Q: Access Holdings recently announced the acquisition of Standard Chartered’s shareholdings in banking operations in Angola, Cameroon, Gambia, Sierra Leone and Tanzania. Can you talk about the rationale behind these acquisitions?
A: These transactions will complement our businesses in a number of markets where Access already has a presence. The exception to this is Standard Chartered’s consumer, private and business banking business in Tanzania. While we don’t have legacy operations in the country, we are in the process of finalising the acquisition of Atlas Mara’s banking assets there, and so will integrate these operations together.
We’re confident we can close all of these transactions by the end of the first quarter of next year. Compared with some of our previous transactions, these deals are not too big and complex, and we’ve developed the skills to ensure that the integration of these assets happens properly and in a timely manner.
Q: What markets are you prioritising next as part of your acquisition strategy?
A: Our plan is to strengthen our presence in east and southern Africa, as well as the West African Economic and Monetary Union. Our intention is to be present in all of the continent’s strongest economies and trade hubs, as our vision is to be Africa’s gateway to the world.
Our intention is to be present in all of the continent’s strongest economies and trade hubs
We feel we have a reasonable presence in OECD markets, having launched our subsidiary in France in May. These countries, by virtue of their stronger currencies, act as a perfect hedge for us against the weaker currencies in some of our African markets.
So we will increase our presence for the most part in sub-Saharan Africa in the next five years, and also in Europe and one or two markets in Asia.
Q: What are the main growth markets across your African footprint likely to be in the next two years?
A: Nigeria is our primary market and one that is going to continue to experience significant growth and contribute significantly to the overall profitability of the Access franchise. We are growing by around 1.5 million new retail customers every quarter – sometimes adding one million in a month – which is significantly ahead of our competition. This growth supports our overall payment business and helps to bring down the cost of funding.
In terms of our other markets, we see our subsidiaries in the Southern African Development Community region contributing more towards profits and the growth of our overall balance sheet.
The headwinds in Ghana [after the government in November said that holders of its Eurobonds would face a 30% haircut] continued to impact our results in the first quarter. Beyond that, however, the group is expanding according to plan, with all our subsidiaries expected to be profitable by the end of this year.
Q: Returning to Nigeria, how would you characterise the discussions thus far between the banking sector and the new acting governor of the Central Bank of Nigeria (CBN) following the dismissal of Godwin Emefiele in June?
A: There have been a number of positive engagements with the new acting governor at the local CEO level on issues including the recent unification of exchange rates, how to fight inflation and lower the cost of funding. The CBN has been particularly keen to engage with local bank CEOs to help stop the leakage of foreign exchange out of the country, and to help reverse such flows.
It’s early days but the change we’ve seen so far from the new administration has been positive, especially with the unification of exchange rates in June. As time goes on and as people gain confidence in the president and his new cabinet, and perceive that the country is once again safeguarding the interest of investors, we’re confident that hard currency should begin returning to the system.
Q: How will the recent devaluation of the naira impact local banks?
A: Lenders certainly have better risk management procedures in place than during the last major devaluations in 2016 and 2017, but capital adequacy levels will still come under pressure.
We’ve been in a situation where the supply of hard currency has dried up, meaning that lenders have been unable to cover themselves even when supporting international trade, so the devaluation will create capital adequacy problems in the short term. A lot of the problems faced by the sector have been regulatory-induced, but we believe that the sector is going to be better managed going forward.
Q: How confident are you about your own capital adequacy at this time?
A: We’ve always done very interesting things to protect ourselves and to create a fortress balance sheet. We’ve issued various alternative Tier 1-types of capital in dollars in anticipation of [such a devaluation]. So we have enough capital to support our business.
Even entities like ourselves that have kept a contingency buffer will have to build up our capital base a bit more
Are we going to be affected by the devaluation? Yes, as will everyone. Even entities like ourselves that have kept a contingency buffer will have to build up our capital base a bit more. We don’t think this will be a problem for us though, as we can grow it back from what we do on an organic basis.
Q: Cryptocurrency trading is extremely popular in Nigeria and most of your footprint. How do you see the future of the digital asset space in Africa?
A: Cryptocurrencies and digital assets are already in widespread use in Nigeria and many of our other markets, as both a speculative asset and for use in settling transactions, and therefore they need to be properly regulated. If they’re not regulated properly they can pose a threat to governments’ monetary policies, as well as increase the risks of illicit financing and money laundering.
Nigeria was one of the first countries worldwide to launch a central bank digital currency in 2021. Take-up has been slow so far, as there haven’t been enough incentives for people to transact with it – especially those at the bottom of the pyramid that it intends to help – but it’s still early days.
For Access we’re looking at having our own stablecoin that can be used for transactions across our footprint, and have held some initial discussions with the CBN about this.
