After a first phase of expansion which saw it settle in fifteen African countries in five years (2007-2011), United Bank for Africa plans a new wave of seven other establishments, mainly in the countries of the CFA Franc zone . However, the group still has to cope with the low profitability of certain subsidiaries.
For the occasion, the first senior leadership forum of the Nigerian banking group, Tony Elumelu had gathered the entire staff of the United Bank for Africa group on Tuesday May 3 in Lagos, the economic capital of Nigeria.
A total of 90 executives, including the entire board of directors of the Nigerian banking group, as well as the presidents and managing directors of all its subsidiaries in Africa and the United Kingdom, made the trip.
During this meeting, the management took stock of the first phase of expansion of its network, which saw United Bank for Africa established in fifteen African countries (see the table below).
In a statement issued after the meeting, Tony Elumelu, president of the UBA Group, welcomed the progress made in this first phase of expansion. He also recalled that the group’s 18 subsidiaries in sub-Saharan Africa (outside Nigeria) of the group represent 25% of its revenues. Its net banking income has increased significantly over the past year: + 10.4% to 205.2 billion naira (932 million euros).
UBA’s African subsidiaries represented 22% of its profit in 2015, compared to 75% in Nigeria, which reached 59.65 billion naira (+ 24.5%). They constitute a fifth of the group’s deposit and loan portfolio, after a remarkable increase in 2015 (+ 27% and + 14% respectively).
In light of this progress, the Nigerian group has announced its intention to expand its footprint with at least seven locations in the coming years, to bring its presence to 25 African countries. The details of this second phase of expansion and its cost were not communicated by the Nigerian group. The only clue provided: this expansion will take place “first in the WAMU [West African Monetary Union, editor’s note] and CEMAC [Economic and Monetary Community of Central Africa, editor’s note] zones” said Fogan Sossah, president of UBA Senegal , cited in a press release.
UBA Group is already present in 8 of the 14 countries in these two zones, which bring together the countries of West Africa and Central Africa which have in common the use of the CFA Franc. Of the countries concerned, UBA Group is only absent from the Central African Republic, Equatorial Guinea, Togo, Niger, Mali, Guinea-Bissau.
“We are a truly pan-African institution and after a period of consolidation, we know that the continued expansion of our footprint in Africa is a key objective,” said Fogan Sossah, quoted in the UBA Group statement.
Subsidiaries lagging behind
While the determination of the leaders of the Pan-African group is clear and the progress made by their African subsidiaries is on the whole satisfactory, many of them are still struggling to find a place in local markets.
Seven years after settling in Côte d’Ivoire, the leading economy in French-speaking West Africa, UBA remains in the second half of the ranking on a market with 23 banks. If this subsidiary made a profit of 557 million naira in 2015, after a loss of -164 million in 2014, its revenues remain modest: 3.61 billion naira in 2015, or less than the Senegalese and Beninese subsidiaries (around 4 , 4 billion naira) and barely half of the revenues earned by UBA Burkina Faso (7.44 billion).
UBA Kenya is in no better shape. Founded in 2009, the Nigerian group’s subsidiary faces a very competitive market and generated only 1.34 billion naira net banking income last year, for a loss of -518 million naira. In Uganda, the other big country in East Africa where UBA has been present since 2008, the results are also modest: a GNP of 1.47 billion naira, for a loss of -141 million.
The management of the Pan-African group also approved at the meeting on May 3 the injection of new capital into the subsidiaries in Uganda, Kenya and Tanzania.
Encouraging sign at a time when the banking group is considering a new wave of expansion: the spectacular growth of the GNP achieved by some of its subsidiaries over the past year: + 47% in Congo-Brazzaville, despite a difficult economic environment caused by the decline in the petroleum, + 228% in Guinea and + 62% in Sierra Leone, recovering after the Ebola epidemic.