Finance
INTERVIEW
m MIDDLE eeting in the
Dele Babade, Group Executive Director at Ecobank Capital, explains why Africa’s investment appeal has actually been strengthened by recent market volatility, and why Middle Africa is the way to go
Q
It’s been a year since the launch of Ecobank Capital, the capital markets and investment banking arm of Ecobank; how has the arm evolved since inception?
The development of Ecobank Capital was a logical progression for the Group. By harnessing our considerable in‐house knowledge and expertise in pan‐African foreign exchange, equity, debt and commodity finance, we can now provide our corporate, governmental and institutional clients with an integrated, highly professional service from a uniquely local perspective of Africa. We have strengthened our team by recruiting additional experienced professionals to increase our deal execution capacity to capitalise on the plethora of opportunities available in Middle Africa. For example, over the past year, we have already executed landmark transactions in Ghana, Chad, Cameroon and Nigeria.
Q
What is ‘Middle Africa’ as defined by Ecobank, and what does it represent for Ecobank Capital?
We define ‘Middle Africa’ as the whole of sub‐Saharan Africa excluding South Africa, ranging from Senegal to Kenya and Chad to Zimbabwe. It is a region which tends to be overlooked by international investors and, as such, provides unique, if challenging, investment opportunities. We aim to execute innovative transactions that leverage Ecobank’s local franchises and, ultimately, to develop Africa’s financial markets with more sophisticated debt, equity and derivative instruments. There is an increasing appetite to invest in Middle Africa, driven
by its status as one of the world’s fastest growing regions and its rich natural resource base. Growth will be further stimulated by key demographic trends, such as increasing urbanisation and the rapid expansion of the region’s middle class. If anything, Africa’s appeal as an investment destination has
been enhanced by recent market volatility because of the low correlation between the performance of African markets and the rest of the world, a factor that sophisticated investors use to balance portfolio risk. Ecobank Capital is investigating business opportunities
throughout Middle Africa. Most of the countries, with the exception of Nigeria, Kenya and, to some extent, Ghana, are still underserved, especially in francophone Africa.
20 | SEPTEMBER - OCTOBER | 2011 Q
What trends are shaping the investment landscape in Middle Africa; what sectors have potential for further investment?
Growth in Africa’s middle class is probably the latest positive structural trend. African consumption has grown by US $275 billion since 2000, more than India and similar to Brazil. More than 300 million people, nearly the third of the population, are now considered as middle class. By 2020, it is estimated that half of the population will have discretionary spending power. The middle class has expanded strongly, by almost 1% per year over the last decade, due to a more supportive policy environment, which has allowed the private sector to flourish. The needs of Middle Africa’s growing middle class range from foods/beverages to telecommunications and banking solutions. Ecobank Capital aims to tap into this vast pool of opportunities for clients and investors. Innovative and tailored solutions have been developed for clients in many sectors, including infrastructure, power, energy, agriculture, general industry, financial services and telecoms.
Q
What does the recent opening of the London office mean for this market; where will Ecobank Capital go from here?
Ecobank recognises the importance of an on‐the‐ground presence in developing commercial relationships so it has built a network of representative offices in major financial centres, including Dubai, Paris and Johannesburg. Our presence in London is raising international awareness of Ecobank’s extensive transactional and advisory capabilities, as well as enhancing its reputation as an authoritative voice on African trade, finance and investment issues. Ecobank will capitalise on operational synergies and cross‐
selling opportunities between its corporate banking, treasury and investment banking businesses in order to coordinate international syndication of deals and assist multinational businesses with their commercial banking transactions, as well as to provide corporate finance/M&A advice within the region. Arguably, the investment case for Africa now is stronger than
ever. In 2011 to date, Ecobank Capital has raised more than $600m for our customers and we intend to double that figure by the end of the year. This is a major achievement for a new market entrant. It also illustrates Ecobank Capital’s tremendous longer term growth potential.
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