Nigeria is Ecobank’s Achilles heel
Africa’s most ambitious homegrown regional bank has a problem, and it is called Nigeria. If it doesn’t solve it, the Nigerian business will hamper Ecobank’s goal of banking 100 million people across the rest of the continent.
Nigeria is Ecobank’s biggest market and also its Achilles heel – a drain on capital that is severely hindering its business elsewhere. The bank’s issues in Nigeria are threefold: its local subsidiary is blighted by low profitability, which is in turn exacerbated by both a cost burden and a stock of impaired loans that dwarfs those of its market peers.
Given that Nigeria is Ecobank’s largest single market and accounts for 24% of the group’s balance sheet, the weak growth and volatile asset quality it reports are critical to the group’s overall performance.
“Nigeria is by far our most challenging place,” Alain Nkontchou, who was named chairman of Ecobank in July, tells Euromoney. “We believe that the way to recovery is there, and as far as I am concerned it is very high on our agenda to solve the Nigerian problem once and for all.”
Elsewhere, Ecobank is in a great place. At a group level, many of its big bets on technology are paying off. In 2019, it added 4 million retail customers, and brought a small army of previously unbanked sole traders and small businesses into the formal economy.
Its investment in digital is also helping to address some of Africa’s biggest challenges.