Johannesburg - The firm intentions of French-based global banking group BNP Paribas to enter the South African market means business relations between France and South Africa are set to be bolstered, according to a Johannesburg-based banking analyst.
This week BNP Paribas, one of the top five international banks, identified South Africa as a promising market, saying it is necessary for the bank to have a presence in the continent’s biggest economy.
Also France’s biggest bank by assets, PNP Paribas made its announcement
shortly after rating agency Moody’s Investors Service downgraded South
It cut the government bond rating by one notch to Baa1
from A3 on the back of worries about South African institutions, future
political stability and lack of room for policy manoeuvring.
Steve Meintjes, a senior banking analyst at Imara SP Reid, said on Tuesday: “This announcement is good for South Africa and the local banking sector.
"The move will increase South Africa’s business relationship with Francophone Africa.”
In the past, South Africa’s business relations with Francophone Africa have not been dynamic because of the language barrier, among other issues.
South African banks that have ventured into Africa have mostly focused on Anglophone Africa, as it is much easier to set up shop in these countries.
The language barrier seems to be a serious impediment for South African companies that want to do business in Francophone and other non-English speaking countries.
Blue Financial Services (Blue), the once high-flying Pan-African micro financier, had to suspend its operations in Cameroon a couple of years ago on the back of a language barrier, in addition to other problems.
Blue has since been taken over by a private equity “white knight”, Mayibuye, after it reported losses amounting to billions of rands.
Paribas said South Africa has "promising" business opportunities,
notwithstanding slothful forecasts in Africa’s biggest economy.
South Africa’s economy is projected to grow by up to 2.7% - a significant drop from estimates of as high as 3.4%.
week, it was also reported that this level of growth is far lower than
growth rates of between 5% and 10% in countries such as Ghana, Nigeria
BNP Paribas chief operating officer Philippe
Bordenave told a gathering in Paris that the company intends to grow its
corporate and investment banking activities in South Africa.
The bank opened its first representative corporate and investment banking office in Johannesburg last year.
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