Uneasy lies setting-up, maintaining bank subsidiary across Africa

Every business comes with a challenge; just like setting up a bank office or offshore subsidiary is risk averse and this, the outgoing group managing director/CEO of United Bank for Africa (UBA) Plc, Phillips Oduoza, pointed out at the fourth valedictory lecture organised in his honour by the Chartered Institute of Bankers of Nigeria (CIBN).

Oduoza, who spoke on “the emergence of a Nigerian Pan African Bank, identified these challenges as political risks, infrastructure gaps, policy inconsistency, trade and cross border challenges, payment challenges, mono-commodity economies and exchange rate volatility, cultural issues, among others.

The Nigerian banks with foreign subsidiaries include United Bank for Africa Plc with 19 subsidiaries on the continent; Access Bank Plc, Guaranty Trust Bank Plc, Skye Bank Plc, Keystone Bank Limited, Diamond Bank Plc, and Zenith Bank Plc.

In his valedictory lecture on Friday last week, Oduoza pointed out that the current state of infrastructure represents an opportunity for a Pan-African bank to provide project or infrastructure finance.

The dearth of infrastructure has hindered most African economies from achieving their full potential and a spillover effect on African companies’ profitability.

Oduoza realised that it was important to explore means of bridging these gaps to a comfortable extent, to ensure that businesses run smoothly, remain profitable and contribute to the economy within which they operate.

He noted that infrastructure deficit on the continent represents another challenge for the Bank.

Infrastructure such as power, transportation, and telecommunication are often inadequate and of relatively poor quality. As such, the cost of operation in such countries is much higher than others with relatively better infrastructure, and he gave instances where UBA has experienced ATMs being moved to some other African countries.

The outgoing CEO who was deeply involved in African expansion programme shared some learning points gained from his personal experience over the years.  “I always knew the 54 countries in Africa would have considerable differences in culture. It was however our expansion and operation in these countries that made me to appreciate the extent to which these diverse cultural differences impacted the work environment and how businesses were conducted. We noticed different trends between the work culture of Francophone and Anglophone Africans and learnt the need to align our operations to fit the local environment and not deploy “a one size fits all” approach”.

We observed marked differences between countries in credit cultures; hence, credit needs to be differently and properly structured and monitored in order to reduce NPLs to the barest minimum.

Human capital was another area that diverse cultural differences played out, especially with regard to staff recruitment, and disengagements, and we had to adopt appropriate policies.

In order to mitigate cultural differences, the group adopted various integration measures and strategies including effective communication within the Group.

Segun Ajibola, president/chairman of council, CIBN said the primary objective of the Institute’s Valedictory Lecture is to recognise the great contributions of outstanding individuals to the banking and finance profession, both in its teaching and practice, and provide the avenue for them to share their thoughts and experiences with the general public.

“It is against this backdrop that I count it as a great privilege for us to gather here this morning to tap into the wealth of experience of a man who rose through the ranks in the banking profession for three (3) decades. There is no doubt that Phillips Oduoza’s sojourn in the banking industry has indeed cut across various aspects of banking”, he said.

HOPE MOSES-ASHIKE