Barclays Africa Group Ltd.’s corporate and investment banking unit has approached Nigerian authorities for approval to convert its representative office to a fully fledged business in the continent’s biggest economy.
The bank has been increasing its staff in Lagos in preparation for receiving the license, Temi Ofong, head of corporate and investment banking outside of South Africa for Barclays Africa, said in a Feb. 13 interview in Gaborone, Botswana.
The Nigerian licensing process could take at least 12 months, Ofong said. “We have an ongoing strategy to expand our footprint and we have formally engaged with the authorities in Nigeria to apply for licenses,” he said.
The Barclays Africa unit’s representative office has been expanded to have a staff of 20, Ofong said. “These include investment brokers and a trade finance team of four people out of Lagos.”
By contrast, last May Barclays UK announced it would cut 7,000 jobs at its investment bank, bringing the total number of jobs to be cut across the firm by 2016 to 19,000.
But the financial intermediation sector in Africa is booming. Standard Chartered Plc, Standard Bank Group Ltd and the investment banking unit of FirstRand Ltd all have operating licenses in Nigeria.
Standard Bank and FirstRand are headquartered in South Africa, but increasingly, growth opportunities are to be found outside South Africa, as the country’s economy struggles to shake off its lethargic performance.
It’s latest troubles are in the power sector, where national utility Eskom is struggling to meet demand after South Africa failed to adequately invest in generation in the 20 years following the country’s first democratic elections and kept aging plants running beyond maintenance cycles.
The utility cut as much as 2,000 megawatts of power Sunday from the national grid to build up diesel stocks for turbines and fill water reservoirs for pumped-storage systems.
Despite a slowdown in oil revenues, a depreciating naira and an insurgency in the north, Nigeria’s economy is still expected to expand by 4.8% this year, more than twice as fast as South Africa’s projected 2.1%, according to the International Monetary Fund.
Barclays Africa worked on the sale of Mainstreet Bank Ltd, among distressed lenders bailed out by the Nigerian government, to Skye Bank Plc, Ofong said.
His unit has also been “short- listed” to manage a Nigerian initial public offering, Ofong said, without giving details. In addition to Nigeria, Barclays Africa sees corporate and investment banking growth opportunities in Ghana, Egypt, Kenya, Zambia, Mauritius, Mozambique, and Botswana, according to Ofong.
The unit has been growing its assets by more than 30% on an annual basis “and we would want to continue, going into the new financial year,” he said.