Ecobank is seeking to bolster its trade finance and asset management businesses in the East African region by riding the rising wave of intra-regional trade. Speaking during the Intra-regional trade in East Africa forum, Nok Bwonditi, Ecobank Kenya Executive Director & Head of Domestic Banking said the organisation had the requisite regional infrastructure to be an enabler of regional trade.
The bank, which presently has over US$130 million funds under management, has dedicated professionals in over 30 African countries with extensive local knowledge and qualitative experience in trade finance and asset management. The intra-regional trade forum hosted by Ecobank comes hot on the heels of President Uhuru Kenyatta’s announcement that Kenya will banking on economic integration of Africa as a springboard to expand market space for Kenya’s goods and investments.
“We have experience in arranging credit for projects involving cross-border investments, specialising in development finance products and asset management among other financial services,” said Mr Bwonditi. Trade analysts at the forum urged the East African region to ratchet–up intra-Africa trade saying regional trade remained Africa’s biggest opportunity for rapid economic development.
Mr Patrick Obath, a member of the National Economic Social Council, decried the low intra-Africa trade volume which stands at an average of 12 percent, paling in contrast with Asia’s 60 percent, European Union’s 52 percent and U.S.’ 40 percent. Intra-regional trade totaled US$133bn in 2011, just 11.8% of Africa’s trade with world. Edward George, the Head of Commodities Research at Ecobank Group said, “although intra-regional trade has grown from just 4% in 1960, it is still below peak of 15% in 1997.”
He, however, observed that there was renewed focus on Africa as it now has the last largest emerging middle class in the world. Mr George cautioned that multiple trading blocks in Africa, presently 14, continued to stifle regional trade owing to conflicting and overlapping trade regulations. Mr George said though there are long-standing trade routes from Kenya & Tanzania into Uganda, South Sudan, Zambia and into Central Africa, infrastructure still remains a big impediment to intra-regional trade.
Mr Obath said Africa should focus on adding value to its exports instead of import substitution. “Refining oil is import substitution at a very low level of the value chain, besides building refineries; we should build a massive petrol chemical complex in Africa.” Ecobank operates the largest banking network in Africa, more than any other bank in the world. The Bank is committed to expanding its operations further “to deliver competitively priced, innovative solutions for the African continent,” he said.
Intra-regional trade has been on a steady rise, with a recent report showing Kenya had eclipsed global Asian powerhouses in investing in the East African region. According to TradeMark East Africa, the publishers of the Doing Business Report in collaboration with the World Bank, Kenya now is a major a player in the region, with significant investments in the financial, retail and agro-processing sectors.
The integration of East African countries saw the launch of a common market protocol in July 2010, bolstering trade between the five member states of the East African Community. Due to growing business prospects, East Africa is now a top destination for the business fraternity angling for a portion of the East African pie due to the improved business environment and discovery of commercially viable oil and gas deposits in Uganda, Kenya and Tanzania.
A peaceful election in Kenya also saw a sharp rise in business confidence as perceptions of political risk dwindled. This has seen inflows from private equity funds into the region double from 2011 to hit US$475 million last year.