The Group CEO of Ecobank Transnational Incorporated (ETI), Ade Ayeyemi, said Nigeria is not the pan-African bank’s biggest market. Instead, “Nigeria is our biggest opportunity,” he told business journalists during a virtual press conference that was held, yesterday, to introduce the company’s new Chairman, Alain Nkontchou.
Ayeyemi’s clarification was in response to a particularly interesting question about the challenges facing Ecobank Nigeria and the likely effects of said challenges on overall group performance. According to him, ETI’s Anglophone West Africa (AWA) region is the biggest market, based on the latest earnings report for Q1 2020.
A look at Ecobank’s challenges
Both the Group CEO and newly-appointed board Chairman acknowledged that ETI has been grappling with some challenges. The COVID-19 pandemic, for one, has been a major challenge facing the Pan-African bank. According to Mr Nkontchou, the pandemic has adversely affected some ETI customers, and by extension affected the bank.
He specifically noted that loan is a major challenge, as customers struggle to repay principal debts and interests. Note that this is currently a major issue across the Nigerian banking industry. A recent Nairametrics report talked about how 22 banks had to restructure as much as N7.8 trillion worth of loans just to prevent them from going bad.
Speaking further, the Chairman identified ETI’s Nigerian operation as another major challenge. According to him, “Nigeria has a difficult macro environment”. This is a situation that understandably affects many companies operating in the country, not just ETI.
Focus on Ecobank Nigeria, ETI’s ‘biggest opportunity’
Earlier during the press conference, Nkontchou had answered a question about ETI’s plan to address the declining performance of its Nigerian unit. He began by admitting that ETI “has faced some major issues in Nigeria that have affected our legacy assets.” He then spoke about measures that have so far been taken to address these challenges, including the fact that ETI had raised some debt capital and built a resolution vehicle to address the issue of bad loans.
In the meantime, ETI will continue to prioritise Nigeria, Nkontchou said. According to him, this is important, especially so recovery efforts are being made in view of the COVID-19 pandemic.
Overcoming COVID-19 by partnering the African Union
“We see the challenges and we are dealing with them as an organisation. But we also see the advantages,” said Group CEO Ade Adeyemi, in response to questions about how ETI is generally coping with the negative impacts of the pandemic. He then focused on the opportunities presented by the pandemic, including ETI’s collaboration with the African Union to not only provide funding to African SMEs, but also to provide training opportunities whilst availing access to markets.
“SMEs are very important to the African continent. They are also among the reasons Ecobank Transnational was formed – to be able to contribute to Africans’ economic advancement. Prior to the COVID-19 pandemic, we have always been particular about SMEs,” Ayeyemi said.
What are ETI’s cost-cutting measures amid the pandemic?
During the conference, Nairametrics asked about the company’s cost-containment measures. We thought this was an important question, especially in view of the pandemic. The Group CEO agreed with this, and had enumerated the measures that have been adopted.
- Remote working has enabled ETI to cut down on the costs of running their branches
- The usual costs typically associated with work travels have significantly reduced
- ETI approached some of their service providers seeking a reduction in the cost of service in view of the pandemic
- Generally, the pan-African bank is making sure to avoid waste and minimise costs as much as it can.
Note that ETI had incurred operating expenses of N94.8 billion in Q1 2020, which is 2% more than N92.9 billion in Q1 2019. This is according to information obtained from its unaudited Q1 2020 earnings report.
How important is AfCFTA to ETI’s business?
According to Alain Nkontchou, Ecobank Transnational Incorporated believes that it is at the forefront of harnessing the benefits of the African Continental Free Trade Area Agreement (AfCFTA). As such, the bank is quite excited about it.
Nkontchou’s plan for ETI
Shortly before the press conference ended, Alain Nkontchou was asked to talk about his plans for Ecobank Transnational Incorporated. In response, he stated that his mission is to continue to make ETI a bank that Africans can trust, whilst contributing to Africa’s socio-economic development. It is also part of his mission to ensure that the bank continues to deliver on dividend payments. In the meantime, however, it is uncertain whether ETI will pay any dividend in 2020.
On July 8, 2020, ETI announced the appointment of Alain Nkontchou as its new Chairman of the board of directors. As Nairametrics reported, he took over from Emmanuel Ikazoboh, whose six-year tenure as Chairman ended last month after he reached the retirement age of 70. Nkontchou is Cameroonian by nationality and has many years of banking experience.