Awori: Ecobank Has Agenda to Drive Growth in Nigeria

At the just concluded 36th Annual General Meeting (AGM) of Ecobank Group held in Togo, its Chief Executive Officer, Mr. Jeremy Awori expressed the group’s determination to strengthen remittances, among others in Nigeria, targeted at driving its overall growth.  Kayode Tokede presents the excerpts

Strategies adopted to grow Nigeria business and its contribution to bottom-line

We have a strategy which is going to be very similar to other growth transformations of the Group and return strategies, which is to grow our payments business, consumer and SME businesses, because there’s definitely a need that not just one bank can fulfil.

We have some products and services that we either have launched or will launch that we’ll be able to also add some digital services to the platforms in which we operate.

We also have opportunities in corporate banking, selectively more on the cash management side. We are encouraging trade and we want to also be able to participate in the remittance space. Today in Nigeria, almost $20 billion of remittances comes into the country. We want to be the partner that brings that money into the country and to be able to deploy it, either to change lives and livelihoods or to invest in businesses across the continent.

Last but not least, in addition to trade, given the sort of opening up of the foreign exchange markets within the continent, we’re now seeing many more transactions. We’re seeing Nigerians wanting to send money into Africa and using our platforms to do that.

We’re seeing an increase in the numbers of remittances in Nigeria. Nigeria with the geographic size, and due to the population revenue potential for us as a Group.

So, we see that in Sub Saharan Africa, Nigeria is the biggest banking revenue pool market outside South Africa and that’s why we are focusing on Nigeria. We’re focusing a lot on technology, digitization, automating processes to improve customer experience, so that customers have a better way to bank.

We have a big agenda in Nigeria that we’ll be looking at, to drive growth. Now, in terms of financial performance. It is one of our big revenue drivers across the continent, and you can see very clearly in our annual reports, the actual profit & loss numbers.

We just believe that there is more that we need to do to deliver, especially on the profit line. And that’s where we’re focusing on.

We believe we can grow the revenue line, and we have had some historic impairment issues, but what we have typically seen, which is a difficult challenge for us to manage, is when you convert Naira performance into dollar performance.

Given the depreciation of the currency, it more or less indicates like the business is not growing. But when you look at it in Naira, we’re growing the business quite rapidly and we’re growing it well enough about 20per cent per annum.

So that’s what’s encouraging, but it’s going to be a lot of work and the team is committed. And I think you’ll start seeing some green shoots of this business as it turns around.

About ETI’s growth, transformation and returns strategies

ETI is keen on fulfilling its purpose, which is around financial integration, financial inclusion and making a difference in the lives of Africans across the continent. In order to do so, we have crafted three core pillars that we are focusing on. One is growth. The other one is transformation, and the third one is on returns.

Now on the growth section, we’re looking at, how do we grow our business faster in the future and why is growth important? Growth is important to be relevant on the continent. There’s still many financially underserved businesses and individuals that we wish to bring into the formal section, and by doing so, it is proven to uplift lives and livelihoods and health drive economies.

Under our growth pillar, we’re going to be focusing on growing our core business, which is corporate and investment banking. But we have newer, younger businesses that we feel will grow very rapidly and will make a difference on the continent. 

And these businesses include our consumer banking business. There is what we call commercial, which is our SME banking business, and then lastly, our payments, remittances and fintech partnerships business, which is newly created to focus on the fast-growing payments and remittances business. These businesses, we feel, especially the newer businesses, represent a big opportunity for growth and we are developing new propositions.

We’re investing in technology, our people, and you will see more about that. And we were very pleased to emerge as the SME bank of the Year by the African bank Awards, which shows the early progress that we’re making in making a difference within the SME sector.

From a geographic perspective, we are in 35 countries across the continent, and we see that we have opportunities to grow where we are.

We have a strong position of leadership in 22 markets. We are top five players and we wish to entrench our position in those markets. We are paying particular attention to Nigerians and the East Africa businesses, because we feel there’s room for them to improve on their performance and to deliver further to the Group and we tend to grow our trade business.

Even when we are in 35 countries across the continent, we are part of Africa continental free trade. We wish to drive and play our part in supporting trade across Africa and even into the world as we see more activity on that front.

We’re also working on improving our brand and growing it further. And you’ll have seen we launched a new campaign, which is a better way, a better Africa. We launched that early in the year with the TotalEnergies cup 2023, a tournament, which was watched by almost 2 billion people and it was a good introduction competition.

And we are Pan African banks, and it makes sense as a natural partnership. We’re committed and  we believe we can make a difference. We’re a growing business, and we’re excited to be stepping forth, and we’re optimistic about these prospects for Africa, and the prospects for our business. We’re counting on all your support as we embark on this new, exciting journey. Under the new leadership of Papa Ndiaye.

 Expansion into UEMOA as some banks are leaving

We want to enhance our position in UEMOA.  Look at whether it makes sense to acquire another bank if they’re available to be acquired, and whether we can actually add value by bringing it into the Ecobank family. Like you quite rightly noticed, a number of banks are leaving some of these markets and that creates opportunities.

We have a duty to examine those opportunities and see if they fit with us. And if they do fit with us and they, we can agree on terms, then we would proceed but there is a lot that needs to happen before you can say that we are going to acquire another bank.

But for us, I just really reiterate, we are already in a strong position in a number of these markets. There are regulatory concerns also sometimes for some other banks, but we will consider each case on its own merit and take it from there. So, I wish I could tell you yes for certain we’re going to do this or no we’re not. I guess you just have to watch over time what happens.

On expansion in South Africa, other regions ETI currently not operating

It was started by President John Doe among others, to really encourage financial integration in the Economic Community of West African States (ECOWAS). It was then subsequently built upon to spread out across the African continent. I was not there at the time, but I believe the logic was that there was definitely a need to provide further banking services in Sub Saharan Africa.

In Northern Africa, there are already many well established and very strong banks that are providing services there, as are they in South Africa.

We have a representative office in South Africa, and as you well know, one of our shareholders, Nedbank is a materially and systemically important bank in South Africa.

So, as we think about our participation strategy, on where we offer banking services, we look at the number of things. We look at, is there a need and a space for us to participate in that market? Have we got an ability to compete effectively against that market? And have we got an ability to generate returns for our shareholders. Right now, the focus is on the 35 countries that we have. We feel there’s still room to grow our business in those countries.

We don’t preclude, or say we will never do something. We have to also consider the regulatory environments, the complexity of operating in these markets, but we really feel that by partnerships and working together, we can get the benefits of some of those other markets.

So don’t be surprised in the remittances and payment space, if you see us partnering both with Southern Africa as well as Northern Africa. But we really feel we’ve got opportunities in the markets we have for the short-term future, and we keep ourselves open to opportunities that they present themselves.

On dividend payout to shareholders

We’re a growing business, and a business that’s investing. The capital on that front is also important as we grow further in order to generate not just short term but long term returns for shareholders. The ultimate aim is for us to deliver sustainable value, and we’re very mindful of that.

It is R part of the GTR strategy, which is value for the shareholders as we are looking for returns for the shareholders, and those returns come from dividends, but also appreciation in the share price in case people wish to be able to sell their shares, and they can sell them at a higher price.

futures Ecobank futures outlook

We have very specific agendas for each country that we’re in and each region. We want to strengthen the fact that we run a diversified business across the continent. Being in 35 countries, we are far and away, and have the largest geographic footprint of any bank on the continent.

We want to leverage that along with our one system gateway, which we run out of our Ghana business, to be able to confer competitive advantage for each of the markets we’re in. What do I mean by that? Because we run one system, we can roll our products faster. We don’t have to go to each country and make changes on the technology front in those markets.

Because we run a one system gateway today, we can do real-time payments from one country to another, whether it’s Ghana to Kenya or Zambia to Uganda.

We can do real-time payments, and we’re one of the few banks who can do that, if any, of the others, and that’s on our proprietary system.

When I talk about SME, it is quite a wide catchment. These are the drivers of the economy. They’re the drivers of employment. And we are challenging ourselves hard to see what more we can do. Typically, people talk about SMEs as requiring funding, and there is a big funding gap today. It’s estimated between $250 billion to $300 billion in terms of facilities needed to support these SMEs, but they also have other banking needs and payment needs.

For example, they need support on trade. They need training on trade. They need training on how to optimize foreign exchange, how to manage risk, how to expand across the continent. So we want to go into areas and work with businesses who want to operate in more than one country.  We want to be the banking partner of choice. If you’re in, say, Kenya, and you want to expand out to, for instance, Eastern-Southern Africa, we can help you take your business into that part of the market.