Africa’s head of products and segments, says the bank will extend
its operations to 15 countries this year and 35 countries by the
end of 2009. UBA’s consumer banking operation will play a key role
in the bank’s ambitious international expansion plans, writes
Douglas Blakey.
West Africa’s largest financial services group,
Nigeria-based United Bank for Africa (UBA), continues to grow at a
breathless pace, boosted by infrastructure investments, Nigerian
banking reforms and an impressive international expansion strategy.
And, according to the bank’s head of products and segments, Angela
Nwabuoku, UBA’s cross-border operations are set to go into
overdrive.
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She told RBI: “We have an ambitious pan-African
aspiration because we believe the necessary step following
dominance of the Nigerian banking landscape is to dominate
Africa.”
At home, it certainly dominates, with the largest branch and ATM
network (over 700 retail distribution centres and around 1,000 ATMs
across Nigeria); more than 6 million retail customers; and market
shares of around 25 percent in the main retail banking
segments.
Its international ambitions were flagged up by publication of a
strategy paper in May, following a three-year restructuring process
in partnership with management consultants McKinsey, all designed
to propel the bank to be the leading financial services group in
Africa by 2010. UBA’s march across the continent has already
resulted in operations in Ghana, Cameroon, Uganda, Liberia and
Sierra Leone, while a subsidiary, UBA International, has been
created to spearhead the bank’s global expansion plans.
“We have secured licences in about five more countries and all
are expected to commence operations before year-end,” Nwabuoku
added. “We have concluded two new acquisitions in East and Central
Africa and we plan to make them public as soon as all regulatory
sign-offs are secured. We believe we should have a presence in 15
African countries by year-end and 35 African countries by the end
of 2009.”
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By GlobalDataOne potential key market will be South Africa. Nigerian banks
have made regular efforts to break into the South African financial
sector without success for a number of years. Finally, in June, the
South African government endorsed three Nigerian banks – First
Bank, Union Bank and UBA – to commence retail banking.
A country of 140 million
For the foreseeable
future, the bulk of UBA’s profits will be derived from its Nigerian
arm, however, with its retail division contributing around 30
percent of group revenue. And in a country of 140 million people,
of whom only around 14 million have a bank account, there remains a
great deal to play for.
While it is the largest country in Africa, accounting for almost
50 percent of West Africa’s population and is also the world’s
eighth-largest crude oil exporter, Nigeria’s GDP per capita was
only about $825 in 2006.
Nwabuoku said: “The banking environment in Nigeria has
considerable potential owing to the size of the population and the
rapidly-growing middle class. There is a very large unbanked and
underbanked population [around 70 percent of the adult population]
and our aim is to reach these markets.”
The McKinsey exercise also resulted in the bank setting up a
retail financial services arm to provide a wide range of financial
services targeting non-bank customers across Africa through
non-branch channels such as direct sales agents, telemarketing, the
internet, consumer outlets and microfinance banks.
By 2009, UBA expects to increase its branch network to more than
1,000 and will open branches both in rural and urban areas. All the
bank’s branches are “self-sustaining”, said Nwabuoku, and must
break even within the first six months of opening.
UBA will also increase its investment in alternative
distribution channels, in particular m-banking in recognition of
the explosion in mobile phone use; Nigeria had around 55.3 million
mobile phone customers in 2007, compared to only 32 million in
2006.
“M-banking shows where the opportunity is, with regards to
customers embracing technology,” Nwabuoku said. “Mobile telephony
has reached the unbanked, so it shows you the kind of retail
product innovation that can be extended to this market.”
UBA was one of the first banks to pioneer mobile banking in
Nigeria via its U-Mobile service, which allows customers to check
their balances, view their statements, make fund transfers and
top-up their pre-pay mobile phone balances.
“The market response to the product so far is quite encouraging
[and] we have gradually started its roll-out at our operations in
Ghana, Cameroon, Liberia and Uganda,” added Nwabuoku.
The forefront of product innovation
UBA is at the “forefront of product innovation” in Nigeria, she
added, and will continue to invest particularly in the areas of
retail lending, electronic payments and deposit taking. The group
has recently rolled out a money transfer service (called CashFast),
launched a non-resident Nigerian banking service (NRN Banking) and
has had success with its online channel, U-Direct.
The establishment in 2007 of Nigeria’s first bank-sponsored credit
bureau, the Credit Reference Company, together with the recent
emergence of two independent credit bureaus, is expected to boost
card use in the short to medium term – and debit and credit cards
remain a key focus for UBA. In terms of Nigerian card penetration
levels, there were around 24.2 million debit cards in circulation
as of July 2008, according to a recent report by RBI’s
sister publication Cards International, with UBA’s share
exceeding 30 percent.
The bank offers a sophisticated range of cards, including a V
Pay debit card along with an own-branded UBA debit card; a
MasterCard-branded dollar-denominated credit card in standard and
corporate formats; a prepaid MasterCard; and a credit card
incorporating the ‘Pride’ branded loyalty programme, introduced in
2007, with points redeemable at a range of merchants including
Virgin Airlines, telecommunications company MTN and hotel chain
Hilton.
UBA recently launched a dual currency debit card which can be
used domestically and internationally, which Nwabuoku says “is the
best thing that has happened to customers in recent times as they
do not need to carry multiple cards for different purposes
especially when they travel out of the country”.
And in May, in an attempt to tap into the growing Nigerian
interest in English soccer’s Premier League, the bank teamed up
with London-based football club Arsenal to collaborate on a range
of financial services and football initiatives, including
co-branded debit and credit cards in all the West African locations
where UBA operates.
The bank believes the co-branding agreement will also support
its commitment to developing grassroots football in soccer-mad
Africa, as well as boosting the use of electronic banking products
on the continent.
“We expect a lot from our card business, especially with the
launch of our alliance with Arsenal and the market response to that
has been encouraging, ” Nwabuoku stated.
Africa’s global bank
UBA has invested heavily in its brand, promoting the tagline
‘Africa’s global bank’, with the aim of flying the flag for African
excellence.
“We treasure the UBA brand and will continue to refresh and
closely manage it and will continue to associate our brand with
other brands and activities that will enhance its value and project
UBA as a leading bank in Africa,” Nwabuoku said.
Through an experiential branding programme tied to its corporate
social responsibility platform, UBA linked up with the Africa Movie
Academy & Awards, with the aim of supporting the development of
the African cinema industry. UBA has also encouraged individual
entrepreneurship by sponsoring the Nigerian television edition of
Dragon’s Den, the venture-capitalist TV show that
originated in Japan and is now shown in a number of countries
around the world.
“The aim is to embed our brand in the lives of the community in
ways that infuse excitement whilst building goodwill and loyalty
for the brand,” Nwabuoku said. “The TV show falls under the UBA
Edutainment platform which provides communities with functional and
educative entertainment initiatives.”
According to Nwabuoku, the bank’s segmentation strategy, which
has tended to concentrate on the mass affluent, professional and
mass retail segments, will be tweaked, with the focus shifting to
include other segments such as non-resident Nigerians, small and
medium-sized enterprises and the high net worth sections of the
market.
At the other end of the income scale, the bank recently launched
UBA Microfinance Bank, to support the growth of micro and
small-scale enterprises. Rather than giving handouts to the
disadvantaged, the exercise is all about creating an enabling
environment for people who have the “dynamism, attitude and desire”
to succeed. The bank expects its microfinance arm to become the
biggest financial partner of those considered ‘economically
disadvantaged’ in Africa.
STRATEGY
China Development Bank tie-up to bear
According to Angela Nwabuoku, the head of products and segments at
UBA, there is scope for her bank to benefit from further
collaboration with foreign banks. “It will depend on available
opportunities and the clear value the foreign institution will
bring [but] we have at various times built partnerships with firms
like UBS and we will continue to work with international
institutions where there is a compelling case,” she told
RBI.
While Nigerian press reports in January this year suggesting
China Development Bank (CDB) was in talks to buy a multi-billion
dollar stake in UBA proved to be wide of the mark, UBA does expect
to benefit from a partnership agreement it signed in 2007 with
CDB.
“It was never about an equity stake – it is just a strategic
partnership. I expect the agreement to start to bear fruit in early
2009,” the bank’s head of investor relations, David Ellis, told
RBI.
At the time the CDB partnership agreement was signed last year,
UBA CEO Tony Elumelu said: “It provides us [with] an almost
infinite amount of capital to execute projects.”
In June, speaking at the World Economic Forum on Africa at
Davos, Elumelu said Nigerian businesses needed to be ready to forge
new kinds of global partnerships. While foreign banks have been
slow to invest in Nigeria, South Africa’s Standard Bank raised its
Nigerian profile last year, merging its Stanbic Bank unit with
IBTC.
“We welcome the entrance of international banks; it is healthy
for both the industry and the economy as a whole and we also think
it is an endorsement of the country’s economy and that augurs well
for us,” concluded Nwabuoku.
