Exploring AfCFTA with cross-border expansions

The gains of cross-border transactions in Africa are fast rising. Still, the implementation of the African Continental Free Trade Agreement (AfCFTA) is expected to make such benefits more pronounced in the years ahead.

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For many stakeholders, the AFCFTA offers significant opportunities for the private sector, especially financial institutions to expand into new markets, and seek new business opportunities.

But the benefits from the AfCFTA deal to a financial institution or company depend largely on the level of preparedness undertaken by such institution in readiness for the trade pact full implementation.

The Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, last week urged Nigerian businesses to seize the AfCFTA opportunity to ensure that Nigeria serves as a significant hub for international and domestic companies seeking to serve the West, Central and East African Markets.

Access Bank Plc expressed its commitment to be at the centre of the AfCFTA implementation process, providing banking services to the rising African population. The bank is expanding its operations across Africa to ensure that it is fully ready to meet the increasing banking needs of the over 1.3 billion Africans targeted in the AfCFTA deal.

Access Bank has also unfolded plans to expand to more African countries as part of a strategy to support trade and finance in the continent and take advantage of the AfCFTA.

For instance, Access Bank Plc recently entered into a definitive and binding agreement with ABC Holdings Limited to acquire 78.15 per cent shareholding in the African Banking Corporation of Botswana Limited (BancABC Botswana).

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The transaction, which is subject to regulatory approvals and customary conditions precedent, is expected to close before the end of this quarter. ABC Holdings is a subsidiary of the London Stock Exchange-listed group – Atlas Mara Limited.

Access Bank Company Secretary, Sunday Ekwochi, described Bostwana as renowned for its quality sovereign credit rating and stability with the bank’s market entry expected to further solidify its strategy as, “a strong banking partner in key verticals across retail and corporate banking, including especially supporting trade-in payments across southern Africa and Sub-Saharan Africa more broadly.”

Speaking on the deal, the Group Managing Director/Chief Executive Officer, Access Bank Plc, Herbert Wigwe, said: “We remain committed to a disciplined and thoughtful expansion strategy in Africa, which we believe will create strong, sustainable returns for our shareholders and stakeholders at large, over the medium and long-term.

“The establishment of Access Bank through this acquisition in the Republic of Botswana will position the bank to deliver a more complete set of banking solutions to its clients active in and across the SADC and COMESA regions.

According to him, the transaction complements our recent strategic growth acquisitions in South Africa, Zambia and Mozambique. “We are building a bank of the future that Africans across Africa and the world would be proud of and look forward to welcoming the employees, customers and other stakeholders of BancABC Botswana to Access Bank.”

BancABC Botswana is the fifth-largest bank in Botswana and is a very well-capitalised banking institution poised for growth and success in its local market. The bank has been perennially profitable, given an existing high-quality retail loan book with opportunities and scope for diversification and further expansion into corporate and SME lending.

Continuing, Wigwe explained that 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 the continent.

He stated that the plan is for the bank to establish its presence in 22 African countries to diversify its earnings and take advantage of growth opportunities in Africa.

According to him, Africa has enormous potential and there are opportunities for an African bank that is well run, that understands compliance and can support trade and the right technology infrastructure to support payments and remittances, without taking incremental risks.

“We believe that we are best positioned to 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 to make sure that it is of benefit to the bank. As we do this, we are working with our friends and partners.

“We are diversifying our earnings away from volatile markets as well and we are orchestrating our operations from the global payments gateway and ensuring that using Access Bank UK, providing corresponding services from digital platforms, the overall profitability of our franchise,” he explained.

Commenting further, on AfCFTA, he said the bank would use its digital framework to benefit from the continental agreement.

“Coming to Nigeria, we think we need to continue to entrench ourselves in the local market because there is still so much work to be done. So, we are doing everything possible to satisfy our customers and also to ensure that our channels are adequately secured. We are also ensuring that our staff are very efficient,” the CEO said.

According to Wigwe, Access Bank has invested around $60 million to acquire a stake in South Africa’s Grobank.

Access invested both equity and debt in the South African bank, part of a regional expansion to tap into correspondent and trade banking deals on the continent.

He said Access will expand trade finance capability within Grobank which is currently focusing on the agricultural sector in South Africa.


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