Oduoza: Nigerian Banks Not Over-regulated

  • UBA, EXIM Bank sign $100m trade financing MoU

From Tokunbo Adedoja and Obinna Chima in Kigali, Rwanda

The Group Managing Director/Chief Executive Officer of the United Bank for Africa (UBA) Group, Mr. Phillips Oduoza, has said that the perception that the Nigerian banking sector is over-regulated is not true, adding that the industry remains strong with improved regulatory oversight.

Oduoza said this in an interview with THISDAY yesterday in Kigali, Rwanda at the ongoing World Economic Forum (WEF) on Africa.

Oduoza, who will be stepping down as the bank CEO at the end of July this year, said: “I do not think that Nigerian banks are over-regulated. I think you need to look at other jurisdictions and look at the level of regulations we have. One of the most regulated environment is the United States. If anything at all, I think they are moderately regulated.

“So, I think the banking industry remains strong and governance is very strong compared with where we are coming from, risk management is very robust and the industry is very strong.”

Also yesterday, UBA signed a $100 million trade financing memorandum of understanding (MoU) with the Export-Import Bank of the United States (EXIM Bank) on the sidelines of the WEF on Africa.

Both institutions explained that the MoU would provide up to $100 million to finance the purchase of American goods and services. The Chairman and President of the EXIM Bank, Fred P. Hochberg, and Oduoza, signed the MOU, with the goal of expanding trade between the US and sub-Saharan Africa.

Both of them were joined by the Deputy Managing Director and Group Managing Director Designate, UBA, Mr. Uzoka Kennedy, as well as the Group Head, Financial Institutions and International Organisations, UBA, Sola Yomi-Ajayi, at the signing ceremony.

Shedding more light on the agreement, Oduoza while speaking with THISDAY said: “For us in Nigeria and for our customers across Africa, it means that they have a source of funding for their transactions, especially the medium to long-term funds which you don’t normally find in the market easily. It implies that once you are importing goods from the US, then facility is available for you to draw upon.

“For us in Nigeria, for those that are involved in manufacturing, it will also assist them to a very large extent. So, it is not a question of one having a good project, but there are no financing. So, it provides liquidity and financing and enables businesses to produce effectively.”

According to the UBA boss, once an SME operators meets the requirements, he or she would be able to access the fund.

Also, Hochberg said: “EXIM Bank is proud to build on its decade’s long commitment to financing American exports to sub-Saharan Africa.

“This memorandum signals to American exporters and African businesses alike that there are many more promising opportunities to work together, and EXIM stands ready to provide the financing needed to turn more of those opportunities into realities.”

The MoU is a statement of general intent between EXIM Bank and UBA to promote the availability of EXIM financing of up to $100 million in the region. EXIM Bank and UBA will work together to share information and develop export-financing opportunities in key sectors including commodities, agriculture and food products, spare parts, and large and small equipment purchases.

Under the MoU, EXIM Bank and UBA will explore options for offering a range of financing solutions for American exporters and African buyers, including short and medium-term financing programs that allow for flexible repayment terms and competitive insurance policies guaranteed by EXIM.

Since 2009, EXIM has provided more than $6 billion in financing for transactions across sub-Saharan Africa. For the fiscal year ending in 2014, the Bank supported $2.05 billion in transactions in more than 20 sub-Saharan African countries.

In 2014, the bank signed a $100 million MOU with the Eastern and Southern African Trade and Development Bank (PTA Bank) to finance US exports to the region that target both Diaspora businesses in the U.S. and PTA Bank’s member states.