The fast-growing economies of Africa face headwinds from the pull-back of international banks from the continent, Barclays’ erstwhile-chief executive told CNBC, as the bank moves to sell down its business in Africa.
Countries like Nigeria, the continent’s biggest economy, received a flurry of international trade finance in the build-up to the global financial crisis of 2007-08.
Since then, inflows have slowed, increasing the economic challenge for the continent where many people still struggle to access energy supplies or basic education.
“There are headwinds from commodities and international banks pulling out,” Bob Diamond told CNBC Africa on Saturday at the London Business School’s Africa Business Summit.
However, Diamond was optimistic about the medium to long-term prospects for Africa
If you look at Mozambique’s President Filipe Nuysi or Nigeria’s Muhammadu Buhari’s agenda they aim to diversifying their economies away from what has been a reliance on the extractive industries, he said.
“That can be pretty positive. When you look at the potential of the agricultural sector for example in Nigeria, it’s the largest sector of their economy today – it’s already larger than the oil industry. In the short term there are real challenges in terms of slower dynamic growth, in terms of currency valuations.”.
Diamond reckons the time for investing on the continent is now.
“This is a great time to be investing because the prices of businesses, in our case of banks are lower. In the currency levels vs the dollar and other major currencies are also at a good level. So we see this as a time to invest.”
Since quitting Barclays in 2012 following the bank’s interest-rate manipulation scandal, Diamond has focused his attention on Africa. In 2013, he co-founded Atlas Mara, which purchases African banks with the aim of establishing a sub-Saharan Africa-wide banking chain.
In addition, Diamond co-founded Atlas Merchant Capital in 2013, which invests in the financial services sector. The investment firm is currently working with U.S. private equity firm, Carlyle Group, to establish a consortium to bid for stakes in Barclays Africa.
Diamond declined to comment on the possible bid on Saturday.
Barclays has already sold a 12.2 percent stake in its African subsidiary, raising aggregate gross sales proceeds of just over $13 billion South African rand ($878 million). It confirmed the sale on Thursday.
“Since the financial crisis we have seen many of the Europeans pull back (from Africa), particularly those who were providing trade finance,” Diamond told CNBC on Saturday.