14 | The Lion King
Spotlight on
Ben Odukwe
MD/CEO, UBA Benin
What are the dominant economic
sectors in Benin Republic and how
well is UBA Benin represented in those
sectors?
Based on their contribution to the
Gross Domestic Product (GDP), agricul-
ture, public administration, general
commerce, energy and infrastructure/
construction are the key sectors propel-
ling the economy of the Republic of
Benin.
UBA Benin is doing relatively well in
these sectors. As matter of fact, we
are today, one of the top financiers of
Government Projects through various
financial tools including but not limited
to investment in T-bills, Government
Bonds and direct lending to State
Corporations and Agencies.
UBA Benin, consecutively over the last
two years, has participated in syndi-
cated loans to finance the country’s
cotton campaign, the main export
commodity, contributing up to 80%
of national export revenues and 45%
of tax revenues (excluding customs).
UBA is also doing very well in the power
sector (electricity mainly). We are the
collecting Bank of SBEE; the national
power holding company.
How would you rate the Benin Republic
banking sector and how has it influ-
enced UBA’s capacity to make profits?
The Banking sector of the Republic
Benin is quite small but one of the most
dynamic within the UMOA zone -- there
are currently 12 banks operating in the
country.
The industry is still virgin, with total
banking population just about 18% of
the bankable population; giving a huge
opportunity for business growth, new
customer acquisition and the ancillary
benefits in terms of accounts openings,
loans, cards, and deposit collection
among others.
There are trade business opportunities
for the local banks due to the proximity
of the country to Nigeria and two other
land-locked countries, where UBA is
present. This gives competitive edge
to UBA Benin, being a subsidiary of a
multinational Nigerian Bank. UBA Benin
is therefore capitalizing on our Group’s
robust operational platform to generate
profit through trade transactions, sale
of e-banking products, corporate and
retail lending.
What are the current challenges in the
banking sector in Benin?
The Republic of Benin’s banking sector
is currently going through a very tough
period, mainly due to a downturn in the
economy in the past 18 months.
In the 2013 financial statements of
banks released in April /May 2014,
many declared huge losses. Based
on the aggregated figures from the
Central Bank (BCEAO), the profit after
tax (PAT) of the entire industry dropped
drastically by close to 50% to XOF 4.57
billion in 2013 (from XOF 8.67billion the
previous year).
There has been improvement in areas
like deposit mobilization and increase
of risk assets, but most banks have
recorded huge volumes of delinquent
loans, which have been classified and
provisioned for, with negative impact
on profitability and ultimately impaired
shareholder’s funds.
As at end of March 2014, the industry
Non-Performing Loans (NPL) ratio was
22.43% as against 20.05% the previous
year, and above the average of the
UMOA zone of about 15%.
This has posed a great source of
worry for global financial institutions
like the International Monetary Fund
(IMF), which foresaw the danger and
embarked on a stress-testing of the
local Banking Industry early this year.
How buoyant is the non-financial sector
in Benin Republic?
There is hope for the local Banking
industry to bounce back, owing to new
developments going on in the non-fi-
nancial sector. So, to respond to your
question, I must state that the non-fi-
nancial sector is really buoyant. Many
infrastructural projects requiring huge
funding are in the pipeline.
The government just launched, few
weeks back, a rail project that will link
Cotonou to Niamey in Niger. A conces-
sionary agreement has been signed
with Group Bollore.
The Government Infrastructure and
construction budget for this year has
been increased by 20% to XOF 57
billion. There are many road construc-
tion projects going on in the country.
Two additional airport construction
projects are to be launched and these
will require funding from the Bank.
Republic of Benin is a commerce hub
for neighbouring countries, Nigeria and
the landlocked countries (Niger, Burkina
Faso, and Mali) because of its seaport.
This geo-strategic positioning explains
its high volume of imports, of which,
the largest chunk are re-exported to
the neighbouring countries mentioned
above.
What role is UBA playing to boost
economic growth in Benin Republic?
We are actually a Bank of reference
in the country as we play a catalytic
role which impacts positively on the
economy of Benin Republic. This
explains the enduring relationship we
have been able to establish with the
Government of the country.
Specifically, UBA is a major financier
of agriculture in the country which
is the engine room of the country’s
economy. A strategic plan has been
set up, through which we have identi-
fied cotton and cashew nut as the
two export products to focus on. Over
the last two years, UBA has financed
agro-business up to XOF 20 billion and
we are getting prepared to participate
in the next cotton campaign.
The second key sector UBA Benin
