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Asset Management / Wealth Management
Young population to boost asset management industry in Africa
Growing adoption of digital technology seen spurring demand for investment products
The Asset 28 Jul 2021

Digitalization and a massively young population are expected to fuel Africa’s asset management industry as it recovers from the pandemic and economic growth accelerates.

Amid high fertility and declining birth rates, 60% of Africa’s population is under the age of 25 making it the world’s youngest continent, with over 11 million young people entering the labour market each year. East Africa, led by Kenya, is expected to post a GDP growth of 4.8% this year.

Despite the impact of Covid-19 and the depreciation of local currencies against the US dollar, assets under management for banks, insurers, and pension funds in Nigeria and Kenya alone grew 17% in 2020 from the previous year, based on filings in these markets.

And although Africa is considered a very long-term investment destination for onshore investors, there is widespread expectation that the growing adoption of digital technology and a burgeoning youth population will spur more wealth and investment offerings for upwardly mobile investors. These products target young people, who are not limited to dealing with bank branches and physical cash, and are more open to digital transactions.

There is growing interest in digital currencies and assets in the continent, particularly in Ghana and South Africa, prompting central banks and regulators to take appropriate steps.

Meanwhile, demand for securities service providers is rising as new investment products and solutions come to the market.

Standard Chartered Bank, for example, is seeing rapid growth in the adoption and usage of its digital platforms across most markets in the continent where it operates, particularly in Kenya, Ghana, Uganda, and South Africa.  As the biggest securities service provider in the continent, the bank is supporting growing demand from clients for asset servicing and digital cash management.

Standard Chartered won The Asset Triple Asset Custody Specialist – Africa Award 2021 for its extensive network in the continent, its strong digital capabilities, and expanded asset servicing capabilities despite the drop in assets under custody due to the pandemic and the depreciation of the local currencies against the US dollar.

In 2020, the bank expanded its asset servicing capabilities to include local assets in eight markets belonging to the West African Economic and Monetary Union, a regional political and economic union of 15 countries in West Africa. Standard Chartered also expanded its partnerships in the continent to make securities lending more suitable to the requirements of local clients. In Nigeria, its market share rose to 24% last year from 23% in 2019.

Currently, retail investors are still a relatively small part of the asset management sector in African markets. But their number is expected to rapidly grow as financial products become more popular and they are encouraged to save more while overall economic growth accelerates, according to PwC.

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