(Ecofin Agency) – In the midst of a reorganization of the priorities of major Western banks in Africa, the CEO of JPMorgan Chase is banking on the continent to strengthen the position of the American bank, with a marked interest in sovereign debt and wealth management.
Jamie Dimon (pictured), CEO of JPMorgan Chase, is preparing his big return to Africa, according to Reuters. In October, he will set foot on four key nations on the continent – Kenya, Nigeria, South Africa and Ivory Coast – for a strategic tour aimed at strengthening the American bank’s presence in this area still largely underexploited by Wall Street giants. A first trip in seven years with one ambition: to make Africa a growth lever for the largest American bank, at a time when European and North American banks, once omnipresent in Africa, are reviewing their priorities. Standard Chartered, Barclays, Société Générale and even BNP Paribas have either sold their subsidiaries in several African countries or refocused their activities around sovereign debt and a few large institutional accounts.
Seizing the sovereign debt opportunity
The bank, which already has offices in South Africa and Nigeria, aims to expand its investment banking, asset management and wealth management activities in these two countries as well as in Kenya, Ivory Coast and even Ghana, Dimon said in Davos.
Why these countries? Because they embody Africa’s current economic dynamics: rapidly changing economies, rapid urbanization and a pressing need for capital to finance infrastructure. But more importantly, these countries offer access to high-yield sovereign debt markets, mergers and acquisitions and corporate transactions that JPMorgan wants to conquer.
According to an OECD report, Africa would need an additional $1.6 trillion in financing by 2030 to achieve the Sustainable Development Goals (SDGs). Currently, the cumulative nominal value of Eurobonds issued by African countries stands at around $111 billion, with the top five countries (Angola, Egypt, Ghana, Nigeria and South Africa) accounting for 71% of this value. In this context, sovereign financing needs are becoming a priority for African states, and JPMorgan is keen to capture a significant share of these transactions.
Last May, JPMorgan Chase signed a $200 million financing agreement with Rwanda, partially guaranteed by the African Development Fund (ADF) of the African Development Bank (AfDB). A team from the largest American bank had already visited the AfDB offices in Abidjan a few months earlier, as part of a trade mission, where it had indicated its readiness to support sovereign financing, guaranteed by the pan-African bank, the only one to date with a triple-A rating from the three major American rating agencies.
With African countries returning to international financial markets this year, JPMorgan has already been active on several financial transactions. In June 2024, the bank led Senegal’s $750 million Eurobond issue as lead manager. It was also co-lead manager on Côte d’Ivoire’s $2.6 billion deal. It was also cited for Benin’s issue, which raised $750 million in February, and in Kenya, where $1.5 billion was raised. The only notable exception was Cameroon, where JPMorgan was not mentioned.
Mergers and acquisitions, a growing sector
The dynamism of large African companies, particularly in sectors such as energy and telecommunications, also generates numerous opportunities for investment banks. Mergers and acquisitions, as well as fundraising, are becoming commonplace on a continent seeking economic consolidation.
In 2022, Sub-Saharan Africa recorded 297 M&A deals worth $19.2 billion, compared to 176 in 2021. And while this figure is down from $87.5 billion in 2021, partly due to the global economic climate, investors remain more than optimistic. According to a KPMG study, around 68% of active investors in Sub-Saharan Africa expect an increase in M&A deals over the next two years.
Wealth management to capture emerging wealth
In addition to sovereign debt and corporate operations, JPMorgan is banking on wealth management to expand in Africa. The sector private bankingstill relatively little exploited by large international institutions, represents a new growth opportunity. According to the Africa Wealth Report 2024Africa is home to about 138,000 High-Net-Worth Individuals (HNWIs), individuals with at least $1 million in investable wealth. Of these, 328 are centi-millionaires and 23 are billionaires.
This wealthy class, mainly concentrated in economic hubs such as Nairobi, Cape Town, Lagos, Cairo, Marrakech or, more modestly, Abidjan, is showing a growing interest in international investments, particularly in luxury real estate and international financial markets. It is precisely this emerging wealth that JPMorgan, whose wealth management division saw its assets under management increase by 13%, reaching $1.9 trillion in 2021, intends to capture. And the prospects are enticing: according to forecasts, the number of African millionaires could increase by 65% by 2033, an unprecedented outlook for wealth management.
An advisory board with Dangote and Blair
Yet the path has not always been smooth. In 2018, the bank had already tried to establish itself in Ghana and Kenya, but had come up against strict local regulations. However, in recent years, the projects have been put back on the table. The context now seems much more favorable. In February 2023, after a meeting between Kenyan President William Ruto and a senior JPMorgan official, it was announced that the bank would soon open a new office in Nairobi.
To support his expansion in Africa, Jamie Dimon had to surround himself with influential advisors, such as Nigerian billionaire Aliko Dangote and former British Prime Minister Tony Blair, who are very present in African palaces. A sort of advisory board of personalities who, thanks to their networks and their detailed understanding of local dynamics, bring valuable expertise to the bank.
Fiacre E. Kakpo
