Sameera Casmod | sameerac@radioislam.co.za
14 May 2024 | 12:10 p.m.  SAST
1-minute read

BNP Paribas, the sixth-largest bank globally, has ceased its operations in the country.

With assets totalling €415 billion (R8.2 trillion) under management, the French banking giant had received authorisation to operate as a bank in South Africa via a branch in 2012, offering corporate and investment banking services.

The decision to exit comes as part of the group’s strategic refocusing on Europe and Asia, leading to a scaling back of its activities across Africa.

Efficient Group’s economist, Dawie Roodt, discussed BNP Paribas’ departure on Radio Islam, saying that the move is unsurprising and does is not signify a drawback for the country’s investment climate.

Reasons that the foreign bank might have exited the country include the current regulations that oversee banks in South Africa, as well as the dominance of local banks in the market.

Roodt noted that the bank’s withdrawal is different from Shell’s departure.

The exit of Shell is indicative of economic stagnation and systemic challenges, Roodt said.

He discussed a growing sentiment among international investors regarding South Africa’s diminishing appeal as an investment destination.

“South Africa is not even on the emerging market anymore. South Africa has become a very unattractive investment destination,” Roodt said.

He underscored obstacles such as regulatory burdens, infrastructure deficiencies, and governance issues that deter international investors from establishing or maintaining a presence in the country.

Citing conversations with international directors and fund managers, Roodt noted the erosion of South Africa’s standing as an emerging market and the reluctance of global businesses to commit capital to the region.

While BNP Paribas’ departure may not constitute a seismic event in itself, it reflects broader concerns about South Africa’s investment climate.

Listen to the full interview on Sabaahul Muslim with Moulana Sulaimaan Ravat here.