Access Bank: Staying Ahead of the Pack

Focus

Oluchi Chibuzor writes that with the recent visit to the President of Rwanda, Paul Kagame by the Chief Executive Officer of Access Bank Plc, Herbert Wigwe, the financial institution is positioning itself as the gateway in the continent actualising the objectives of the African Continental Free Trade Area

With the commencement of the African Continental Free Trade Area (AfCFTA) agreement in January this year, stakeholders have continued to list the benefits to businesses in the continent.

The AfCFTA agreement is expected to create the largest free trade area in the world measured by the number of countries participating.

The pact connects 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at $3.4 trillion. It has the potential to lift 30 million people out of extreme poverty, but achieving its full potential will depend on putting in place significant policy reforms and trade facilitation measures.

In fact, it is expected that full implementation of AfCFTA would reshape markets and economies across the region and boost output in the services, manufacturing and natural resources sectors.

According to the World Bank, as the global economy continues to face the challenges presented by the COVID-19 pandemic, the creation of the vast AfCFTA regional market is a major opportunity to help African countries diversify their exports, accelerate growth, and attract foreign direct investment.

The multilateral institution noted that AfCFTA would be a huge step forward for Africa, demonstrating to the world that it is emerging as a leader on the global trade agenda.

“The African Continental Free Trade Area has the potential to increase employment opportunities and incomes, helping to expand opportunities for all Africans. The AfCFTA is expected to lift around 68 million people out of moderate poverty and make African countries more competitive.

“But successful implementation will be key, including careful monitoring of impacts on all workers—women and men, skilled and unskilled—across all countries and sectors, ensuring the agreement’s full benefit,” the bank added.

In addition, the AfCFTA represents a major opportunity for countries to boost growth, reduce poverty, and broaden economic inclusion as its implementation is expected to lift 30 million Africans out of extreme poverty and boost the incomes of nearly 68 million others who live on less than $5.50 a day; increase Africa’s exports by $560 billion, mostly in manufacturing; and spur larger wage gains for women (10.5 percent) than for men (9.9 percent), among others.

However, analysts have stressed that the success of AfCFTA will rely heavily on Africa’s financial services industry’s ability to serve as the brain of the liberalisation process.

The analysts noted that for Nigeria, with most Tier-1 banks already operating in many African countries and continually expanding, it gives them an edge over their counterparts in other African countries.

They added that with the increase in trade that would spur economic activities and increased lending, many banks are already in a liquid position to take advantage of AfCTA.

To a former President of the Chartered Institute of Bankers (CIBN), Mr. Uche Olowu, Nigerian banks with more trade will be in a better position to increase lending to the real sector which in turn will spur economic activities.

He said: “Banks are ready especially as banks have procured good lines that would support trading and supporting manufacturers, exporters, Nigerians products, which would thereby jumpstart economic activities.

“Nigerian banks are liquid and are prepared to lend out to those channels and outlets to serious manufacturers because it poses great opportunities for Nigerian banks and the Nigerian economy.

“Banks are there to intermediate and they have the information, data and all that it takes to support Nigerian businesses that are serious and credit worthy.”

Also, the President of Risk Management Association of Nigeria, (RIMAN) Mr. Magnus Nnoka, noted that Nigerian banks are well capitalised and have outlets across Africa which put them at an advantage.

Nnoka said: “We are amongst the most prepared country from the financial services point of view. Apart from a few banks in Egypt and South Africa, Nigerian banks are reasonably capitalised compared to other African countries.”

According to the World Trade Organisation (WTO), International Monetary Fund (IMF) and other international economic organisations, the continent’s financial services sector should take a lead role in providing the major tools necessary to implement robust trade agreements.

Banks must position themselves to lead the way under this agreement and also introduce innovations and new technologies to adapt to the diversifications which will result from the agreement.

This opportunity will provide competition within the industry and therefore banks that position themselves appropriately, will benefit enormously.

This clearly must have informed the recent aggressive drive for continental expansion by Nigeria’s Access Bank Plc, with Herbert Wigwe as the driving force.

The bank chief executive officer recently paid a working visit to the President of Rwanda, Paul Kagame, in his quest to further expand the financial institution’s presence in the continent.

Access Bank recently unfolded plans to expand to more African countries as part of a strategy to support trade and finance in the continent and take advantage of the AfCFTA.

According to Wigwe, across Africa, there is an opportunity for the bank to expand to high-potential markets, leveraging the benefits of AfCFTA.

He said AfCFTA, among other benefits, would expand intra-Africa trade and provide real opportunities for Africa.

He stated that the plan is for the bank to establish its presence in 22 African countries so as to diversify its earnings and take advantage of growth opportunities in the continent.

According to him, Africa has enormous potential and there are opportunities for an African bank that is well run, that understands compliance and has the capacity to support trade and the right technology infrastructure to support payments and remittances, without taking incremental risks.

“We believe that we are best positioned to basically do all of that. Our focus is to become an aggregator in Africa and we are building a global payment gateway and providing trade finance support and correspondent banking across the continent. We are focusing on the key markets.

“The approach would always be that in the country we wish to go to, that we have the right skills. We would not just be a drop in the country in which we are present, we would make sure that we have an impactful presence in each of the major countries in which we are present.

“In doing this, we are also mindful of the country we are going to so as to make sure that it is of benefit to the bank. As we do this, we are working with our friends and partners.

“We are diversifying our earnings away from volatile markets as well and we are orchestrating our operations from the global payments gateway and ensuring that using Access Bank UK, providing corresponding services from digital platforms, the overall profitability of our franchise,” he explained.

Commenting further, on AfCFTA, he said the bank would use its digital framework to benefit from the continental agreement.

“Coming to Nigeria, we think we need to continue to entrench ourselves in the local market because there is still so much work to be done.

“So, we are doing everything possible to satisfy our customers and also to ensure that our channels are adequately secured. We are also ensuring that our staff are very efficient,” the CEO said.

In line with its expansion drive, Access Bank in April entered into a definitive and binding agreement with ABC Holdings Limited to acquire 78.15 per cent shareholding in the African Banking Corporation of Botswana Limited (BancABC Botswana).

The transaction, which is subject to regulatory approvals and customary conditions precedent, is expected to close before the end of this quarter.

ABC Holdings is a subsidiary of London Stock Exchange listed group – Atlas Mara Limited.

Bostwana is renowned for its quality sovereign credit rating and stability. Access Bank’s market entry is expected to further solidify its strategy as, “a strong banking partner in key verticals across retail and corporate banking, including especially supporting trade in payments across southern Africa and Sub-Saharan Africa more broadly.”

Commenting on the deal, Wigwe, said: “We remain committed to a disciplined and thoughtful expansion strategy in Africa, which we believe will create strong, sustainable returns for our shareholders and stakeholders at large, over the medium and long-term.

“The establishment of Access Bank through this acquisition in the Republic of Botswana will position the bank to deliver a more complete set of banking solutions to its clients active in and across the SADC and COMESA regions.

“This transaction complements our recent strategic growth acquisitions in South Africa, Zambia and Mozambique. We are building a bank of the future that Africans across Africa and the world would be proud of and look forward to welcoming the employees, customers and other stakeholders of BancABC Botswana to Access Bank.”

In 2018, the bank launched its ‘Africa’s Gateway to the World’ campaign – a strategic initiative which aims to promote ‘access to finance’ in Africa and beyond. It started this campaign by leveraging technology to offer its consumers new products. An example was its partnership with Remita, which has offered PayDay loans to over five million external customers. The product was available on the web, through the bank’s USSD code, via ATMs, Access Mobile, WhatsApp Banking, and QuickBucks – its instant loan disbursal application.

Access Bank has also continued to strengthen its digital technology to propel both its sustainability targets and its African gateway strategic drive.

This was evident in the bank’s partnership with the Africa Fintech Foundry (AFF), aimed at nurturing the next generation of cutting-edge financial-technology firms.

Equally, Access Bank has been driving its revenue growth through retail expansion, which has grown consistently across all income lines, driven by a strong focus on consumer lending, payments and remittances, digitalisation of customer journeys, and customer acquisition at scale

It has also maintained strong capital levels despite investments for growth and has accumulated capital over time.

Therefore, as one of Africa’s most capitalised banks as well as its expanding footprints and digital platforms, Access Bank has effectively positioned itsslf as one of the leading financial institutions in the continent to reap from the new continental deal.