Riding the wave of Africa’s financial services sector

The World Bank has hailed Africa’s emerging financial services sector as a key to growth on the continent, but a lack of critical skills at the right level could hamper its continued progress.

This has been true for all of the booming economies that have arisen in Africa over recent years. While construction and development increases in countries like Nigeria and Kenya off the back of the demand for resources such as coal and oil, the emergence of previously sketchy financial services has sustained this growth.

The rise of insurance products on the African continent is enabling local businesses and agriculture to expand. At the same time, the development of stronger banking and financing infrastructures have not only benefitted the local population, but are also stimulating increased international investment in diverse sectors.

Regulatory frameworks on the continent are also becoming more sophisticated. While this is a good development, David Taylor, Director of the African Institute of Financial Markets and Risk Management (AIFMRM) at the University of Cape Town (UCT), points out that this also presents one of the most significant challenges in the industry.

“If one looks at the South African context, for instance, the implementation of the Basel II and Basel III global reforms have had a massive impact on the way that our banks do business, and there is definitely a need to put skilled professionals in the sector who can navigate these challenges,” says Taylor.

He adds that there has also been a fundamental shift in the skills that companies in the sector are looking for. “From the research that we have conducted, it has become apparent that companies are now looking for a level of maturity, experience and agility of mind in new graduates entering the market. At present, this is beyond the scope of most university degrees.”

“Addressing this skills gap, therefore requires that universities and business schools across Africa look at changing the way that they train new graduates for the financial services sector,” says Taylor.

Taylor notes that this has been the motivation behind the development of AIFMRM’s postgraduate offerings.

“AIFMRM is a new research and teaching institute at the University of Cape Town, which is taking the lead in developing a new approach to producing recruits relevant to this industry. We are currently in the process of recruiting our second cohort of students for our Master of Commerce in Risk Management of Financial Markets degree, which was developed after extensive consultation with industry partners,” Taylor says.

He says that to create a degree that is truly responsive to industry needs, universities need to start by working more closely with finance professionals in the design and development of degrees. Secondly, they need to ensure that lecturers and staff teaching on the programme include experienced industry practitioners who are up-to-date with developments in the sector. Finally, they need to be able to simulate the challenges of working in the sector.

“There is also a lot of emphasis on presentation skills, group work, discussions and exposing the students to different work styles and situations. Because this is what they will face in the workplace,” says Taylor.

One of this year’s students, Daelin Pillay, comments that as the challenges in Africa’s financial services sector are predominantly related to regulatory issues, what stands out from conversations he has had with people in the industry is that professionals need a wider perspective.

“On this programme, we are not just learning about risks, but also a lot of quantitative facts, stats, programming and the like. We are actually acquiring skills to make us adaptable to different risks and situations,” says Pillay.

He adds that the degree has also identified a number of opportunities in the sector for him. “A great advantage of being part of this degree, is that companies generally come to us for what they need. Many of the banks and all of the top companies on the JSE have come to us, as opposed to us approaching them. The opportunities are endless because the risks that we identify and work around are not just in the financial services industry, but also across multiple sector businesses. Our lateral thinking is put to the test, which is vital for our training and future work,” he says.

Taylor adds that, even though the degree is only in its first year, it has definitely generated interest in the industry.

“The long-range goal of the institute is to create satellite versions of AIFMRM in other African countries, alongside international partners. Over the next couple of years we would also like to attract PhD students from the rest of Africa,” he states.

Compared to the rest of the world, Africa’s financial sector is still significantly underdeveloped, and while there have been revolutionary developments in the regulation and growth of certain countries’ financial sectors, these are still only a handful of cases.

“And as banks and insurers continue to seize opportunities to increase their market penetration, more versatile skills will be in increasing demand,” says Taylor.

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