On the frontier of finance

The Economist writes:

Africa is enjoying its best period of sustained economic expansion since independence. Real GDP growth is expected to rise from 5.7% in 2006 to 6.1% this year and 6.8% in 2008. This good performance is partly driven by high commodity and oil prices. Foreign aid has also helped. But it is also due to better economic management, more openness and more stable politics. Such policies mean banks have to work harder to make a profit, but also help them to grow. That is encouraging them to reach out to new customers—and so they should.

For all the progress, much remains to be done. In spite of innovations to bring in new customers, banks still have to build up necessary scale, cut costs and manage risks better. Sub-Saharan African economies are growing, but except for a handful, they remain very small: South Africa's GDP alone makes up almost 40% of the whole. Relative poverty is declining, but four out of ten Africans still have to survive on less than a dollar a day.