UBA’s presence in the Middle East represents the deepening connectivity between Africa and the Gulf as well as the bank’s growing global ambitions. Indeed, UBA, which began its expansion plans out of Nigeria in the early 2000s, is the first Nigerian-based bank to open shop in the United Arab Emirates (UAE).
In a wide-ranging interview with The Africa Report and Jeune Afrique, Elumelu discusses the bank’s future, the importance of extending financial services across Africa and how the government in Nigeria can support business and investment for a sustainable future.
Aside from his position as UBA chairman, Elumelu is also the founder of Heirs Holding, an African investment company with interests in financial services, energy production, oil and gas, agriculture, real estate and hospitality; chairman at Transcorp PLC, Nigeria’s largest conglomerate; and founder of The Tony Elumelu Foundation, an organisation that seeks to catalyse entrepreneurship across Africa.
UBA was the first Nigerian bank to expand into the continent and you have just opened a subsidiary in the UAE. What are the next steps in the bank’s development?
Tony Elumelu: UBA is an African bank. We operate in 20 African countries – 11 francophone countries and 9 anglophone countries – which illustrates our pan-African focus. We consider ourselves an economic powerhouse that can bring Africa together and connect us to the rest of the world through our presence in the UK, France, the US and now UBA Dubai, which will open this week to support business between Africa and the Gulf.
In terms of revenue, we now have a near 50/50 split between Nigeria and the rest of the world, which will continue to change as our international presence evolves.
Our main aim is to support African companies – in particular, small to medium sized enterprises (SMEs) – that want to do cross-border business and help international companies do business in the continent. We also work with governments to provide physical and social infrastructure across Africa – all activity to support and catalyse economic development.
Do you think the regulatory environment in Nigeria supports banking activity?
I think the regulatory context in Nigeria is strong – and it takes strong national regulatory systems to support the expansion of banks regionally and internationally, which Nigerian banks have been able to do very successfully.
I also believe that the regulators have helped us navigate some turbulent times, including the commodity price crash, the global pandemic and now inflation. We are working our way through some tough times, so it might not be appropriate for us to force changes on the regulator. We are all going through a period of adjustment, which will take time to work through.
Just one year ago, you launched your insurance business with Heirs Life and Heirs Insurance. What are your ambitions in this field?
Access to financial services in Africa remains poor and part of our aim as a group is to increase financial services penetration: this includes insurance. Insurance penetration as a percentage of GDP is less than 1% in Nigeria, but given the country offers a market of 220 million people – the largest market on the continent – if we can roll out a successful insurance product here, replicating something similar across the continent should be easy.
This is how we expanded our banking business – by starting in Nigeria and exporting to other countries. Our initial focus is on life insurance, which is doing well.
Digitalisation will support this development.
One of the reasons that insurance penetration in Africa is so poor is because payouts and settlements still take too long, so there is a hurdle in increasing people’s confidence in the insurance sector. For us, our aim is to pay out insurance policies within 24 hours. Our aim is to make sure that when insurance is called on, it is there to support you. This is particularly true for women whose access to insurance is extremely poor.
It’s also important for us to work with the regulators when it comes to the development of compulsory insurance products. It is [still] early, but we are pushing for change and penetration. Digitalisation will support this development.
Nigeria’s presidential election is coming up. What should the future government prioritise in terms of regulation, economic development and business support?
The number one issue facing Nigeria today is security. Where there is security – and the ability to move around freely – business will prosper, and private investment will flow. However, this goes beyond the freedom of movement: it also means strong legal frameworks that build confidence in the system. As they stand, I believe our legal frameworks are good, but they can be strengthened and made even more stable.
We also need to focus on reliable infrastructure – access to electricity, internet connectivity and dependable transportation systems – which will benefit business and provide the frameworks for our young population to succeed. The future of Nigeria is in the hands of the youth.
In fact, I want to see our government prioritise our young population, give them support, encouragement and provide them with opportunities, so that we can reduce unemployment and underemployment levels. Through the Tony Elumelu Foundation we can provide them with the financial tools and mentorship to succeed, but this doesn’t mean much without reliable infrastructure and opportunities at home.
There is a drive towards local production and manufacturing, but the process has been hampered by limits on imports and a lack of dollars in the system. How can we create opportunities at home to encourage local manufacturing and support entrepreneurship?
I believe in the free market. I don’t like restrictions. I want to be able to go to any country as a global citizen, a global investor and I want the same for those who come to Nigeria and Africa. As such, I believe that the government should nurture an environment that allows us to compete freely.
If you look at the oil and gas sector, you can see that change is private sector lead. We are seeing that some of the international oil companies are stepping back, and the local, national companies are filling the space. This is happening naturally; the government is not directly involved in this, but what they can do is support economic development and support investment to the country so that local business can thrive.
What kind of message does the withdrawal of Shell from Nigeria and the legal issues that the company is facing send to the international community about doing business in the country?
Doing business in any country may lead to legal issues – this is an attribute of free market and democracy. Commercial dispute resolution is a hallmark of the free market. People can and should be able to contest if needed – as long as the process is transparent.
At the same time, Africans are not necessarily benefitting from our continent’s natural endowments, so I would like to see local interest in business increase in economic activity so that our people benefit, and that local value is created. Those that bear the brunt of the effects of natural resource exploitation should be the ones that benefit. I would like to accelerate this transition – and I would like us to make sure that we are ready for it.
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