Standard Chartered, a London-based bank that specializes in emerging markets, has announced that it will invest $100 million in Africa over the next three years.
The bank, which makes about 90 percent of its income in Africa, Asia and the Middle East, hopes to double the $1.3 billion in income it derives from Africa, 8 percent of company profits.
Standard Chartered’s move is part of a pattern of companies seeing enormous opportunity for growth on the African continents. The strategy of concentrating on emerging markets has paid off in a big way for Standard Chartered, allowing it to avoid the economic woes that have plagued Western markets in recent years.
But the bank’s dealings in the Middle East have also come with a price: in August, the bank agreed to pay a fine of $340 million to the New York Department of Financial Services after it was accused of hiding $250 billion in transactions involving Iran—prompting the New York agency to label Standard Chartered a “rogue institution.” The New York DFS claimed that it possessed documents showing a cover up of transactions allegedly used to fund terrorist groups in the Middle East. British politicians charged the U.S. with having an “anti-British bias” and accused the U.s. of trying to undermine London’s banking industry.
A week after the allegations were made, the bank agreed to pay the $340 million fine, allowing it to keep its license to operate in New York state. The bank also agreed to allow a monitor, who will report directly to DFS, to oversee its money laundering controls for two years.
Standard Chartered is already present in 15 African countries. As part of its $100 million investment, it will open 110 new branches in 8 countries—including Kenya, Ghana, Nigeria and Mozambique—which will mean 900 jobs in the consumer banking sector.
The bank’s Africa CEO, Diana Layfield, said Standard Chartered is hoping to capitalize on the expansion of trade between Africa and China, which hit a record high of $166 billion in 2011.
“We see a real opportunity to capture a larger share of the increasing south-south trade links between Africa and Asian countries including India, China and South Korea,” Layfield told AllAfrica.com.
The bank will also increase its investments in mobile payment technology, which is a way of reaching a population which is referred to as “the unbanked.” This technology has been especially effective in Kenya.
Layfield said Standard Chartered is seeing new competition from banks based in China, Africa and South Africa, which have all begun to see the enormous opportunities in Africa.
“But even allowing for increasing competition, we should be able to at least maintain the double digit growth delivered since 2006, and more than double returns over next five years,” Layfield said.