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Africa’s Largest Regional Bank Brings World-Class Service to a Dynamic Region

An Institutional Investor Sponsored Report on Africa's Largest Regional Bank

“Middle Africa” is one of the fastest-growing regions of the world—but one still sorely lacking in banking services. Ecobank’s presence in 36 African nations gives it a unique position to support and sustain Africa’s growth trend by bringing modern banking technology and service to the region’s consumer, industrial, trade and governmental sectors.

For the past decade, six of the world’s ten fastest-growing economies have been African countries. Can Africa maintain a development pace as the world’s top growth continent?

Yes, African countries are making significant strides and Africa as a whole is on a good growth trajectory. We expect this growth to continue. The African Development Bank, a valued Ecobank partner, estimates that Africa’s macroeconomic prospects remain favourable. According to the AfDB Chief Economist and Vice President, Mthuli Ncube, Africa’s average growth is projected to accelerate to close to 5 percent in 2014 and 5 percent to 6 percent in 2015 – to levels last seen before the onset of the 2009 global recession. In the medium term, he notes, deeper participation in global value chains should be seen as part of the strategy for achieving strong, sustained and inclusive growth.

The region’s growth today is more broad-based, driven by domestic demand, infrastructure and increased continental trade in manufactured goods. Looking to the future, Africa’s economies have a great potential to build on their demographic dynamism, rapid urbanization and wealth of natural resources. For this to be sustainable though, and for it to impact positively on people’s quality of life, the continent seriously needs to develop its manufacturing and skills base and remain at the forefront of technological innovation.

How is the Ecobank Group positioned to participate in this growth?  How extensive is your “footprint” in Africa now?  How healthy are your operations?

The prospects for banking across what we term “Middle Africa” remain very buoyant, driven by sustained high rates of economic growth, huge unmet needs for basic financial services and the emergence of new mobile technologies to provide them. Ecobank remains uniquely positioned to take advantage of these fundamental trends, as well as niche opportunities in wholesale banking such as online cash and treasury management and structured commodity trade finance.

We recently extended our already broad footprint to include South Sudan, Ethiopia and Mozambique. This now gives Ecobank a presence in 36 sub-Saharan African countries. We have secured a banking license in Angola and expect to open there in due course. As Africa’s fifth largest economy, Angola is strategically important to us. It also represents the completion both of our retail and Lusophone footprints.

Our recent half-year results testify to the health of our operations, with all our regional businesses in Africa registering over 30 percent advances in profit before tax. Even more importantly, our focus on operational efficiency and branch productivity has led to a 3 percentage point reduction in our cost-to-income ratio.

You became Group CEO in March this year.  How do you intend to change the bank’s mix of services and its strategic priorities?

After the recent controversy, my number one priority has been to rebuild confidence and trust with all our stakeholders: our staff, regulators, customers and shareholders. Having steadied the ship, and with turbulent waters now behind us, I am now focused on world-class service delivery and on improving productivity right across our unique footprint. There will be no seismic shifts in strategy, as Ecobank is well positioned to deliver long-term sustainable growth and increasing shareholder value, based on three fundamental drivers, namely scale, diversification and efficiency.

Is Africa’s traditional dependence on commodity sales and foreign aid as key economic drivers ended?  What sectors are expanding and bringing the most wealth today?

Investing in Africa is no longer a commodity “play.” Today it is a consumer story. Annual consumer spending is currently not far short of US$400 billion and in five years that figure could be close to Russia’s current consumer purchasing power. As a result, we expect consumer-facing sectors to outperform, so one needs to look at banking real estate, which will be a game changer, and the retail sector amongst others.

And we are seeing growing collaboration between development finance institutions, regional multilaterals and global and African commercial lenders to provide a mix of debt and equity finance and a range of cost financing to encourage an increased `private sector participation in funding Africa’s infrastructure investment deficit.

What is being done to reduce Africa’s poverty rate--that is still more than 40 percent?  How is the banking system contributing to improvement in living standards in Africa?

Sub-Saharan Africa has the lowest banking penetration in the world, standing at an average of nearly 17 percent compared with 60 percent in developing countries. This means that a large proportion of Africa’s population remains “unbanked” because of their inability to afford or gain access to a traditional bank account. The rollout of mobile banking across Africa is allowing millions of people to perform financial transactions relatively cheaply, securely and reliably.

‘Cashless banking’ negates a number of the barriers associated with traditional banking, namely accessibility with limited rural branch networks, affordability as transactions are done at a relatively low cost, and creditworthiness as no documentation is usually required.

There are challenges, of course, including consumer education and difficult regulatory environments, but the expansion of financial services to include the lower income population can provide jobs and ultimately help reduce poverty. Providing convenient, reliable and accessible financial services forms the bedrock of Ecobank’s retail strategy. And partnering with leading global players, like MasterCard and Airtel, is key to migrating our customers to a ‘cashless society’.

Ecobank has operations throughout the continent.  Which regions—and which countries—embody the best “growth stories” now?

Indeed, our operations are spread throughout sub-Saharan Africa. Each region though is different and has its own unique particularities. In fact, it would be wrong to even aggregate all African countries in any sub-region, as every country experience is different, with varying levels of economic growth. What we continue to focus on is delivering the best quality financial services to all Ecobank customers across Africa, making it possible for everyone to be bankable.

Are foreign investors showing confidence yet with their direct and portfolio investments in Africa?  What are the most urgent reforms that still must be made to attract more foreign investment?  Where do you expect this investment to come from?

Smart international investors, and especially those with the right vision, know that Africa is the region in which they should be investing, and many are doing so. But there are some who still remain sceptical about Africa. Their perceptions lag behind the continent’s new realities. Africa is now home to some of the world’s fastest-growing economies and offers the highest risk-adjusted returns on foreign direct investment among emerging economies. It is not just China and India that have recognized this. Substantial pools of African capital are opening up. South Africa recently took a bold decision to allow its pension funds to invest outside the country. This means they can deploy in the order of US$15-20 billion of capital into the rest of Africa in the next few years. It is only a matter of time before Nigeria follows suit.

The main issue is how to make Africa more competitive in relation to other emerging markets. This means relaxing capital and foreign exchange controls, increasing regionalization, reducing trade barriers and fostering intra-African trade. We also need to harmonize banking regulation across the continent.


Richard Uku

Group Head, Corp Communications


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