Fidelity Bank Plans to Acquire Additional Banks as it Expands Footprint Across Africa
Fidelity Bank, the leading bank in Nigeria, is making strategic moves to expand its footprint across Africa. The bank has announced its plan to acquire more banks in the region after finalizing the purchase of the London unit of Union Bank of Nigeria Plc.
Fidelity Bank’s CEO, Nneka Onyeali-Ikpe, revealed in a recent interview that the bank is already in talks with another financial institution in Africa, and the acquisition is expected to be completed this year. The bank plans to expand to at least five African countries in addition to Nigeria, with a target of being in six countries by 2024.
The bank is seeking to diversify its earnings and mitigate risks by expanding its operations outside Nigeria. Fidelity Bank is one of Nigeria’s largest banks, with 4 trillion naira in assets, and is the country’s best-performing bank this year, with shares rising by 32%.
The move is a response to the growing trade within the continent, which is expected to increase by 52% in the next decade, according to the African Trade Policy Centre. Fidelity Bank aims to tap into this growth by facilitating trade and corresponding banking roles in these countries.
The Nigerian lender is interested in countries within west, east, and southern Africa, and has already identified a few targets. The bank plans to use the 13.8 billion naira it raised in a private placement earlier this year for the acquisitions.
Fidelity Bank is not alone in its expansion plans. Other Nigerian banks, such as Access Bank Plc, are also looking to expand overseas to manage risks and diversify their earnings. Access Bank Plc aims to expand to 26 countries by 2026 from 16.
Fidelity Bank’s acquisition strategy is expected to position the bank as one of the leading banks in Africa, both in terms of earnings and assets. With the slow economic recovery in Nigeria, currency devaluations, and acute dollar shortages, the bank is looking to expand outside the country to curb its risks and widen its opportunities.
Fidelity Bank is optimistic about the growth prospects of its expansion strategy, as its private banking customers are interested in doing business and acquiring properties in the UK and its environs, and require the bank’s support. The bank expects to generate significant growth from these business opportunities, both for itself and its customers.
CBN Disburses N13.8 Billion to Manufacturing Sector Under 100-for-100 Policy
The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele has said the apex bank has disbursed a total sum of N173.3 billion to various beneficiaries under its 100-for-100 Policy on Production and Productivity since the policy commences.
Emefiele, who made this known in Abuja shortly after the Monetary Policy Committee meeting, said N13.81 billion of the total disbursed amount was for the development of three new projects in the manufacturing sector.
He said, “Under the 100 for 100 Policy on Production and Productivity, the Bank disbursed the sum of N13.81bn to three projects in the manufacturing sector.
“This brings the cumulative disbursement under the facility to N173.31bn, disbursed to 81 projects comprising 45 manufacturing, 23 agriculture, five healthcare, and eight services sector projects with an estimated 23,343 direct jobs created.”
The loan is capped at N5 billion per participant by the central bank, according to the guidelines for the implementation of the initiative.
In the guideline, the apex bank said 100 private sector organisations with projects that could transform the local economy through job creation, improve productivity, reduce imports, increase non-oil exports, and improve foreign exchange generating capacity of the nation will be selected and financed under the 100-for-100 policy.
“The initiative, which shall be bank-led, will be rolled over every 100 days (that is, quarterly) with a new set of companies selected for financing under the initiative,” it stated.
Meanwhile, the Nigerian economy grew at a slower pace in the first quarter of 2023 as Africa’s largest economy expanded at 2.31% year on year.
The National Bureau of Statistics (NBS) attributed this decline in growth to the cash crunch caused by the CBN’s decision to change the Naira notes in an effort to curb counterfeit notes and other national challenges.
50% of UBA Earnings Comes from African Operations
One of the largest banks in Nigeria and Africa, United Bank for Africa (UBA) Plc has said about 50% of its earnings come from African operations.
Abiola Bawuah, the Executive Director/Chief Executive Officer of UBA Africa, who disclosed this said it was made possible because of the bank’s digital offerings and products that help gain large market shares in key markets in Africa.
Speaking to the press during a hybrid media parley on Thursday, Bawuah explained that while devaluations and rising inflation in Nigeria and other African nations where the bank operates impacted overall performance, subsidiaries remained strong and continue to contribute significantly to the growth and development of trade, infrastructure and finance.
She said, “As of last month, none of our African subsidiaries is making a loss. They have all been turning in profits, this is a testament to the fact that they have navigated successfully and have all found their footing.
Bawuah, a Ghanaian national, who was appointed earlier this year became the first female CEO of UBA Africa, to take the group’s total female directors to eight.
She said, “We need the government to regulate the private sector because the sector is struggling. However, the private sector needs to be strong, and that is where UBA comes in. There have been numerous facility programmes we have come up with for consumers in the corporate sector like the Small and Medium Enterprises, Micro, Small, and Medium Enterprises that are being supported by us.
“It is only in UBA that I know of that you can be an MSME, and once you are faithful to us and you have run the enterprise very well, we are ready to support you, even when you do not have collateral.
“However, Africa must develop the private sector, and when you talk of the private sector, 60 per cent of the private sector in Africa are either SMEs or MSMEs, which would not be able to be developed by the foreign banks, because what they classify as SMEs monetarily is high, and most SMEs in Africa are far below that range.”
Guaranty Trust Holding Company CEO Urges Lower Cost of Data to Drive Financial Inclusion
Segun Agbaje, the Group Chief Executive Officer of Guaranty Trust Holding Company (GTCO), disputed the notion that continuous use of Unstructured Supplementary Service Data (USSD) for fund transfers would deepen Nigeria’s cashless policy as pursued by the Central Bank of Nigeria (CBN).
Agbaje emphasized that the future of financial inclusion and increased literacy lies in reducing the cost of data, making it more affordable.
Agbaje drew a parallel with India, stating that the two countries share similar demographics and highlighting that India has achieved remarkable progress in financial inclusion.
He expressed his belief that USSD technology is cumbersome and costly, while internet banking offers a more robust and technologically advanced alternative.
According to Agbaje, the fight over USSD has served as a distraction created by telecommunications companies. He argued that banks are advocating for the protection of customers, insisting that they should only pay for successful transactions and not for transactions that were not calculated on their accounts. He challenged the widespread use of USSD, stating, “USSD is not the answer.”
Agbaje called for a shift towards mobile banking, which he viewed as more advanced and user-friendly, requiring less data consumption.
He stressed the urgent need to reduce the cost of data in Nigeria, pointing out the disparity between data costs in Nigeria and India.
He emphasized that lowering data costs would enhance financial inclusion and increase interest in the country.
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