Financial Market & Technology Trends in Africa

July 13, 2011

On the heels of announcing that Nedbank Capital has decided to use PORTIA Outsourcing Services to power their middle-to-back office (see original announcement), as well as news that we signed our second client in South Africa (to be formally announced shortly), it is worth reflecting on the trends PORTIA is observing in Africa’s financial markets.

We’re bombarded with news about the attractiveness of BRIC countries, and lately there have been many studies showing that growth in emerging markets in Eastern Europe and Southeast Asia may outpace BRICs.  But few studies, if any, focus on growth in sub-Saharan Africa.  We believe ignoring the potential in Africa is a big mistake.

South Africa is undoubtedly the most discussed market on the continent, not only because it is growing steadily but also because its financial markets are well-developed.  In mid-April, the BRIC countries and South Africa began pushing the World Bank and International Monetary Fund for more access to leadership positions in the organizations.  Later this year, China is hosting a BRIC summit and has invited South Africa to join.  Despite this focus, few financial technology vendors are servicing the South African market in the same manner as BRIC countries.

But South Africa isn’t the only growth market with unmet financial technology needs.  In 1989, only 5 sub-Saharan African countries had stock markets.  Today 16 countries have active stock markets, and their capitalization grew from $113 billion to $245 billion between 1992 and 2002.  And according to the IMF, South Africa’s economy is expected to grow 3.4% in 2011, whereas the sub-Saharan growth as a region will accelerate to 5.5%.  Over the past 10 years, the pace of growth in sub-Saharan Africa was more than double South Africa.

We believe that sub-Saharan Africa, including South Africa, has been neglected by financial technology vendors largely because these growth figures are based off a relatively low base when compared to BRICs.  But investment firms in Africa have the same complex IT needs as their Asia counterparts:

  • Solutions that support their entire middle-to-back office operations
  • Solutions that can handle multiple currencies and global asset types
  • Solutions that provide capabilities beyond their operational abilities, such as customized reporting, performance attribution and automation of non-core processes
  • Solutions that are easily configured and adapted to specific geographic requirements
  • Solutions that can be implemented and integrated in an easy, cost effective manner, whether installed or hosted

PORTIA provides comprehensive, global middle-to-back office solutions that meet the needs of investment firms in emerging markets.  PORTIA has been active in sub-Saharan Africa and understands the unique operational needs of firms in the region.  Winning business from two of the largest financial services firms in South Africa demonstrates our commitment to serving the needs of firms in sub-Saharan Africa.  For more information about PORTIA’s solutions and how they meet the needs of African investment firms, visit our website or contact us by email.

– Matt Bellias, Director of Strategy and Marketing

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