Foreign banks are pulling out of Africa after decades of operations saddled by declining profit and rising operational costs reflecting the continent’s changing investment landscape and the diminishing appeal in the financial services sector.

On-going exits are largely linked to increasing competition from telcos and financial technology (fintech) firms offering mobile and digital financial services, weakening currency, political instability in several countries, and rising cases of terrorism, a new study by the global rating agency Moody’s shows.

The agency through the report dated September 24 says the tough operating environment has seen top global lenders which have operated in the continent for years scale down operations or exit completely by selling their African businesses to local banking operators.“Africa was long regarded as one of the next frontiers for global banking expansion. But the perception of many Western (foreign) banks has shifted over the last decade owing to disappointing profitability (when adjusted for currency movements and capital weighing) and rising operational challenges,” the agency says.

They include some large British and French banking groups, such as Barclays Plc, Standard chartered Plc, BNP Paribas, Credit Agricole, Groupe BPCE, HSBC and Societe GeneraleThe report notes that Africa’s retail banking in particular has fallen short of expectations for some foreign banks, with increasing competition from mobile and digital competitors challenging traditional banks’ market shares and profitability.“For African countries lacking comprehensive banking networks, mobile banking has become an easy alternative for money transfers and an important vehicle for increasing banking penetration,” the report says.“Fintech startups and mobile money operators such as Safaricom’s M-Pesa, Orange Money, and MTN Mobile Money have also expanded rapidly, offering a wide range of financial services to underserved individuals and new markets like the microcredit segment.”Competition between traditional banks, fintech startups and mobile money operators is intense, and traditional banks are working hard to defend market shares while preserving profitability, according to the report.

The report notes that rising interest rates at the tail end of the Covid- 19 pandemic have also dulled the attractiveness of African markets for some foreign banks causing them to single out African operations as being higher risk but less profitable than other regions.

In addition, weakening in the value of some local currencies against the dollar or European units, has cut the contribution of African operations to foreign banks’ revenues and profitability.

Recent economic shocks, such as the pandemic in 2020 and the commodity crunch that followed, hit emerging African middle classes, adding further pressure.“Several countries are still bearing the scars of the pandemic in the form of higher debt and increased poverty,” the agency says.

Moreover, political instability in several African countries has fuelled uncertainty and in some cases led to economic sanctions, constraining banks’ ability to conduct their business and repatriate profits.

There have been a series of coups in sub-Saharan countries in recent years, including Mali, Guinea, Burkina Faso, Niger and Gabon.

The emergence of terrorist organisations in few countries has also put African operations in the spotlight.

Tightened regulations on Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF have added greater complexity to banking operations, increasing the regulatory burden and magnifying reputational risk.

As of June 2025, 12 out of the 24 countries on the Financial Action Task Force’s grey list of jurisdictions under scrutiny for money laundering and terrorist financing were located in Africa.

According to the report the US sanctions, currently imposed on nine African countries adds another layer of risk and as a result foreign banks, some of which have been in Africa for more than a century, are increasingly leaving the continent.

Britain’s Standard Chartered Plc, which has operated in Africa for around 150 years is progressively reducing its footprint.

Its shareholding in these subsidiaries were finally sold to Access Bank in July 2023.

Standard Chartered Plc made a $217 million loss on the sale of its business in Zimbabwe, Angola and Sierra Leone largely due to forex translation with Harare accounting for the biggest hit.

Barclays Plc whose operations on the continent span more than 100 years marked its complete exit from the region in December 2017 by reducing its shareholding in South Africa’s Barclays Africa Group from 62.3 percent to a non-controlling stake of 14.9 percent.

The lender sold off business units it did not consider core operations and shifted attention to consumer corporate and investment banking in Europe and the US.

UK’s financial conglomerate Atlas Mara Ltd (Atma) which had acquired banks in seven African countries has already exited the continent terming its African investments “risky” and the sub-Saharan African macroeconomic environment as ‘challenging” exacerbated by the Covid-19 pandemic.

Consequently, from September 2020 to date Atma has completed its divestiture in Mozambique, Rwanda, Tanzania, Botswana and Zambia.

In June 2023, French bank Societe Générale announced the sale of its stakes in several African subsidiaries.

It sold its holdings in Mozambique (65 percent) and Burkina Faso (52.6 percent) to Vista Group, and its stake in Chad (67.8 percent) to Coris Bank.

Last month (August 2025), it also sold its 95.5 percent stake in Mauritania to Enko Capital.

In Cameroon and the Republic of Congo the bank’s participations were ultimately acquired by the respective local governments, which exercised their right of first refusal.

Société Générale also announced that it had signed an agreement to sell its 57.2 percent stake in its Equatorial Guinea subsidiary to Vista Group.

However, since the announcement, there has been no official confirmation that the transaction has been completed.

As of June 2025, disposal processes are also underway in Guinea Conakry and Benin.

The bank cited a lack of critical mass and limited synergies with the rest of the group as key reasons for its exit, aiming for a more efficient allocation of capital.

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