Coronavirus: South African logistics shines amid lockdown
South African investors in real estate for logistics have so far been largely shielded from non-payment of rent caused by lockdown.
By David Whitehouse
The COVID-19 pandemic is likely to quicken the shift to digital financial services in Africa, Ecobank Transnational Incorporated CEO Ade Ayeyemi told The Africa Report.
Once the worst of the pandemic is over, COVID-19 could be “a great accelerator,” enabling the adoption of new technology in Africa, Ayeyemi said from Lomé in Togo. “It can be an opportunity for the continent and create new business models.”
Using digital channels rather than branches has raised fears that financial services may become harder to obtain for those who can’t afford access to digital tools. Ayeyemi has faith in the march of technology.
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“No-one has a template,” for how to manage a bank in such a pandemic, said Ayeyemi. But the bank’s diversified, technology-based model leaves it well placed to withstand the crisis, he added.
Ecobank operates in 36 African countries and claims to have the largest African presence of any bank in the world.
In the short term, implementation of the Africa Continental Free Trade Agreement (AfCFTA) should be delayed due to COVID-19, said Ayeyemi.
Operating conditions for the bank will be “extraordinarily challenging” in coming months, Ayeyemi said when reporting the bank’s first-quarter results on 24 April. The non-performing loan (NPL) ratio for the first quarter increased only marginally to 9.9% from 9.7% at the end of December.
Transaction levels are down, and customers “are not doing what they used to do in the quantity they used to do it.” Some purchases, rather than being deferred, will never take place, he said. The bank is using staff on a rotational basis to keep working while minimising social contact.
READ MORE: South Africa’s digital Bank Zero: on track to launch despite pandemic
As for a timetable for the resumption of dividend payments, Ayeyemi said he would need to call Anthony Fauci, director of the U.S. National Institute of Allergy and Infectious Diseases, to ask him when the world will defeat COVID-19. Perhaps he should try another number: Ecobank in fact has not paid a dividend since 2017.
Bottom line: Tackling the new strategic challenges posed by COVID-19 at the same time as containing the financial impact and keeping shareholders on board will be a major comnbination of challenges for Ecobank.
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