The United Bank for Africa Plc (UBA), one of the continent's oldest and largest financial institutions, is headquartered in Nigeria with operations in 18 other African countries and offices in New York, London and Paris. Phillips Oduoza, who has been group managing director and chief executive since August 2010, has both engineering and finance degrees from the University of Lagos and has worked at Citbank and several other Nigerian banks. He was interviewed by AllAfrica at the U.S.-Africa Business Summit in Chicago earlier this month.
How important to UBA are the operations outside Nigeria?
Nigeria contributes 80% of our revenue. By the end of this year, we are looking at the percentage contributed by other countries to rise to about 25%. In the next three years, we are looking at the situation where Nigeria contributes a maximum of 50% with the rest of Africa contributing another 50%.
The idea is to continue to diversify our revenue base. We want a situation where our revenues are not dependent on Nigeria's oil revenues.
The 19 African countries where UBA operates cover a significant percentage of the GDP of Africa as a whole. We are talking about Benin, Sierra Leone, Senegal, Liberia, Burkina Faso, Cote d'Ivoire, Guinea and Ghana plus Nigeria in west Africa; Gabon, Cameroon, Democratic Republic of the Congo, Congo-Brazzaville and Chad in central Africa; and Tanzania, Uganda, Kenya, Zambia and Mozambique in the east and south. These are key economies in Africa. At UBA we play in the strategic sectors of each of these economies.
How does UBA benefit from having a New York office?
The presence we have in the United States assists us to bank American companies and take our services to their subsidiaries in Africa. There are a lot of the U.S. multinationals that operate across Africa - especially in the oil and gas sector - big names such as Exxon Mobil, Chevron, and the oil service companies. UBA is perhaps the only African bank that has a presence in United States of America. We comply with U.S. laws and are regulated by the Office of the Comptroller of the Currency. The good thing about operating in the United States is that regulation requirements are very stringent.
As UBA operates across Africa, how do the various regional organizations impact operations?
You have Cemac in Central Africa, Ecowas and the Uemoa zone in the west, for example. And each of them has its own regulations and each has some form of convergence, making it easier for us to apply a common standard. It is our policy to operate everywhere like we do in New York. We have only one standard, and then we incorporate local requirements. You find that our high level of compliance is way above that of most other banks that operate in the various countries where we operate.
For multinational customers, who you have identified as key clientele, what comparative advantage does UBA offer?
What we provide for multinationals that operate across the region are specific products designed just for them. For instance, we have what we call a 'key distributors scheme' to serve our corporate clients' dealers and distributors. If you [as a bank client] have this set up in one country - Kenya, for instance - we can apply it in Nigeria, in Zambia, in Cameroon and in other places where we operate. Secondly we do loan syndication for the very big multinationals where the capacity of the bank is not sufficient to handle their single transaction.
For countries in the Uemoa zone, where they use the XOF [west African CFA franc] and those in the Cemac region, which use the XAF [central African CFA], we can finance large transactions with funds from all the countries [within each zone]. For example if you have a big-ticket transaction in Côte d'Ivoire, all the countries within that region can put their currencies together to fund that transaction. There is no cross-border risk and no currency risk. This is a big advantage we have over single-country operators in Africa.
But you can't do that kind of cross-border financing in east Africa, for example, where there isn't a common currency - or in English-speaking west Africa?
That's the challenge. If you have a transaction in Kenya, you cannot bring the contributions of the other east African countries to bear on that, and we may be forced to take on currency exposure to do the deal.
What are the biggest obstacles you face as a pan African financial institution?
The major challenge we are facing is talent. And I think it applies to many other players in the region - the shortage of appropriately trained people to drive businesses. It is a very, very big problem. One approach we have taken is to reach out to Africa's diaspora - to have them come and take up some senior positions in various countries.
To focus on UBA's home base, how would you assess the current climate for doing business in Nigeria?
It is still a very tough to do business in Nigeria, but I think it has become easier than it was a few years back. You have younger people that believe the continent must move forward because other parts of the world are moving. You have dedicated private sector people pushing from the private sector and some private sector people moving into the public sector to reform the public sector.
People in government have realized that competitiveness is key, because global capital is not waiting for Africa. Most importantly, the [Nigerian] government has agreed that we must fight corruption - and started doing something about that. We have made substantial progress on transparency. For instance, the power privatization that took place in Nigeria this year could not have taken place under the old regime.
We are not there yet. We have a lot to do. But the good thing is, we are moving in the right direction.
How does social responsibility figure in UBA's operations?
UBA has a platform for our corporate social responsibility, and that is the UBA Foundation which has a focus on three areas - education, economic empowerment and environment, financed with a certain percentage of our profit.
The foundation supports scholarships, teacher training and rehabilitation of schools. They have also been involved in cleanliness of the environment in the various states where we operate. And with economic empowerment, they are supporting market women with interest-free funds to enable them to run their little businesses and other projects. There is a quite lot going on with corporate social responsibility as far as UBA is concerned.
Is the percentage of profits set or does it vary year-to-year?
This varies, according to a decision of the Board.