Banele Ginindza
NEDBANK was looking to make its capital work in the rest of Africa as South Africa’s growth was pedestrian relative to the rest of the continent, chief executive Mike Brown said yesterday.
He said that South Africa’s economy would be limited to the 2 percent to 3 percent growth channel until about 2018 when Eskom’s extra generation capacity comes on stream.
Speaking at a breakfast with Business Report, Brown said South Africa seemed trapped in the 2 percent to 3 percent growth channel but the rest of Africa was in the 5 percent to 7 percent growth channel.
“The question for us is simply how do we take more of the capital the bank has and put it to work in the rest of Africa because South Africa is kind of structurally in a slow growth environment for the next three to four years and until we get more power, quite frankly the economy cannot grow more than 3 percent probably.”
He said at present about 10 percent of the bank’s capital base was invested in Africa, citing the R6 billion investment Nedbank made to acquire 20 percent of Ecobank where they are co-invested with the Public Investment Corporation which has a 15 percent stake.
The Qarati National Bank has a 20 percent stake in Ecobank and IFC has a 15 percent interest.
“The rest of our Africa business is growing faster than our South African business and is adding to the growth rate,” Brown said.
He said the key focus of Nedbank was on how to grow in a 2 percent economy where the bank was a 16 percent to 18 percent market player.
Speaking at the same event, Nedbank’s chief operations officer, Mfundo Nkuhlu outlined the bank’s growth areas in Africa. “Banks feed off growth, so we need to participate in prospects of growth we see to the north of us.”
Nkuhlu said Nedbank had recently added Mozambique to its presence in six countries.
The bank took a 36 percent stake in Banco Unico with an option to acquire a majority stake in the next 18 months.
“In middle Africa, central and west Africa we have gone the route of partnership and have entered into an alliance with Ecobank whose origins are in west Africa.
“The bank was started by some west African governments with entrepreneurs who emerged from Citi Bank, they probably have the most geographic spread. They have a presence in 34 countries,” said Nkuhlu.
He said Nedbank also sought to establish its own operations in the Southern African Development Community and the east Africa environment. “The trick of the game is timing.”
Brown said the recent roadshows to shareholders both locally and internationally had revealed that investment fund managers complement South African business in general about how well they were run, the level of disclosure and the level of governance, which they found to be impressive.
He was talking about fund managers based in London and New York who are running dollar investment funds with mandates to only invest in emerging markets in China, India, Brazil, Turkey, South Africa and then frontier markets like Indonesia and Nigeria.
Nedbank’s head of corporate and investment, Brian Kennedy, talked about how the bank had picked prime position in renewable energy investments in South Africa and the rest of the continent.
He said Nedbank last year committed to underwriting R20 billion worth of renewable projects both in South Africa and the continent, and that only R5bn of that had been used.
Among Nedbank’s renewable projects is the Lake Chikana windfarm in Kenya, which is said to be the biggest windfarm in Africa and a gas turbine project in Ghana.
Nedbank shares rose 1.25 percent to close at R240.75 on the JSE yesterday.