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Ecobank : “We want to grow, but we want to grow intelligently, ”Amin Manekia, Group Executive, interview with Rutilance.com - ....: : Rutilance.com : :....

Ecobank : “We want to grow, but we want to grow intelligently, ”Amin Manekia, Group Executive, interview with Rutilance.com

Publié le jeudi 24 août 2017, par Rutilance.com

At a time when the African continent is viewed as a new frontier for investment and is already the destination of significant foreign investment in mining and petroleum projects, Ecobank, the pan-African banking group, is focused on growth and expansion in the extractives sector.

Despite the volatility of commodity prices, investors do not seem to be deterred from putting money into basic and precious metals, precious stones, rare earths, gas, oil and coal bed methane projects, amongst others.

However, Dr. Edward George, London-based Ecobank Group Head of Research, sees “a very challenging time for the mining sector,” and recommends “the involvement of a lot of African banks in a specific area of the sector rather than across the board, because the outlook is so weak.

Given the level of risk associated with the mining and hydrocarbon sectors, African banks have a lot of leeway to make up. Dr George points out that the biggest issues facing African banks are their “inability to finance multi-billion dollar investments and struggle to understand the long-term viability of projects.”

Ecobank is quietly represented in the extractives industries with exposure to the gold sector and has had successes in segments of the gas and petroleum sectors.

Dr. George points out that this level would be higher were it not for the fact that many of Africa’s leading mineral producers are not in the Ecobank footprint. “We continue to review our mining portfolio and currently finance mining companies along all parts of the value chain,” he added.

Ecobank’s role in Africa’s key sectors

So what does Ecobank do in extractive industries in one of its main markets – the petroleum-rich Nigeria zone or in the West African region, rich in base and precious metals ? What is the bank’s view of Central, Eastern, and Southern Africa (CESA) –which are rich in gold, graphite, coal, and platinum ?

The founder of Rutilance news agency, Olivier K. Tovor, discussed these topics and more with Amin Manekia, Group Executive, Corporate and Investment Banking at Ecobank Group.

As the leading pan-African bank on the continent, we want to grow but we want to grow intelligently,” Manekia said, adding clearly that Ecobank’s appetite for industry is a function of the “right kind of cocktail”. There has also been a major focus on the digitalisation of the bank and its services to clients, making their increasingly complex needs easier and quicker to service.

Olivier Koffi Tovor : If you were to assess the Ecobank Group today, what would you say ?
Amin Manekia : Ecobank Group is a group in transition. The management team, headed by Group CEO, Ade Ayeyemi, is helping the bank move in a new direction. We have re-organised our bank into three main distinct groups : the Corporate and Investment Bank, the Consumer Bank and the Commercial Bank. The group has a broad regional reach, which includes : Nigeria, Anglophone West-Africa (AWA), the FWA -focused on Francophone West-Africa, and then Central, Eastern and Southern Africa countries (CESA). The Group has a number of new priorities such as the focus on being a premier working capital bank for our Corporate and Commercial banks and a newly defined digital strategy which encompasses all our plans. These are some of the priorities, but they are of course not the only ones.

The African continent has been experiencing, over the past few years intense focus on its extractive industries. What percentage of your balance sheet can Ecobank claim in terms of funding and investment in the oil or mining sectors ?

Amin Manekia : Every institution typically works within its own parameters ; in terms of how much exposure they may want to have to a specific industry whether that be oil and gas, financial institutions, or the public sector as examples of industries that banks may choose to work with.

Obviously, by virtue of being a pan-African bank, Ecobank focuses on a number of key industries, which are represented in our markets. Oil and gas and mining are no exception. Looking at our current position, I would say approximately 25% of our exposure is in these sectors. Clearly, our appetite for certain industries has to be part of our greater strategic plan and how it fits together. As I said, I would call it the right kind of cocktail. What I mean by this is when Ecobank commits capital or part of its balance sheet to a project, it is in a position to a get a share of the plan and non-balance sheet side of the business. This could be cash management or contingent liabilities such as letters of credits. When we commit capital to industries, we also want to ensure that we are a dominant player in the working capital needs’side of the business.

Do you think what has been done so far is sufficient or do you feel the Group could do better for the African extractives sector ?

Amin Manekia  : We have to do better. I am not the kind of person to say we have reached the best that we can be. We need to become bigger and better every day. We want to do better in the African extractive industry but, this has to be with the right project, with the right transactional structure and there has to be the right balance between risk and reward in terms of committing new capital. Also, we should play a lead role or a dominant role in the project, non-balance sheet side of the business in terms of cash management, trade services etc.

How does Ecobank’s strategic plan address the need for greater exposure to the African mining and petroleum sectors ?

Amin Manekia  : We want to work with the key players within the various business segments that we operate, be it the Corporate and Investment bank, Commercial Bank or Consumer Bank. In the various businesses that we manage, if the oil and gas or mining and petroleum sectors are represented, the focus will be on the key players within these industries and within the various geographies that we are operating. We want to make sure that we are financing the true need of a planned business rather than helping them speculate, as an example, in terms of commodity prices. We want to help them build their business whether it is in the oil import or export sides. We want to focus on the value chain, it means we seek suppliers and distributors around the business and how can we help finance and add banking value to the business. For instance, Nedbank, one of our shareholders, which has exposure in the extractives sector may choose to expand into the rest of Africa. If it does, we can offer our affiliates in terms of geography to provide local services to the bank and its clients. 

Is this a decision that is too late, or is it in fact a timely one ?
Amin Manekia  : First and foremost, it is worth noting that Ecobank’s interests in the mining sector are not new. The decision to finance industries, whether they are oil, gas, petroleum or mining, is constantly evaluated. Every time, we do a transaction, the portfolio parameters move and the concentration on a particular project or on a particular industry, change. Hence, we are constantly re-evaluating the decision on whether an industry is becoming more important or less important. But in the countries where we are represented, we are always looking out for opportunities and regularly assessing how we can make a difference to businesses by adding value to the products and services they offer.

Roughly speaking, companies that operate in mining and petroleum sectors in Africa look for financing to investment banks and funds abroad. What is the real problem with African banks and funds ?

Amin Manekia  : The debt and equity capital markets in large parts of Africa are still relatively immature. But there is today a limited pool of long term funds available from banks. In a number of projects, the requirement of funds goes beyond the capacity of local banks. We should also keep in mind that a lot of the mining houses are headquartered in places such as Australia, Canada or United Kingdom where they may have a listing and have plans well beyond Africa and, hence, banking relationships extend well beyond African banks. These companies actually work with both domestic and offshore banks to make sure that they have fully funded funding plans, which is appropriate for what they want to do. Where there are local banking needs, and assuming the plans meet the target market parameters for Ecobank, we will partner with these companies to serve their local banking needs. Typically, we are one of the key banks in the markets in which they want to operate, so we can help them navigate through the local system and still provide them with the high level of services that they need.

Which extractive industry investments have been success-stories for the Group ?
Amin Manekia  : We have had many successful projects. I don’t want to go into individual investments but we certainly do financing for a number of oil refineries across West and Central Africa for example. And, we have helped these projects bring oil or refined products to the final consumer. We are financing the value chain. The bottom line is that there are number of examples and we are very proud of what we have done. But there is a lot more that need to be done. Clearly, this is going to be an important part of our business growth within Ecobank’s Corporate and Investment Bank.

Has there been a major financing opportunity in the mining or petroleum sectors that Ecobank has missed and do you regret it ?
Amin Manekia  : I think regret may be too strong a word. Of course, we would like to do more business. We recently had a team of people visit several mining projects in North America to see how we can develop business with them. Once again, this is assuming they meet our target market parameters. We are looking out for additional financing opportunities, whether it is in the mining or petroleum sectors. Clearly, as the leading pan-African bank on the continent, we want to grow but we want to grow intelligently.

Rutilance.com : If Ecobank group could provide more financial contributions, which extractives sector interests you the most, oil and gas or mining ?

Amin Manekia  : As the Group Corporate and Investment Banking Executive, I can say we are driven by our portfolio parameters in terms of having the right or the optimal kind of the exposure in these industries. We want to partner with the winners of projects within these industries. Clearly, we want to finance the value chain and those we believe are poised to grow. Around these plans, the Ecobank Group is in a good position to finance and find the right mixin terms of the committed capital and our balance sheet. We want to make sure ideally we have adequate returns against the capital that we commit to these clients. This is why it becomes a win-win situation in terms of partnering with these projects. (By Olivier K.T)

 

The ECOBANK Group

Founded in 1985 and headquartered in Lomé, Togo, Ecobank is present in 36 African countries, with international offices in Paris, London, Dubai and Beijing, to support our customers who conduct business in the global economy.
It provides consumer and commercial banking, corporate and investment banking, and securities and asset management to approximately 13 million customers, ranging from individuals, small and medium-sized enterprises, regional and multinational corporations, financial institutions and international organisations via 1,265 branches and offices, 2,829 ATMs, the internet (ecobank.com), and mobile banking.
As of 31 December 2016, Ecobank had $20.5 billion in total assets and $2.0 billion in revenue. Ecobank Transnational Incorporated (‘ETI’), the parent holding company of the Ecobank Group, is listed on the Nigerian Stock Exchange (‘NSE’), in Lagos, the Ghana Stock Exchange (‘GSE’), in Accra and the Bourse Régionale des Valeurs Mobilères SA (‘BRVM’) in Abidjan.