By Merit Ibe
In March this year, when Access Bank management announced the completion of its transition into a Holding Company structure leading to the delisting of its entire 35.5 billion outstanding shares from the daily official list of the Nigerian Exchange, it was obvious to most market analysts that they must have seen gold somewhere that needed to be urgently harnessed in a rapidly evolving global financial market.
The company now trading under a new parent company known as Access Holdings PLC has since been relisted to reflect current realities of the maket.
With brick and mortar structures of traditional banking practically going extinct and giving way to electronic service delivery, more Nigerian lenders have in last few years been pressing to break the glass ceiling where competition is intercontinental.
For the Herbert Wigwe-led lender, an Access HoldCo structure means they now has the latitude to branch out into other financial services outside its core banking operations to compensate for a largely depressed earnings capacity of commercial banking in line with industry’s growing propensity to diversify income streams of operators in an enlarged entity.
The HoldCo franchise however allows a parent company to hold controlling stakes in all the subsidiaries under its purview without interference in their everyday running, while freeing each of the companies in the group from the liability or debt settlement obligations of another company in the event of insolvency.
One critical area that the Access HoldCo appears very focused in its quest for towards offering of trade facilitation services to its African business community is the use of an efficient payment and settlement architecture currently being developed to power transactions in the African Continental Free Trade Area ( AfCFTA) which commenced last year with about 52 countries already on board.
There are indeed many reasons to believe that Africa still trails Europe, Asia and the United States of America among other regions in its continental trade currently below 10 per cent of global trade.
Over the past five decades for instance, available records show that while trade with Western nations comes with little or no bottlenecks, intra -African trade are usually mitigated by so much tariff and non tariff barriers including payment challenges which an Access HoldCo can leverage to extend its reach across Africa and beyond in the years ahead.
According to the African Development Bank (AfDB), intra-Africa exports amount to only 16.6 per cent of total trade in the continent.
But the signing of the landmark trade agreement in the African Continental Free Trade Area Agreement (AfCFTA), in 2018 which commits countries to remove tariffs on 90 percent of goods, progressively liberalise trade in services and address a host of other non-tariff barriers opened a new vista for Nigerian and other lenders in Africa to become more competitive.
Though the a lot of work still needs to be done, that agreement created a single African market of over a billion consumers with a total GDP of over $3 trillion which would make Africa the largest free trade area in the world.
This means that any lender with relevant structures can leverage payment and settlement opportunities in the continental space to make more impact.
It is therefore not surprising that Access Holdings’ Afrocentric disposition, saw it opening up branches in major financial centres of the world to enable it focus more on improving trade in the continent and earn more revenue for its shareholders.
Under a holding company structure premised on ethical standards, the bank intends to spin off more portfolio companies with significant complementarities, for an ecosystem that mentors customers across their life cycle while delivering value to stakeholders.
The Group CEO of Access Corporation, Herbert Wigwe, while speaking on the new structure said: “Trade has been one of our strongest strengths and it is something we have pursued, even before the AfCFTA agreement was initiated. We had told ourselves that we want to be Africa’s gateway to the world. What that means is that we will support intra-African trade; drive diaspora remittances and payments.”
According to Wigwe, there are opportunities for financial institutions to expand to high-potential markets, leveraging the AfCFTA across Africa.
He said AfCFTA, among other benefits, would expand intra-Africa trade and provide real opportunities for stakeholders.
Wigwe said Access Corporation would use its London office to expand representative offices in India, Lebanon and China.
He stated that the plan is for Access Bank to establish its presence in 22 African countries so as to diversify its earnings and take advantage of growth opportunities across Africa.
The Access Corporation boss noted that in areas it has not consolidated, through the holding company structure, it would build that in-road seamlessly across the continent.
He said “As Africa, we must support and develop our continent ourselves. So, supporting local businesses is important, ensuring greater financial deepening is also important and if we grow our continent to be strong, then institutions within the continent would be stronger.
“However, you need to manage risks as you do this. So, in some markets that are large in terms of trade, we would basically do more to support businesses. All of these things stand on a tripod: Strong capital – both financial and human capital; strong risk management and strong governance and the governance framework has to run through everything that we do.”
According to him, Africa has enormous potential and there are opportunities for an African bank that is well run, that understands compliance and has the capacity to support trade and the right technology infrastructure to support payments and remittances, without taking incremental risks.
“We believe that we are best positioned to basically do all of that. Our focus is to become an aggregator in Africa and we are building a global payment gateway and providing trade finance support and correspondent banking across the continent. We are focusing on the key markets.
The approach would always be that in the country we wish to go to, that we have the right skills. We would not just be a drop in the country in which we are present, we would make sure that we have an impactful presence in each of the major countries in which we are present.
“In doing this, we are also mindful of the country we are going to so as to make sure that it is of benefit to the bank. As we do this, we are working with our friends and partners. We are diversifying our earnings away from volatile markets as well and we are orchestrating our operations from the global payments gateway and ensuring that using Access Bank UK, providing corresponding services from digital platforms, the overall profitability of our franchise,” he explained.
Commenting further, on AfCFTA, he said the bank would use its digital framework to benefit from the deal.
“Coming to Nigeria, we think we need to continue to entrench ourselves in the local market because there is still so much work to be done.
So, we are doing everything possible to satisfy our customers and also to ensure that our channels are adequately secured. We are also ensuring that our staff are very efficient,” the CEO said.
Access Bank recently transited from core banking into a full financial services holding company.
This change is expected to see the institution evolve from a bank into a large-scale ecosystem player offering a new globally connected set of services. This ecosystem offers specialised services at the same time as a seamless integrated experience to improve both relevance and convenience.
Access Corporation now oversees a group of portfolio companies with significant complementarities that will drive more value for customers and stakeholders.
In Access Bank Group, although banking remains its core mandate, it has now been equipped to provide best-in-class, seamless and consistent customer experience, and service delivery in its operations in Nigeria, and across its 14 subsidiaries in Africa, Europe and Asia.
For the Lending Company, the focus is now largely on consumer lending company, serving individuals and SMEs. Products on offer include buy-now-pay-later loans, car loans, small mortgages, salary-based loans, working capital loans, durable goods loans, point of sale loans and much more. This is a digital business, focused on speed, convenience and value.
On the other hand, the Group’s Payment Company, will drive payments locally and across the African continent and beyond. Primarily a business services company, the Payco will make payments simpler, faster and more efficiently. The focus will be on; Switching, Card Processing, New and Emerging Payments.
As Access Payment gateway to facilitate e-commerce, the Payco will partner with organisations to be the most-trusted Fin Tech enabler in the continent.
Insurance Company: The financial institution recognises that Insurance is key to sustaining businesses, and it is a tool to protect intergenerational wealth and benefit societies. Access Insurance Brokerage would provide a value-added insurance brokering service focused on your individual and business protection needs.
Your banking service experience will be highly improved, and you will be connected to even more exceptional opportunities to suit your lifestyle and business needs. I will continue to support the banking group as well as other business verticals with the new holding company and hope we can also count on your continued support as we write the next 20 years of our journey together”, Wigwe wrote.
Continuing, Wigwe explained: “Many of you would have heard us talk about Access Corporation earlier this year. This natural evolution of our company will ensure that we continue to use digital tools and our partnership with fintechs to support our customers’ lifestyles outside of the banking system.
We have set our sights on and delivered ambitious plans to transform the African financial services sector over the last 20 years. Until now, we have concentrated on banking, with the goal of becoming the World’s Most Respected African Bank. Our banking subsidiary is now Nigeria’s largest bank by assets and Africa’s largest in terms of customer base.
“It is now time for us to take the next transformative step, where we provide our customers with beyond banking services delivering new interconnected financial services across customers’ needs.”
He stressed that the Access Bank Group would continue to operate in Nigeria and through its subsidiaries and business offices in Africa, Europe, and Asia.
“These businesses, when combined, will position Access Corporation to provide banking services, including intra-and inter-Africa trade, consumer lending, payments services, and insurance services to our customers, thereby improving wealth diversification and preservation.
“Looking ahead five years, Access Corporation will be a leading financial and ecosystem player, with services spanning B2B and B2C marketplaces, B2B services, health, housing, digital, mobility content, mobility, core banking offerings, and other financial services such as insurance and wealth management,” Wigwe added.
We recognise and embrace the change that is currently happening and, as we have previously demonstrated, we will lead. Access Corporation will be a driving force in the ongoing digital revolution to the benefit of our stakeholders.
“This transition will allow us to offer more career development opportunities across portfolio companies for our employees, allowing us to attract and retain the best talent in an increasingly global marketplace.
“We will unlock more value for our customers by focusing on distinct business opportunities with high growth rates globally, such as payments and consumer lending,” he said.