United Bank of Africa (UBA) Group Chief Executive Oliver Alawuba has been in Nairobi this week on a deal-making mission that has seen the lender commit Sh19.3 billion ($150 million) to the road’s sector.
He has held meetings with top government officials, including President William Ruto and Transport Cabinet Secretary Davis Chirchir.
Why is UBA looking at supporting Kenya’s infrastructure goals?
Our name is the United Bank for Africa, our mission and vision for Africa is to improve the lives of Africans anywhere they are.
As a bank, we are committed to improving the economies of Africa.
Our main mission is to focus on capital, settlement flows into Africa and to use those flows for the development of the continent. Institutions like UBA will play a dominant role in a rising Africa.
Why is financing infrastructure at the heart of UBA?
The infrastructure finance gap for Africa is huge and it’s not something that one government can bridge.
Hence, we need the private and public sectors working together for infrastructure development in Africa and that will unlock many opportunities.
We have been having meetings on the Kenya roads bond project.
I have met key government ministers, and I am confident in the economy of the country. This is an economy growing at five percent on average which is above most countries in sub-Saharan Africa.
We have seen stability in terms of inflation falling while lending rates are also trending lower. These are things that give confidence to investors in an economy.
Infrastructure financing will help unlock this economy further. Our confidence is demonstrated by us committing resources to the roads bond.
What returns do you expect to make from participating in the Kenya Roads Board (KRB) bond?
The public-private partnership is such that as much as we are in the business to make money, we also believe we are still delivering goods for the people. The returns are quite competitive and that’s why we are coming in as the private sector.
This is just one of the projects we are looking at. I just finished a meeting with the President, and he spoke about the airport.
There is also a 170-kilometre road project heading into Western Kenya. We are happy that these projects align with our vision of developing this continent. We have relied on a lot of outside help before, but this is not coming through.
Now that we have the capacity, we must build African institutions which would be able to impact on the lives of our people and economies.
We are comfortable with the structure of that facility where collections come from the fuel levy and are used to settle payments to bond holders. This is a very creative and innovative and it protects our investment as UBA.
Beyond infrastructure, how else is UBA looking to play a role in the Kenyan economy?
We are strong on infrastructure, but we need to bring that impact down to the people, we will come up with an SME fund which will also integrate Kenyan SMEs which are important to the economy.
We have signed an agreement with the Africa Free Continental Trade Area (AfCTA) for a $6 billion (Sh775.3 billion) SME facility for all African countries.
Kenya will be a beneficiary of this facility. We hope to return to Kenya in the next few months to launch this fund. An element of this financing will also be targeted to women.
How is UBA supporting intra-Africa trade, especially the adoption of the Pan-African Payment and Settlement System (Papss)?
We are out to connect Africans together and connect the people to the rest of the world. One of the challenges we have is for us to trade with one another, they have to go through a bank outside the continent. We have developed products to support cross-border payments.
Today if you have an account with UBA Kenya, you can walk into a branch in Uganda and access your money. We also have a partnership with AfreximBank on PAPSS enabling settlements in local currency. If a Ugandan farmer is selling maize to a Kenyan merchant, the farmer is paid in Uganda shillings, but the merchant pays in Kenya shillings.
This system will encourage intra-Africa trade. We are bringing in partners even at the level of Central Banks to simplify settlements between African countries.
You are present in Kenya through UBA Kenya Bank which you are supporting by recapitalising the business, as continental lenders are expanding, can we expect to see you make a local acquisition?
We are aware of a recapitalisation exercise going on within the Kenya banking industry. UBA Kenya will be fully recapitalised in line with CBK guidelines.
Our interest in Kenya however goes beyond that recapitalisation or just a banking license. We have been investing in Kenya for a very long time.
We are interested in expanding, currently we are in Mombasa, Nakuru and Nairobi, I think in the next two-three years we should be at least in 10 to 15 locations. Beyond physical locations, we are also expanding through digital products.
We will grow organically, but if we have opportunity in the inorganic space, we need to look at it if it aligns with our strategic objectives and will take that on.
