Mr. Roosevelt Ogbonna, Managing Director of Access Banking Plc, gives an update on the bank’s vision and mission to expand trade in the African continent and promote intra-African businesses with the recent mergers and acquisition.
What is the update on some of the transactions you carried out to acquire some banks in Africa?
We have secured the Central Bank of Kenya’s approval and the Ministry of Finance’s approval in Kenya. As you might be aware, all of those approvals have been attained, the approvals have been gazetted in Kenya, so there is no going back. It is not like there is something that can change this conversation.
We are very happy about this acquisition because it used to be a government-owned bank. So it was important we had the political structure in Kenya in alignment, we have crossed that hurdle and I think they are very happy to see us come.
In fairness to President William Ruto, he is the one who is rooting for the deal and encouraging us to do a lot more investment into their market.
For Standard Chartered subsidiaries, all of those have been completed. The last was Cameroon and we needed the approval of their Central Bank (Bank of African Central States), we have just got that approval.
At the start of the year, there were two that were outstanding. There was Sierra Leone and Cameroon and given the approvals that we have gotten, for all these transactions, at least we have all the regulatory approvals. What we are doing now is consolidating the businesses and beginning to run.
It takes a lot of time to consolidate and integrate businesses, not something you want to do in a hurry, you want to ensure that you get it right, technology is no issue and so we take our time and ensure that post Q3, more like in Q4 we begin to see the impact. We are excited as to what that does to us. You might not know some of those transactions place us significantly in those markets. In Sierra Leone, it makes us the third largest bank; in Gambia, we become the third largest bank. In Cameroon, we are among the top 10 banks.
In Angola, we have acquired a bank and we are now adding the Standard Chartered operations and this scales brought us to number eight or nine. What this does to us in Angola is that we now have a strong platform for growth.
How is Access Bank supporting African trades in the light of the AfCFTA?
Before the African Continental Free Trade Agreement (AfCFTA) came through, you remember as a bank we have always had an eco-setting mind set. We felt if we could create a bank in the African continent where that bank would connect the continent and the insight for me came from my UK business.
Access UK has become one of the largest corresponding banks in the African continent. To be clear, it is the largest corresponding bank in Nigeria. So every Nigerian bank that you know, except one, is a customer of Access UK, meaning Access UK is giving them trade lines to support the businesses they are doing.
Access Bank expanded to Egypt, Morocco, Southern Africa and Botswana, and we noticed that there were so many opportunities. The things we are importing from outside the continent are things that can be manufactured within.
In fact, we have customers in the continent who produce the same thing that the continent was importing. It might be that it is in Nigeria that those things were manufactured, however in Angola they are going to Portugal to buy it. This doesn’t make sense.
The AfCFTA just came to reinforce that conversation we were having and we say here is an institution, AfreximBank, thinking about this, how we can partner, and that was how our partnership with Afrexim was re-ignited, to see how we can join forces to create that platform. Today, we are present in all the key markets in the continent.
So the AfCFTA gives you the political will to get this conversation going.
The pull-out of the corresponding international banks in some of these markets gives you the commercial opportunities that we had to take and of course our presence in each of these critical markets, then create a strategic imperative to go and execute.
What is the effect of the Trump tariffs on African trade?
Trump’s policy is a blessing in disguise. I talked about what the AfCFTA does which gives the political will. Trump has just put fuel into fire and he is getting African leaders to look inwards now.
When we have an opportunity to sit in front of African leaders, I ask them to talk about pan-Africanism, you say all these green things, where is your reserve? JP Morgan, Citibank, Standard Chartered. Sincerely you are just talking.
If you take your money abroad and you need it, you will go and crawl and crawl for the money to come back, that system cannot work anymore. I know that the AU had a meeting recently where they were having those conversations. Three Presidents are leading and we have told them what we as Access Bank can do in those conversations and how we can accelerate that goal.
So I think Trump is a blessing in disguise for Africa. If we don’t take advantage of it now, I don’t know when else we would. We are keen and excited to work with Afrexim around the supply chain financing business.
What are some of the constraints to intra-African trade?
There are four things that inhibit intra-African trade. The first is information, the second is capital, the third is trust and the fourth is logistics. We are working on removing all these barriers. Trust is ensuring that every transaction that is done in the continent is a local transaction.
So you are in South Africa and you want to do business with someone in Angola, it is not two different countries doing business. South African entities, do business with Access Bank South Africa. Access Bank South Africa will then do business with Access Bank Angola. Access Bank Angola would now do business with customers in Angola. So every transaction is a local transaction.
We know that historical mistrust has existed among the countries, we cannot change it overnight. Now, part of the mistrust is on even standards. Trade rules might not be compensatory, meaning I treat you well and you must do the same. All of these things would always create trade tension but being on both sides of the divide, we believe we can bring significant values to the table.
In terms of information, we are trying to create a platform working with several partners where you can get information on any African business that is active in the continent.
On the question of capital, when we see a business opportunity, for instance an African is going to import when there is an African company that can produce it and there might be a capacity conversation around ‘this company is too small to meet the demands in the continent.’ Let’s support that company and invest in it to be able to scale. Then we have comfort because there is a ready market for the goods he would be manufacturing.
Now on the question of logistics, you might think it is easy to move goods from Nigeria to Kenya, you have to go all the way down, past South Africa, then you come back to go to Kenya. Is there an easier way to do it? Possibly we can take those same goods, bring them to Namibia Walvis Bay, from Walvis Bay, do inland movement, take it all the way to Tanzania and you cut down on having to go all the way down.
We have to think creatively. To do this, businesses will have to go and create a storage facility in Walvis Bay and that takes a lot of doing and somebody has to provide the fund. I can do it with Access Namibia.
You have spoken on plans to do affordable housing in Nigeria, can you give more insight on that?
We have signed an agreement with Governor Babajide Sanwo-Olu of Lagos to do affordable housing. What we are doing is not a favour, we are trying to ask ourselves, how can we test mortgage business in this country. The board has given us approval to do affordable housing at the rate of below 15 per cent, 20-year run.
We signed the agreement with the Lagos State Government in October last year. We are starting with 2000 units. What is the government bringing? They are bringing land. So they are giving us land for free. They are creating infrastructure for free and then we are creating the housing ecosystem in that state.
Some states might not get it. Ogun State is clear that they have land as an asset and they can well put us on that. We have sold the idea to Katsina State, we have sold it to Abia, we have sold it to Akwa Ibom and Taraba and I think you would see several of those things begin to take place.
We told the governments that those things would be done in 24 months but clearly given the work we are doing, we want to finish them before the 24 months so that the governor who was visionary enough to want to work with us would at least be in government to see some of the things he had started begin to take effect.
Have you considered the risks in some of these investments you are putting into acquisition and other businesses?
Everything you are doing in banking is a risk. You have to ensure that you are taking calculated risk. We are talking about JP Morgan now as the number one but they have gone through 800 mergers and acquisitions and you and I are not talking.
Now we might be the most active on the African continent but we have only done 22 (acquisitions) and I think in the 22 we have done, only one has gone sour and that was Cote d’Ivoire.
Give us more credit that we have done 22 and out of those 22, only one was not executed with value accretion. We didn’t lose money.
Now, to put these in context, all of these M and As (mergers and acquisitions) have created a platform that the growth the bank has gone through. Twenty years ago, if you called Access Bank, you would not call AfriBank next to it or Union Bank next to it, those were the biggest banks at the time.
Today, that is not the story anymore and it is through these M&As that are risky that we got there. Now we have demonstrated that we have the capacity. Every bank is good at something, we just so happen that we are good at this one.
Is the japa syndrome also affecting Access Bank?
Yes it is. As banks, we focus on human and financial capital. While financial capital is easy, you go to the market, you tell your story, you find investors whose vision is aligned with yours and of course, in 30, 40 days you can raise capital, human capital is not that easy. To get into Access Bank, it might take you almost a year, six months or seven months of training school.
