Why Investing in Other African Markets Is More Profitable than in Nigeria – Access Bank CEO
Roosevelt Ogbonna, CEO of Access Bank, has revealed that the Nigerian banking sector is struggling to match the profitability found in other African countries, largely due to the ongoing devaluation of the naira. Speaking at a recent media event, Ogbonna outlined the bank’s ambitious five-year strategy, which includes distinct phases for investment, consolidation, and optimization.
During his address, Ogbonna pointed out that Nigeria ranks low in terms of return on equity compared to regions like Southern, East, and North Africa. He stated bluntly,
“If you take the money made in Nigeria and invest it in South Africa, we could make three times the returns.” This stark comparison underscores the bank’s decision to expand into more lucrative markets across the continent.
Ogbonna further emphasized that from a retail perspective, Nigeria and West Africa fall short compared to other regions.
“We need markets where we have stronger returns,” he noted, adding that Central Africa may even present a more promising banking environment than West Africa.
Historically, the disparity in profitability is striking. Ogbonna recalled that back in 2008, one South African bank outperformed the entire Nigerian banking sector despite Nigeria being the continent’s second-largest economy at the time. He stressed the need for investment in markets that promise better returns and questioned the rationale behind current investment choices given the risks associated with the naira.
When comparing investment options, he posed a provocative question: “If I have $100, should I invest it in Nigeria and potentially earn a return of 20% in naira, or invest in Access Bank UK for a 25% return in dollars?” He argued that stable markets, such as Botswana and Cameroon, offer more attractive options with lower inflation rates and more predictable returns.
Ogbonna also expressed concern over the high costs associated with raising capital in international markets. He highlighted the disparity between the rates paid by African banks compared to their global counterparts, even when the African banks have solid track records. “JP Morgan might raise $2 million at 3 or 4%, while I’m raising $500 million at 9%—what justifies that 600 basis points difference?” he questioned, emphasizing the need to rectify this imbalance.
He remained optimistic about the future, asserting that if foreign banks like Citi and Standard Chartered were to exit Africa, it would create opportunities for African banks to fill the void. “We suffer nothing because life just goes on,” Ogbonna said, advocating for a robust African banking presence that understands the continent’s unique challenges.
Looking ahead, Ogbonna is confident that by 2025, Access Bank will be ranked among the top ten banks in its markets across Africa, excluding Kenya and South Africa. However, he acknowledged that breaking into the South African market may prove difficult unless perceptions of Nigerian businesses shift significantly.
