West African banks change playing field

Monday October 15 2012

PHOTO | FILE West African based banks such Ecobank are looking at a wider revenue stream amid rising competition.

PHOTO | FILE West African based banks such Ecobank are looking at a wider revenue stream amid rising competition. NATION MEDIA GROUP

By JOSHUA MASINDE [email protected]

Banks of West African origin operating in Kenya are eying strategic investments in the energy and infrastructure sector, a move that could upset traditional banking operations.

Despite facing cutthroat competition that has made them either post mixed performance or thirst to break even, the institutions are also aggressively widening their branch network to bring on board customers to boost deposits.

Domiciled in Nigeria, United Bank of Africa Kenya (UBA Kenya) began operations here in 2009 as a subsidiary of the United Bank of Africa.

Ecobank, which has its origins in Togo, began operations in Kenya in 2008 after acquiring EABS Bank. Bank of Africa (BOA), on the other hand, began operations in 1982 in Bamako Mali, but opened its doors in Kenya in 2004 after buying out Credit Agricole Indosuez.

Speaking to Smart Company at his office, UBA Kenya chief executive officer Tunji Adeniyi said the bank is targeting to cash in on utilities and infrastructure financing, which include commercial rails, roads, refineries, pipelines, electricity as well as water projects, most of which are yet to take off. Its sights are also set on financing Konza City and other related projects.

The financial institution has more than 40 years of experience in financing energy and infrastructure projects.

“UBA will leverage on its expertise at group level to execute key transactions across its footprint to maximise these growth areas. For instance in areas like oil and gas, UBA is keen to finance large scale transactions in East Africa, which is emerging as a major global energy player,” said Mr Adeniyi.

Ecobank chief executive Tony Okpanachi told Smart Company that Kenya is a very competitive market and an investor would need to have a long-term view on its operations.

“You have to have a long-term view of the Kenyan market to break even. It is not a market you come in and say you start making money immediately. You need to offer suitable services to compete effectively in this market,” Mr Okpanachi said.

The bank is now aggressively targeting low-end to high-end segments of the market to grow its reach as it seeks to claim the number three slot in Kenya’s retail banking industry.

The bank received a Sh2.1 billion capital injection from its parent company, Ecobank Transnational, in the second quarter of this year to shore up its capacity to fund big ticket deals in the Kenya market.

Bank of Africa Kenya marketing and product development manager Josephine Njuguna said the country is a promising place to do business.

“There is so much happening here that is ultimately translating into very good fundamentals for doing business.

For starters, the country now has a very progressive Constitution that promises political stability for this country. Then there are the resources finds and the growing middle class that are both crucial ingredients for a robust economy,” she noted in an email interview with Smart Company.