AFRICAN FINANCIAL INSTITUTIONS MUST SEIZE SUMMIT OPPORTUNITY

Group Managing Director/CEO, UBA Plc, Mr. Phillips Oduoza, attended the US-Africa Leaders summit held between August 4 to 6 in Washington D.C., USA.  In this  post, he shares his thoughts on the summit. 

Phillips Oduoza, GMD/CEO, UBA Plc 

The recent U.S.–Africa Leaders Summit presents a significant opportunity – one that African financial institutions must seize.

A significant part of the challenge of financing growth and development in Africa rests with financial institutions; particularly African institutions, that work in collaboration with international development organizations, investors and private equity firms, especially those in the U.S.

Those of us at UBA, along with our colleagues at other African banks, have both an advantage and a responsibility.

Our advantage is that we understand, probably more deeply than overseas funding providers, the potential for growth on the continent, and the specifics of how to achieve it. We understand the peculiarities of investing in Africa, the attractiveness of commercial transactions, and how to mitigate and navigate their apparent risks.

Our responsibility, on the other hand, is to illustrate to our global partners the form that investment must take and the kinds of projects that need to be funded in order to help Africa’s nations achieve sustainable growth; this is to ensure that investments have the greatest potential for success. 

As an African financial institution, we believe that economic growth on the continent, and the specifics of how to achieve it, largely depends on our financial intermediary role, because we realize that without funding, entrepreneurs and businesses cannot prosper. We already serve as a vital intermediary, consolidating deposits and transforming those funds into loans for the people and businesses that need them.

But, the task of educating our investment partners is neither simple nor straightforward. 

The global understanding of Africa is improving, but there remains a significant information asymmetry. Many investors, including sophisticated ones, are still inclined to think of Africa as a single entity, rather than what it is, a collection of countries with divergent cultures, needs and resources. 

They are also somewhat at the mercy of western media, which tends to play up easy, sensational stories, but miss the significant trends of long-term growth and increasing self-sufficiency. 

Most African nations are stable and democratic, with improved business climates and abundant investment opportunities in agriculture, power, transportation, telecommunications, energy and other sectors.

As one of Africa’s largest banks, with operations in 19 countries on the continent, and presence in NYC, London and Paris, we at UBA have made huge investments that span the continent, and have continued to grow our business as we help fulfill the pressing need for financing and development.

We foresee a partnership between the U.S. and Africa grounded in mutual understanding and mutual respect.  All of us – not only private institutions, but also government leaders – must play a role in making this happen. We must look to Africa’s government officials to strengthen their democracies and democratic institutions so that investment will flow into the continent.  

And Africa’s banks must share and leverage their deep knowledge of the risks and rewards of investing in Africa, the nature of the needs and opportunities, and the financing structures that will be most effective in matching resources to projects, generating sustained returns, and ensuring that African investment becomes, and remains, a long-term, sustainable project for both Africa and the West.