The African Continental Free Trade Area (AfCFTA) presents great business opportunities for financial sector operators that have the desired network to explore inherent possibilities.
In a string of expansions across the African continent, Access Corporation says the AfCFTA enables it to channel resources and networks to areas within the continent that were previously untapped.
These expansions and efficient deployment of technology have impacted positively on the bank’s performance in its recently released financials and enhanced its commitment to service delivery
The gains of cross-border transactions and efficient deployment of technology for financial services access across Africa cannot be underestimated.
No other programme gives the continent power to explore its potential in banking and other financial services as the African Continental Free Trade Area (AfCFTA) implementation.
The AfCFTA is already providing the mileage for many financial institutions to channel resources and networks to areas within the continent that were previously untapped.
According to the World Bank, the AfCFTA presents a major opportunity for African countries to bring 30 million people out of extreme poverty and to raise the incomes of 68 million others who live on less than $5.50 per day.
With the implementation of AfCFTA, trade facilitation measures that cut red tape and simplify customs procedures would drive $292 billion of the $450 billion in potential income gains.
The World Bank, led by its Group President, David Malpass, said implementing AfCFTA would help usher in the kinds of deep reforms necessary to enhance long-term growth in African countries.
“The scope of AfCFTA is large. The agreement will reduce tariffs among member countries and cover policy areas such as trade facilitation and services, as well as regulatory measures such as sanitary standards and technical barriers to trade. Full implementation of AfCFTA would reshape markets and economies across the region and boost output in the services, manufacturing and natural resources sectors,” the bank said.
Even the Central Bank of Nigeria (CBN) Governor, Godwin Emefiele encouraged Nigerian businesses to explore the AfCFTA advantage and serve as a significant hub for international and domestic companies seeking to do businesses in the West, Central and East African Markets.
In series of expansions across the African continent, Access Corporation’s Chief Executive Officer, Herbert Wigwe says AfCFTA to expand its footprints across the continent and bring improved benefits to customers and returns to shareholders.
With networks across many African countries, Europe and Asia, Access Corporation is relying on technology to deliver quality services to its customer and huge returns to investors.
Clearly, at the end of the day, the massive continental expansion which the financial institution embarked upon few years back appears to have started yielding the expected benefits. Wigwe appears not be slowing down on his mission to position the financial institution as the gateway to Africa. He is redefining banking services with courage and commitment to not only domestic economic, but also the continental economic growth.
For instance, from Nigeria to Rwanda, South Africa, Mozambique, Kenya, Zambia, among several others, the expansionist adrenaline rush in Wigwe saw him last month securing final regulatory approval for Access Bank Zambia Limited, a subsidiary of its flagship subsidiary, Access Bank Plc, from the Central Bank of Zambia for the acquisition and merger of African Banking Corporation Zambia Limited (Atlas Mara Zambia) into its existing operations.
Key metrics growth sustained
Access Corporation has consistently outperformed the market on the growth of key metrics and its recently released financial results did not fall short of investors’ expectations
Access Corporation Plc (Access Holdings), last week presented its first quarter 2023 earnings on the floor of the Nigerian Exchange Limited (NGX), which reflected positive trajectory.
The first quarter financial performance was released same day as the bank’s full year 2022 financial results.
However, the first quarter 2023 results established that the bank got off on the right foot and may end the year 2023 better than its 2022 performance.
Precisely, the first quarter 2023 unaudited results showed that the Holding Company’s (Holdco) gross earning maintained its upswing as it increased to N424.917 billion in the review period, higher than the N295.736 billion recorded in the first quarter of March 2022.
Its profit after tax which declined marginally at the end of 2022, improved in the first quarter of 2023, to N71.636 billion, compared to N57.825 billion it realised in the first quarter of 2022.
Also, Access Corporation’s total assets increased to N15.742 trillion as at the end of March 2023, up from N14.998 trillion recorded at the end of December 2022, loans and advances grew to N5.038 trillion in the review period, from N5.108 trillion as at December 2022, and customer deposits of N9.941 trillion as of March this, higher than the N9.2 51 trillion recorded at the end of December last year.
Interestingly, the bank’s full year results also released same day did not fall short of investors’ expectations, despite the harsh operating environment.
Access Holdings’ total assets as at December 31, 2022, stood at N15 trillion, while its gross earnings crossed the N1 trillion mark to hit, N1.388 trillion, stronger than that of its peers in the league of tier-one banks.
Additionally, deposits from its customers increased to N9.25 trillion, higher than N6.955 trillion in 2021, while loans and advances to customers also went up to N5.557 trillion, from N4.446 trillion as at full year, 2021.
The management also proposed a final dividend of N46.21 billion, representing N1.30 per share to its shareholders for the year ended December 31, 2022. However, the Group’s profit before tax declined by 5.1 per cent from N176.8 billion in 2021 to N167.7 billion in 2022.
AfCFTA advantage
A crucial arena the Access Corporation seems very focused in its quest for offering of trade facilitation services to its African business community is the use of an efficient payment and settlement design being developed to power transactions in the AfCFTA, with about 52 countries already aboard.
The emerging consensus is that Africa still trails Europe, Asia and the United States among other regions in its continental trade below 10 per cent of global trade.
For example, over the past 50 years, records show that while trade with the West comes with very few or zero bottlenecks, intra-African trade are usually mitigated by so much tariff and non-tariff barriers, including payment challenges, which an Access Corporation can leverage to extend its reach across Africa and beyond in the years ahead.
According to the African Development Bank (AfDB) led by Akinwumi Adesina , intra-Africa exports amount to only 16.6 per cent of total trade in the continent.
But the signing of the landmark trade agreement in the African Continental Free Trade Area Agreement (AfCFTA), in 2018 which commits countries to remove tariffs on 90 per cent of goods, progressively liberalise trade in services and address a host of other non-tariff barriers opened a new vista for Nigerian and other lenders in Africa to become more competitive.
Though much work still needs to be done, the agreement created a single African market of over a billion consumers with a total Gross Domestic Product (GDP) of over $3 trillion, which would make Africa the largest free trade area in the world.
Fundamentally, this means that any lender with relevant structures can leverage payment and settlement opportunities in the continental space to make more impact.
Perhaps not surprising Access Holdings’ exploited its Afrocentric leaning and opened up branches in major financial centres of the world to enable it focus more on improving trade on the continent and earn more revenue for its shareholders.
An alert, sure-footed leader, Wigwe noted: ”We recognise and embrace the change that is currently happening and, as we have previously demonstrated, we will lead. Access Corporation will be a driving force in the ongoing digital revolution to the benefit of our stakeholders.
“This transition will allow us to offer more career development opportunities across portfolio companies for our employees, allowing us to attract and retain the best talent in an increasingly global marketplace. We will unlock more value for our customers by focusing on distinct business opportunities with high growth rates globally, such as payments and consumer lending.”
It is given that a good vision pulls in ideas, people and other resources. It creates the momentum and will to make change happen. It inspires individuals, complementary organisations and institutions to commit, to persist and to give their best.
Technology banking
Globally, banking is driven by technology. Gone are the days when banking was restricted to locations, specific time of the day and accessible/understandable to the upper, educated class of the society.
Today, banking happens anywhere and everywhere, with technologically-inclined financial institutions taking the lead.
For Access Holdings Plc, trading as Access Corporation, and led by Wigwe, technology is redefining and simplifying banking. It has also brought banking to the doorsteps of almost every household.
Wigwe has also deployed professionalism, discipline and persistence in leading the change in the traditional narrative of the banking sector in Nigeria and the continent.
From deep understanding of compliance issues and the need to use right technology infrastructure to support payments and remittances, without taking incremental risks, Wigwe has taken the banking giant to the next level.
He said: ‘’The bank will go forward, focus on becoming an aggregator in Africa as we build a global payment gateway, provide trade finance support and correspondent banking across Africa’s key markets. We are diversifying our earnings away from volatile markets and orchestrating operations from the global payments gateway.”
Also, Access Holdings’s commitment to delivering services to at least one in every two Nigerians has been reaffirmed as it inaugurated and empowered 100,000 Access Closa Agents to provide more than banking services to existing and new customers across the nation.
With the number of Access Closa Agents spread across the 774 local government areas in the country, the bank has significantly grown access to finance and banking services to millions of previously un(der) banked Nigerians, while providing alternate streams of income for MSMEs, promoting financial literacy, and also advancing its ambition to bank one in every two Nigerians by 2025.
According to the bank, the exponential growth of its agent network was in fulfillment of the its promise to ensure easier and safer access to financial services for every Nigerian.
“As a bank driven by innovation, we must deliver better outcomes for customers in terms of speed, security, and service to enhance customer experience in all the locations that we operate.
$300m capital to drive African expansion
Access Bank, the commercial banking unit of Access Holdings Plc, received $300 million as capital investment from the parent company to further its expansion move within Africa, the bank announced.
“The investment takes the form of a Tier 1 capital qualifying mandatory convertible instrument and is expected to improve the bank’s shareholders’ funds and total ratios,” Access Holdings said in a statement.
The Central Bank of Nigeria has endorsed the investment, it added.
Access Holdings is expanding into new markets on the continent and branching out into new businesses permitted by its holding company licence in pursuit of its strategy to be “Africa’s gateway to the world.”
The group is nursing the hope that its newly launched payments subsidiary Hydrogen will be able to settle one out of every three transactions that come into the continent in the nearest future.
“As a leading financial institution in the continent, we remain foresighted in our approach to our growth and capitalisation needs,” Wigwe said.
“This investment is a capstone initiative following the US$500 million Additional Tier 1 capital raised by the Bank in 2021 and advances its vision to be the World’s Most Respect Bank.”
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