Implications of Barclays exit on Africa as investment destination

The British bank Barclays has had operations in parts of Africa for a century.

The UK lender has a 62.3 per cent share in its African operations — 1,267 branches across 12 African countries, including Kenya, Ghana, Tanzania, Mozambique and Uganda. Barclays Africa is the entity that controls these operations, and it holds a 68.5 per cent stake in Barclays Bank of Kenya (BBK).

As the UK banking giant revealed an after-tax loss of $549 million (Sh55.6 billion), its CEO, Jes Staley, confirmed the pending sale of its stake in Barclays Africa. The sale, subject to shareholder and regulatory approval, would reduce its interest in Barclays Africa to a non-controlling, non-consolidated position over the next two to three years.

Mr Staley, who took office in December, hinted that the lender would be looking to concentrate on its core operations in the US and UK.

The chief executive also announced plans to increase the bank's investment in education and skills development across Africa.

Barclays employs 42,000 people across Africa. Its largest Africa unit is in South Africa, but the lender also has a substantial presence in East Africa, with 769,000 customers in Kenya (its second-largest Africa market), 561,000 in Tanzania and 136,000 in Uganda.

So what does a sale imply for the banking sector and for Africa as an investment destination?

To understand this, we need to know that while strategy reflects more on barriers to entry, there are equally tough barriers to exit. In fact, there is a close relationship between exit and entry barriers, and depending on the industry, exit barriers may be more punitive than entry ones.

Take, for instance, the barriers of exit in a legal marriage. They tend to be more punitive than entry ones — assuming there are any. One Facebook post put it this way: "A wedding ring is the smallest handcuff ever made ... So think deeply, choose your prison mate carefully and sentence yourself wisely to avoid a prison break."

Barriers to exit

This analogy demonstrates why companies need to contemplate their exit strategy just as much as their entry.

So what are the barriers to exit?

Share this story:

Share on Facebook

Google Plus

Linkedin

Please enable JavaScript to view the comments powered by Disqus.

Chicken gate scandal: Mrs. Gladys Shollei's side 2016 Standard County Golf Classic series kicks off in Machakos Kenya's top golfer Dismas Indiza aims to perform better in this year's Kenya Open Gor Mahia acquires services of Brazilian tactician José Marcelo Ferreira a.k.a 'Ze Maria' The Next Frontier: Meet red worm farmer using worms to make manure Ministry of energy and petroleum defends government's planned installation of 5000 mega watts
Source: Implications of Barclays exit on Africa as investment destination