GTR caught up with political analyst and futurist Daniel Silke on the sidelines of the GTR Africa Trade Finance Week in Cape Town today to discuss the Barclays Africa exit: the inopportune timing of the decision, the likelihood of an Asian suitor and how the move is unrelated to the South African domestic economy.
GTR: Is Barclays’ exit from Africa a sign of things to come for the continent, or a scenario specific to the bank?
Silke: I don’t think it is indicative of any kind of trend that would apply across the board to a divestment away from South Africa. Its origins are very specific to the bank itself. It is related to difficulties in the broader banking set-up, and an underperformance of the bank in African terms.
It also reflects on an ongoing reappraisal of the banking sector into the future. This is a sector that is potentially going to be disrupted by non-traditional service providers. It therefore has to rationalise as far as possible to play to its specific strengths.
It is important for African governments to be cognisant of the changing global economy and the changing pressures on major industries, such as banking. African policymakers need to provide the most enabling environment possible in order to continue to foster good relations, because these banks are going to come under pressure. A lot more will need to be done from a government point of view to make it attractive for these institutions to remain.
Having said that, the timing of the decision has left Barclays open to criticism that this is either a commentary about the domestic South African economic story and the related uncertainties in governance surrounding that, or the headwinds facing the African continent.
It’s not going to lead to any mass exodus.
GTR: What are your thoughts in terms of potential buyers?
Silke: It will be interesting to see whether a buyer comes out of a domestic framework in South Africa, or foreign interest. This is clearly the opportunity for an Asian or Chinese bank to move in. The South African government might like that because it would show that China’s got our back. It would play into the government’s narrative of distancing itself from the west and pivoting towards the BRIC countries, particularly China.
It’s also likely that domestic funders like the Public Investment Corporation (PIC) might step in here, in some form or other. It’s unlikely to be a suitor from the western world.
GTR: How significant is it that a suitor has not yet been announced?
Silke: This is not the moment for Barclays to be entering into a discussion about that: that is a separate process from the one that was announced. It would be useful from a South African point of view for the matter to be cleared up relatively quickly. It would be prudent to find suitors battling over who would be the right one, rather than leave a gap open, given the size of Absa. The area of concern would be the type of suitor and the linkages that bidder has with the government.