expand and follow their corporate clients abroad.

Our analysis shows that the potential size of the opportunity for SSA banking could range between $490 and $950 billion of additional credit (at 2016 prices). To fully realise this growth potential, it’s important African regulators get to grips with the key issues affecting SSA, including restricting the increased risk of contagion that this could bring to the region, but also making sure that financial inclusion is accelerated across all sectors of the economy and especially households.

Looking further afield, in the Eurozone we have revised upwards our projection for GDP growth, which we expect to hit about 2% this year – the fastest since 2015. The Eurozone economies are experiencing a synchronised upswing in economic activity with the core and periphery both growing at relatively fast rates. We expect this upswing to continue into the third quarter, particularly for some of the smaller peripheral economies like Malta and Cyprus, who are expected to record bumper years for tourism.

Finally, in the US, the Federal Reserve remains cautious about the pace of economic recovery in the face of relatively subdued inflation. A key risk we are watching are the impending negotiations regarding the federal debt ceiling, which could drag and cause short-term uncertainty. In this month’s edition we have also taken a closer look at how the Fed is thinking of reversing its quantitative easing programme.


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PwC's James Loughridge discusses financial development in Sub-Saharan Africa and the role Pan-African banks have to play.


A turnround for the G7?

A turnaround for the G7? This month’s GEW explores the reasons behind the recent uptick in economic activity of the G7 economies and analyses whether this trend will continue in the future. It highlights the importance of productivity growth for long-term growth and discusses how to revive productivity in the G7. It also discusses the business implications of a more protectionist US, in light of President Trump’s campaign pledges for a border tax and tariffs.





Contact us

Barret Kupelian
Senior Economist
Tel: +44 (0)20 7213 1579

James Loughridge
Tel: +44 (0)78 0266 0106

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