The African Continental Free Trade Agreement (AfCFTA) opens $504.17 billion African goods and $162 billion services to Nigerian companies.
Access Bank’ acquisition of majority stake in BancABC Botswana activates solid foundation to explore opportunity presented by the AfCFTA and become Africa’s payment gateway to the world.
Trade is the lifeline of great economies. For Nigeria and many Africa countries, trade not only cement inter-country relationship, but helps to bring prosperity to the people.
Still, businesses that will tap from the opportunities presented by trade, including the $93 billion transactions that happen informally across the African continent, are those that have the identified network and technological backbone to harness such benefits.
The need to formalize Africa’s trade opportunities led to the implementation of the African Continental Free Trade Area (AfCFTA), which also come withe wider opportunities.
The Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, said that the AfCFTA, when fully implemented, could afford Nigerian companies preferential access to African markets worth $504.17 billion in goods.
Over the last few years, Access Bank Plc has been on an aggressive expansion journey. From expanding its footprints nationally, the Nigerian bank has been strategically planting branches across Africa and establishing presence in countries thousands of miles from its headquarters, with a view to take advantage of the widening opportunities in the continent.
The latest among such venture by Access Bank was its announcement on the Nigerian Exchange Limited (NGX) that it had acquired 78.15 per cent shareholding in African Banking Corporation of Botswana Limited (BancABC Botswana).
The Company Secretary, Access Bank, Sunday Ekwochi, who disclosed this, explained that BancABC Botswana is the fifth largest bank in Botswana as well as a well-capitalised franchise poised for growth in its local market.
“The new acquisition will form part of the bank’s nexus for trade and payments in Southern Africa and the boarder COMESA trade region. BancABC Botswana’s achievements in the retail banking space will provide an opportunity for the bank to deploy its best-in-class digital platforms and product suites to the benefit of BancABC Botswana’s customers and enable it to complete strongly across its core business segments,” he explained.
Commenting on the transaction, Group Managing Director/CEO, Access Bank, Herbert Wigwe said: “We are pleased with the successful conclusion of this transaction which will provide significant synergies by combining BancABC Botswana’s strong retail banking operation with Access Bank’s wholesale banking capabilities.
“It will also strengthen the quality of earnings through revenue diversification and growth in the corporate and SME banking segments for BancABC Botswana. The combination is another step towards out broader vision of becoming the World’s Most Respected African Bank.”
Access Bank already has subsidiaries across Sub-Saharan Africa and Europe, providing financial and banking services. The bank’s subsidiaries include Access Bank (Gambia) Limited, Access Bank (Sierra Leone) Limited, Access Bank (Zambia) Limited, Access Bank (UK) Limited, Access Bank (Ghana) Limited, Access Bank (D.R. Congo), Access Bank (Rwanda) Limited, Access Bank (Guinea) Limited, Access Bank (Kenya) Limited and Access Bank (Mozambique) Limited.
According to Wigwe, the target is for the bank to establish its presence in 22 African countries as well as some strategic locations outside the continent so as to diversify its earnings and take advantage of growth opportunities in Africa.
Probably the first and most important benefit of Access Bank’s expansion is the rate at which the bank has been able to scale – growing its customer base with unprecedented ease. This has made it easier for it to secure a broader geographic footprint across Africa and the rest of the world.
Also, former Deputy Governor of the Central Bank of Nigeria, Sarah Alade, had noted that a growing number of studies had reviewed the effects of cross-border banking on financial intermediation and efficiency, and found the existence of a positive relationship.
According to her, improvement in the ability of households and firms in a country to access finance and the actual usage of banking services, one way in which the intermediation functions of banks are measured, is enhanced by bank entry. Additionally, she pointed out that banks are in a better position to lend if they are able to mobilise deposits and increase their asset base.
There is general agreement in the literature that the entry of foreign-owned banks increases competition and efficiency in the banking sector of the host country, she said.
This is mainly because the entry may reduce risk exposures for the banks through greater geographical and sectoral diversification, and enlarge the aggregate quantity of capital invested in the banking sector. “Researchers and analysts encourage entry of banks as a means of strengthening weak and inefficient banking structures, particularly in emerging economies. Banks that expand internationally are typically more efficient, better capitalised and come from countries with a more developed banking system,” she added.
The latest acquisition by Access Bank came less than two weeks after it announced that it had successful issued $1 billion ($500 million apiece) tier-1 Eurobond, under its medium term note programme.
The bank had explained that the move was in line with its commitment to execute its vision to become the ‘World’s Most Respected African Bank.”
According to Wigwe, the success of the transaction, which he said was the first in the Nigerian banking industry and the first of its kind in Africa outside of South Africa, would significantly enhance the bank’s tier 1 and total capital ratios ahead of Basel III implementation in Nigeria.
The fresh capital would provide room for significant growth through ongoing execution of the bank’s strategic objectives.
In particular, it followed its recently announced Group reorganisation which was aimed at capturing the strategic opportunities in payments, agency banking, and insurance across the continent which we expect will further enhance the growth profile and diversification of our business.
“Our growth and diversification strategy is also underlined by the recent expansion of our regional footprint where we continue to monitor opportunities,” Wigwe explained.
Wigwe had said across Africa, there are opportunities for the bank to expand to high-potential markets, leveraging the benefits of the African Continental Free Trade Area agreement (AfCFTA).
He had said AfCFTA, among other benefits, would expand intra-Africa trade and provide real opportunities for Africa.
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.
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.
Noticeably, with all these, Access Bank is positioning itself to become Africa’s gateway to the world and with the improved capital, the bank is now better positioned to support trade and payments across the continent.
By 2023, Access Bank aims to have consolidated its position as Africa’s gateway to the world with about 100 million customers in Nigeria and an additional 20 million customers across our African subsidiaries, Wigwe had projected.
He attributed his growth projection to the bank’s innovative payments solution, saying, “Access Bank is set to revolutionise the payment and banking landscape in Africa.”
“The growth of e-banking start-ups and solutions has proven to be incredibly beneficial for the Nigerian economy. Given that these digital innovations provide much-needed solutions to a number of issues customers of the traditional banking systems have hitherto experienced, there has been an unmistakably positive effect across various sectors.
“As an established leader in the Nigerian and indeed African banking industries, Access Bank has embraced digital technology to propel both its sustainability targets and its African gateway strategic drive,” the bank stated.
This was evident in its partnership with the Africa Fintech Foundry (AFF), aimed at nurturing the next generation of cutting-edge financial-technology firms. The AFF is a pan-African accelerator designed to find and invest in start-ups that implement a global viewpoint while still focusing product offerings on Africa.
Access Bank plans to harness the very best Nigeria has to offer, working closely with them to make Nigeria a retail banking powerhouse.
“Over the last couple of years, Access Bank has focused its expansion efforts on powering digital payments across Africa. The bank launched its AccessAfrica product, a payment system that serves to facilitate cross-border trade and non-trade payments,” it added.
The Vice President, Prof. Yemi Osinbajo recently estimated the value of informal trade in the African Continent to be in the region $93 billion yearly.
Osinbajo, who stated this in a message delivered at a roundtable on industrialisation in Africa with the theme: Positioning African Industries for Economic Transformation and Continental Free Trade, organised by the Manufacturers Association of Nigeria (MAN) to celebrate its Golden Jubilee, said while the AfCFTA offers limitless opportunities for the industrialisation of Africa, authorities across the continent must take the right policy actions to actualise them, pointing out that such actions include the protection of local industries and improving value chains.
He said part of the guiding principle in preparing industries for AfCFTA, is “ease of payments across borders and implementation of the protocols on free movement of persons.”
Osinbajo underscored the importance of the AfCFTA as the fulcrum for Africa’s development. As he put it: AfCFTA is indispensable if industrial development is to take off in Africa because it offers wider markets and economies of scale which are essential for manufacturing to be competitive. “We must take policy actions to create an environment in which businesses can thrive.
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