Currency devaluation affects African financial institutions - UBA

The United Bank for Africa (UBA) revealed that payment-related issues and currency devaluation are among the problems afflicting African financial institutions.

This was stated by Oliver Alawuba, UBA group managing director/chief executive officer (GCEO), in an interview with journalists on the sidelines of a four-day international banking conference held in the United States of America from October 17-21.

He claimed that the bank had built the capacity to effectively manage those risks.

He stated that the banking group is strengthened as a result of its reach and network.

Alawuba added that it is also largely immune to the internal and external challenges that have become commonplace among African financial institutions.

He emphasized the various issues confronting banks and financial institutions, such as credit, market, and operational risks.

Alawuba went on to say that with UBA’s extensive foray into key markets, the bank has put in place solutions to help mitigate losses from such risks.

“There are several challenges for Nigerian and African banks such as issues of payments, currency depreciation amongst others, but over the years, at UBA, we have developed the capacity to effectively manage these risks whilst we continue to pursue our growth strategy,” he said.

“UBA is a diversified institution in terms of the businesses and sectors we support. Some of the countries where we are present, like Zambia, Guinea and Mozambique have not witnessed currency depreciation, and so, the diversified nature of our business is a key positive.

“It gives us the leverage and provides business resilience. Furthermore, our presence in global financial centres such as New York, Paris, and London, provides further diversification of revenues and hedges against devaluation on the African continent. “UBA America has been providing banking services to African institutions for over three decades. We know Africa very well and understand how to mitigate the risks of doing business in Africa.”

The conference’s goal, according to Sola Yomi-Ajayi, executive director, UBA Group/CEO UBA America, was to build and strengthen the financial ecosystem, adding that the group has been working with African commercial banks and sovereign entities.

“UBA has been leveraging its extensive network to improve access to financial markets in addition to providing capacity-building initiatives for the development of the African financial eco-system. A key takeaway from this conference is that the risks pertaining to Africa can be de-risked, and we can make it more attractive to do business with African financial institutions,” she said.

“There are risks and concerns about money laundering and financing of terrorism, and these can be de-risked through building strong AML frameworks, strengthening internal controls as well as leveraging technology to improve transaction monitoring on the continent. We can also do this through structured trade finance and innovative solutions to bridge the foreign currency receivables on the continent.”