Globally, banks are renowned to be engines of economic growth. They mobilise funds from areas of surplus to areas of needs as well as give interest to the depositors and charge interest from the borrowers, thereby providing income for those who have idle funds, and earning income from those that borrow money to finance their businesses.
By doing so, capital gaps that may exist for companies undertaking important transitions in their activities are eliminated.
The economy of any nation grows faster when companies operating in the economy witness growth. And one sector that can facilitate the growth is the banking industry given its role of financial intermediation.
A major role of banks is to lend money for economic activities and engender growth. However, over the years, the role has not been played to the satisfaction of stakeholders. Both companies and individuals have stories to tell about how difficult it is to get funding from banks through the normal lending process.
While some of the banks may be willing to lend, the challenging operating environment has affected the level of financial support to companies and individuals.
In order to encourage more lending, the Central Bank of Nigeria (CBN) had to introduce the loan to deposit ratio (LDR) policy that mandated banks to lend about 65 per cent of their total deposits to the private sector.
Africa’s Global bank, United Bank for Africa (UBA) Plc’s African subsidiaries are on firm footing as they have been contributing maximally to the group’s profit margin. Its unwavering commitment to spearhead economic growth across the continent through targeted policies aimed at maximising the benefits derived from the mining and oil sectors, has been a huge benefit to Nigeria.
To this end, the bank is poised to collaborate with the Economic Community of West African States (ECOWAS) towards implementing strategic initiatives that will not only attract investment but also foster sustainable development in the mining and oil sectors.
The Chief Executive Officer, UBA Africa, Abiola Bawuah, who spoke at the just concluded 4th ECOWAS Mining and Petroleum Forum (ECOMOF 2024) which was held at the Palais des Congrès in Cotonou, Benin Republic, said the bank recognises the pivotal role of the mining and oil sectors in shaping the economic landscape of African nations and is strategically positioning itself to be at the forefront of this transformation.
Specifically, the bank’s African operations have contributed close to 50% of the group’s earnings, leveraging digital offerings and products across the board to gain large market shares across the different regions of operations in Africa.
Bawuah noted that notwithstanding the impact of devaluations and double-digit inflation in Nigeria and a number of other African countries where the bank operates, the subsidiaries have been performing well, contributing significantly to the growth and development of trade, infrastructure and finance on the continent.
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.
Continuing, she said, “And this extends to each and every one of them, even the ones in war-torn countries. Of course, we are aware that there is always room for improvement, but for now, we are glad that our 19 subsidiaries are out of the red zone.
In the area of infrastructure financing, she affirmed that UBA has been bullish in financing projects across Africa, which according to her is based on the conviction that the continent needs to bridge the infrastructural gap, necessary for economic growth.
“UBA has proven expertise and capacity in key sectors of economies across Africa, especially in oil and gas, infrastructure finance, agriculture and commodity/export, and these have positioned it as a preferred partner for structured solutions to key governments and corporations operating in/into Africa,” Bawuah said.
Bawuah told the journalists present at the event that in the last few years, the bank has invested heavily and supported key governments of various African countries with over $1bn in infrastructural development, especially in roads, hospitals, health, power and other critical sectors.
According to her, the bank has contributed massively to promoting trade in Africa and has partnered with the African Continental Free Trade Area (AfCFTA), adding, “At UBA, we believe that our customers should be able to trade conveniently among themselves, and so we have been partnering with them in this area. We have made it easy for our customers across countries to trade easily within themselves, without having to bother about all the hassles that have to do with forex.”
Early this year, Abiola Bawuah, a Ghanaian national, was appointed as the first female CEO of UBA Africa, an appointment that further demonstrated the bank’s commitment to diversity. The Group Board now includes eight female Directors.
She was previously the CEO, UBA Ghana, and formerly Regional CEO, West Africa, supervising the operations in Benin, Burkina Faso, Cote d’Ivoire, Ghana, Guinea, Liberia, Mali, Senegal, and Sierra Leone.
United Bank for Africa is one of the largest employers in the financial sector on the African continent, with 25,000 employees group-wide and serving over 35 million customers globally. Operating in 20 African countries and in the United Kingdom, the United States of America, France and the United Arab Emirates, UBA provides retail, commercial and institutional banking services, leading financial inclusion and implementing cutting-edge technology.
In line with its commitment to the growth of the nation’s economy and in order sustain its increased lending to customers, UBA Plc acted as an Initial Mandated Lead Arranger with a consortium of Nigerian commercial and international banks in a $1.5 billion pre-export finance facility for Eagle Export Funding Limited, to enable the forward sale of crude by the Nigerian National Petroleum Corporation (NNPC) and its upstream subsidiary, the Nigerian Petroleum Development Company (NPDC).
UBA provided $200 million towards the crude oil sale, to support investment growth and liquidity requirements. The forward sale will provide much needed capital for investment in NNPC’s production capacity, which is of strategic importance to the Nigerian economy and the country’s leading source of foreign exchange earnings. UBA’s position as mandated lead arranger recognises the group’s strength in structuring and deploying financing to the oil and gas sector, and the depth and liquidity of the group’s balance sheet.
UBA has a strong track record in the resources sector across Africa, having facilitated similar oil prepayment deals with the NNPC. UBA was also responsible for the EUR 240 million Revolving Crude Oil Financing Facility for the Société Africaine de Raffinage and in Congo Brazzaville co-funded the $250 million crude oil prepayment facility for Orion Oil Limited.
Speaking on this most recent support for Nigeria’s petroleum industry, Chairman, UBA Group, Tony Elumelu said: ‘This has been one of the most economically challenging years that Nigeria has witnessed. With the sharp drop in the price of oil and the ensuing hardship that followed the onset of the Covid-19 pandemic, the private sector must come together and contribute meaningfully to the economy. This facility is clear evidence of this – UBA is providing investment that will significantly improve Nigeria’s production capacity and in doing so also demonstrating the strength, depth, and sophistication of our commercial banking capability. I believe that together, working with governments, we can create more jobs and more wealth for people, not only in Nigeria, but across Africa.”
Olamide Adeniji is a member of the editorial team of TheScript Newspaper
