Ecobank bails out local industry

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ECOBANK Group says its Zimbabwean operations supported various sectors of the economy, disbursing letters of credit (LCs) and guarantees amounting to US$320 million for the year ended December 31, 2021.
Local companies have long been using the LCs to finance international trade where the Reserve Bank of Zimbabwe (RBZ) was the underwriter, assuming the counter risk of the buyer.

However, the central bank stopped issuing LCs after the re-introduction of the foreign currency auction system two years ago. This was because authorities were of the persuasion that the auction system would adequately cater to industry’s forex requirements.

As the forex auction system continues to be blighted by allotment backlogs, the Ecobank facility has provided a lifeline for forex-starved firms.
In the group’s 2021 annual report, group chief executive Ade Ayeyemi said the pan-African financial institution continues to support Zimbabwean industry.

“In 2021 Ecobank Zimbabwe Limited supported various sectors of the economy. Letters of Credit and guarantees amounting to US$320 million were issued to support the needs of various sectors of the economy.

“The areas supported by the LCs include, among others, importation of manufacturing raw materials, crude degummed soyabean oil, wheat, agricultural equipment and implements, mining equipment, fertilisers and agrochemicals, among others,” he said.
Ayeyemi said 2021 was a transformational year for the pan-African banking institution.

Ecobank recorded a 174 percent increase in profit before tax to US$478 million, reflecting positive operating leverage and lower credit losses.
The group posted a record 19 percent increase in return on tangible shareholder equity while net revenue also grew by five percent to US$1,8 billion driven by an increase in interest-earning asset balances and products.

Ecobank’s customer deposits also grew by eight percent to US$19,7 billion due to a growth in customers across the group’s digital platforms. The group’s profit was also buoyed by solid performances from business units.

The group’s corporate and investment banking increased by 11 percent to US$404 million. Commercial banking profits grew by 191 percent to US$67 million while consumer banking also reported a 105 percent increase in profit before tax to US$87 million.
As for digital finance, the group also reported strong customer adoption of its digital platforms.

The group’s total digital transactions value rose by 54 percent to US$64 billion for the period under review. As such, payments revenue also grew by 23 percent to US$208 million. The number of customers using the group’s mobile application and USSD was at 14 million.
For the year 2021, Ayeyemi said the group showed resilience despite various economic challenges, making a positive impact as it continued to respond to stakeholders’ needs.
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