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South Africa’s First Rand Seeks Growth in Africa Through Acquisitions

FirstRand is a major banking group in South Africa and its incoming CEO is keen to look outside of South Africa for growth. The domestic economy is on the retreat and plagued by mismanagement and power blackouts. South Africa has a world-class banking sector and strong capital markets, compared to the rest of Africa, and is well-suited to take a leadership role in developing Africa's capital markets and industry.

FirstRand was established in 1998 through the merger of several financial institutions in South Africa. It is second in South Africa by total assets, market capitalization, and loan book size. Incoming CEO Mary Vilakazi, set to take the helm in April, has revealed plans to acquire not only traditional banks in Africa but to also take other measures to grow international market share.

South Africa is on the decline forcing companies to look abroad for growth and Africa is where they will have the largest competitive advantage. Standard Bank's share price appreciated (24%) the most among the major banks in South Africa last year due partially to its exposure outside of South Africa.

Standard Bank has the largest African footprint of any South African bank operating in 17 countries on the Continent and focusing on large corporate clients. Nedbank has a smaller reach operating in 7 African countries and focuses on offering retail banking services to individuals and small businesses. Its acquisition of Ecobank in Kenya strengthened its East African presence. FirstRand has the smallest reach of the big three South African banks in Africa with operations in only 5 countries mostly in Southern Africa.

Heightened focus on Africa for South African banks makes sense because growth on the Continent (4.6% in 2024) is expected to outpace South Africa's for the foreseeable future. Mobile money transactions surpassed $1 trillion in 2022 highlighting the Continent's rapid digitization.

Vilakezi finds the positive in the ruling party's incompetence and inability to deliver basic services and stated, "[f]or a democracy we need to get to a place whereby a party knows that if they don’t deliver, they can lose an election, [the upcoming 2024 election] might be muddy, it might be noisy, but I think that’s how we start strengthening our democratic muscle.”




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