An investment expert, Mr. Jide Ogunleye, has questioned the rationale of Nigerian banks newly found fervor for expanding their operations into African countries with low economic generation capacity. Ogunleye, who is the Chief Executive Officer of Denaro Capitals, said the acquisition and establishment of Nigerian banking brands in countries in West and East Africa lacks appropriate investment judgment.
“I believe that the establishment or acquisition of Nigerian bank brands in these countries is simply an ego tripping by most of Nigerian banks that want to join in the feel of internationalizing their operations. It’s like another rat race to determine which of the banks can boast of establishing its brand outside the country.” Ogunleye said.
“But sincerely, I don’t think it makes investment sense to spend so much money to construct a bank branch in a country where the Gross Domestic Product is not up to that of Lagos State. This is beside the fact that most of the citizens of these countries have been shown by reports to prefer their own banks. I can tell you that a new branch in any urban centre in Nigeria will yield better returns for the banking brand than those outposts they are establishing in the other countries.”
“I am not saying that there is something generically wrong with establishing branches in other countries, but in the case of most Nigerian banks, I feel the choice of those countries do not make a good investment decision. I do not know how the Nigerian bank brands want to take on the indigenous financial institutions in those countries with their solitary single branch. This is beside the regulatory hurdles and fees they have to pay to get the branches established.
“Now, if the argument is to serve the needs of Nigerians resident in those countries, we would need to know the population of Nigerians in the countries, and I can tell you that with the exception of neighbouring Benin Republic and to a little extent, Ghana, the population of Nigerian residents in these countries does not provide for a flourishing bank branch.
“If a Nigerian bank opens a branch in London, South Africa or in the United States of America I think that would be understandable because of the obvious dynamics available in these countries. The population of resident Nigerians are not only appreciable but given the natural inclination for Nigerians to identify with their home brands when they are in the diaspora one can easily conclude that such branches in these countries would be beneficial to shareholders of the banks and Nigerians in those countries.” Ogunleye argued.
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