“Our vision is to build a world-class bank and contribute to the financial and economic integration of Africa!”
Having taken office in March 2023 as the CEO of the foremost Pan-African banking group, Kenyan banker Jeremy Awori gave an exclusive interview to Financial Afrik. He discussed the outlook for Ecobank Transnational Incorporated (ETI), his top priorities to boost profitability, the situation in specific strategic countries, and the disconnection between the stock price of the group and its fundamentals. Exclusive.
You’ve been at the helm of the Ecobank TI Group for a few months, the first Pan-African group by its geographical network. What actions do you consider a priority?
Since my appointment, I have met our main collaborators. I have visited 14 countries, met regulators, partners, customers, branch managers, and their staff. The vision I inherited from my predecessors is to build a world-class bank and contribute to Africa’s financial and economic integration.
Regarding this, the African Continental Free Trade Area (AfCFTA) is especially significant for our future plans. We position ourselves as a bank that facilitates trade in Africa, both within and between countries. Currently, our services cover 35 countries, including Ethiopia and South Africa (Note: Ecobank serves these two countries even though they do not yet have a banking license).
We provide real-time money transfers and payments through our platform, a one-stop-shop for businesses, SMEs, and companies of all kinds to receive technical and financial support for their import-export activities and investment endeavors. Additionally, the platform provides essential information to conduct their business. Our platform also acts as a bridge not only within Africa but also between Africa and the rest of the world. We offer multiple solutions to small businesses, contributing to financial inclusion at competitive prices. SMEs, the engine of the economy, including the informal ones, benefit from technical support through our platform or in our branches. Ecobank is an inclusive bank.
Another priority for us is Nigeria, one of our largest markets. We have both quantitative and qualitative leaps to make to match the potential of the top West African economy. Other markets are also essential. Our aim is to support businesses and SMEs in their growth strategies. Our positioning today is clear. In 15 markets, we are either number one or two (like in Ivory Coast, Senegal, and among others, Ghana), positioning us to support the rollout of the AfCFTA. We want to diversify further, transitioning from a bank with a strong corporate influence to a universal bank known also for its retail banking services, providing consumer loans, and services to SMEs. Our platform offers an exclusive one-stop-shop for operators of all kinds, with the advantage of real-time payments.
Your balance sheet is consolidated in dollars. How do you hedge against the depreciation risks of the currencies in the countries where you operate?
Indeed, being present in 35 countries, we face some local currencies’ depreciation against the dollar. However, the strength of the ETI group lies in its diversified presence. Being present in the WAEMU zone linked to the euro, in Nigeria with its unique realities, in Central and East Africa, we benefit from a kind of natural hedging due to the dispersion of exchange rate risks. Some of our revenues are also in dollars. Furthermore, the equity capital of our subsidiaries is in local currencies, limiting this exchange risk. We admit, depreciation risk is real. Considering the first half of 2023, our pre-tax result increased by 67% in constant local currencies since the beginning of the year. Conversion into dollars results in an 18% depreciation. It’s a challenge our teams have expertise and strategies for.
Ecobank is listed on three West African stock exchanges. Doesn’t this exposure ultimately destroy value when considering the group’s low valuation compared to some of its subsidiaries?
Firstly, the reason for listing on the stock exchanges in Ghana, Nigeria, and UEMOA was to allow as many people as possible to buy Ecobank shares. Moreover, it was a strategy to support the growth of capital markets in these countries. There have been periods of significant drops, but on an annual basis, the ETI share price has increased up to 42% on these stock exchanges. Instead of focusing on the stock price, internally, we work to generate more profit and dividend value for shareholders.
You recently joined the PAPPS platform of Afreximbank. What do you expect from this platform?
The primary goal is to boost intra-African trade, currently limited between 14% and 15% of the continent’s trade with the rest of the world. As noted by UNCTAD, by increasing this trade to 33%, the deficit is reduced by 51%. The PAPPS platform reduces payment delays between suppliers and customers and facilitates cross-border payments. Our platform complements PAPPS.
Lastly, what role should major banks like Ecobank play to accelerate the AfCFTA?
The African common market has 1.4 billion consumers. Ecobank offers an inclusive service accessible to all players. Digitalization allows reaching previously excluded populations. The role of banks is to support this integration by providing practical and affordable solutions for cross-border operations.
