It was yet another global footprint made possible as one of the leading Nigerian and indeed African banks, United Bank for Africa (UBA), expanded its business frontiers with the opening of a branch of the bank in the oil-rich Middle East country of United Arab Emirates (UAE).
The new branch is situated at the Dubai International Financial Centre (DIFC), in Dubai.
Tony Elumelu, the Chairman of UBA, speaking about the landmark achievement while unveiling the new branch, said what started as an ambitious dream, is today, a reality.
According to him, Dubai’s strategic position as a thriving global trade hub at the intersection of Asia, Europe and Africa, makes it an ideal market for over 35 million+ customers of UBA to leverage their businesses and boost their global footprint.
“The UAE is a world-class business centre, with close accessibility to the African continent, Dubai is an ideal ally to help tap Africa’s economic potential and support the next phase of our continent’s progress.
“Already present across Africa, in France, the United Kingdom, and the United States of America, UBA Dubai helps UBA catalyze our vision of being African by heart and knowledge, and the bridge to the world economy.
“United Bank for Africa has grown from a single-country bank to a global institution, with over 35 million customers and so our launch at the Dubai International Financial Centre (DIFC), one of the world’s most advanced financial centres, will create huge opportunities to promote trade and investment flows across our regions, as well as intensify relationships and enlarge our focus.
“Africa’s Global Bank has a unique portfolio of products and services, that provides financial solutions to all our customers, big and small, the traders, entrepreneurs and investors, the savers and the strivers.
“As we open our doors to the people of UAE, as the first Pan African bank to establish a branch in Dubai directly from Africa, we are making our contribution to creating a more sustainable trade space for Africans, the Middle East, Asia, and the world at large.
“It is beyond the Middle East, the Far East, we believe in the first instance Dubai should serve this area but we want to go beyond, we have a lot of customers and Africans who do business in the Far East. We want to be that bank that helps support our people who do business any and everywhere in the world. Sometime soon, Far East will also come on stream,” Elumelu said.
TOE as he is fondly called, also recognizes international expansions don’t necessarily lead to immediate profitability.
“The more we expand as we do, at times we are not able to whet the appetite of shareholders, but we are futuristic, we are Africa first, we think long term, we believe in the long term all this expansion will begin to contribute significantly to the bottom line, ” he said.
Indeed, it took UBA about 6 years to break even in Ghana but now their African operations contribute “over 50% of profits” as Mr. Elumelu asserted.
UBA’s foreign operations contributed over N60 billion out of the full-year profits of N118.6 billion. All its foreign operations printed profits except Kenya and Uganda which reported losses.
As UBA expands into new frontiers, concerns should arise about the timing, especially as the world grapples with galloping inflation, fear of a recession, and forex crisis back home. Most companies are also looking to roll back on global expansions fearing that the uncertainty of a possible global recession could upturn projections. Elumelu, however, thinks otherwise.
“We are very conservative and cautious of our expansion programs. However, as a group, we are long-term, and we believe tough times don’t last. We know inflation is high at the moment but slowly it will moderate, and things will change. But this is where strategic investors, long-term investors take a position. Take position at this time and when things turn around, you are there to take advantage. We are extremely hopeful that the global economy maximum 2-3 years will turn around and we will be there,” he said.
While such positive sentiments about the global outlook are welcomed by the erudite TOE, executives of the bank are mindful of the challenges ahead. Globalization is not as rosy as most business executives tout it to be. Beyond the rosy financial projections lie several landmines that make it difficult to execute the best laid out plans.
Regulators are stricter with foreign-owned businesses and the culture and service expectations of customers differ from one country to another. Foreign companies are just a scandal away from seizing operations in the foreign business, mothballing millions of dollars in investments without commensurate returns.
UBA appears to understand this challenge which explains why it goes lean when opening new international outlets and prefers to grow organically albeit slower when compared to acquiring local subsidiaries.
According to the Chairman, “we have learned from previous acquisitions that starting afresh gives us more value and sustainability in the long term. We also appreciate the limits of globalization, which is why our expansion plans are strategic. It’s not just trading, there is also forex. We are not in a better position to take our future into our hands. With this expansion, we not only facilitate trade but also capture forex liquidity which is critical to how we support our customers.”
With over 20 branches/subsidiaries outside Nigeria and the only Nigerian bank with a deposit license in the United States, UBA pride itself as one of Nigeria and Africa’s respected banks. As it launches operations in the gulf, shareholders will expect that this bet is not just about fulfilling the etymology of a name but a strategic move that will lead to value creation for shareholders in the form of dividend growth and capital appreciation.
UBA currently has an outlet in the US, UK, France and so adding Dubai to the mix was a logical next step for the bank which styles itself as not just a Nigerian-owned bank but a pan-African bank.
The mood in Dubai while during the branch opening reflected how excited the entire UBA leadership team was. It was easy to comprehend just how important this new branch in the gulf is to the bank. It was also clear it was not an easy one considering the strict regulatory approvals required to set up a financial institution in Dubai. It was also easy to guess this was not going to be the last of the global expansion for UBA.
“In recent times, the UAE and Africa have seen enormous growth in trade, travel and cultural exchanges, beyond just oil and gas, and continue to expand these relations. As the African Continental Free Trade Area (AfCTA) implementation gathers force, this relationship will only expand.
“Growth is crucial to the long-term survival of any business and a crucial element for that growth is identifying key opportunities for your businesses.
“UBA Dubai is another step, another milestone, closer to our clear destination. Patience, persistence and possibilities – all were evident today. Delivering business expansion is thrilling. You learn about a new territory, the tastes and preferences of a new audience. But one question remains the same. Are you capable of meeting or exceeding these goals? Today, join me to applaud the Board, management, and the entire staff of the United Bank for Africa, as we declare UBA Dubai open for business. Cheers to new beginning,” Elumelu excited.