Nigeria’s Access targets Kenyan agribusiness

A customer being served at Transnational Bank in Nairobi. FILE PHOTO | NMG Nigeria’s top lender by assets, Access Bank, says it is sensing a business opportunity in villages and rural areas, following last week’s Central Bank of Kenya (CBK) nod to acquire ex-President Moi-linked Transnational Bank. The announcement came as rating agency Moody’s termed the deal insignificant to change its rating.

Group managing director Herbert Wigwe said the lender had set its sights on commercial lending to agriculture, which remains low — compared to other sectors — accounting for four percent of the lending portfolio, according to industry lobby Kenya Bankers Association.

“This acquisition aligns with our strategy to become Africa’s gateway to the world and we are excited about the potentials that reside in the East African market,” he said in a statement.

“We will leverage our presence in key payment corridors, strong partnerships in non-presence countries — robust technology platform as well as world-class risk management to provide cutting edge financial solutions to our clients.”

In 2018, Kenya’s Equity Bank committed to lending Sh20 billion to 2,000 farmers in the next five years.

Rating agency Moody’s in the meanwhile has affirmed the B2 long-term local currency deposit ratings of Access Bank.

“Access Bank’s acquisition of Transnational Bank Plc in Kenya is in line with its strategy to grow outside Nigeria but in the near term it will have no material credit implications due to Transnational’s small size,” said Peter Mushangwe, a banking analyst at Moody’s.

The banks’ long-term deposit rating was changed to negative from stable.

The agency said the Nigerian lender’s financial profile had been generally resilient to the difficult operating environment in the West African country.

“On average, the Nigerian banks benefit from good pre-provision profitability and capital positions; asset quality and foreign currency funding positions have improved over recent quarters, following the recession in 2016,” said Moody’s.

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