Absa Group is seeking to deepen its presence in Nigeria as the South African lender moves to reduce its dependence on a handful of major African markets.
The bank is exploring plans to convert its representative office in Nigeria into a merchant bank, potentially giving it a broader platform to compete in Africa’s largest economy.
Absa Chief Executive Officer Kenny Fihla said the proposed move is part of a wider strategy to diversify the group’s earnings across markets, business lines and customer segments.
South Africa, Kenya and Ghana currently generate more than 80% of Absa’s profit, making the bank vulnerable to economic shocks concentrated in those markets.
“We’ve got a rep office in Nigeria, which we are exploring the possibilities of converting into a merchant banking licence,” Fihla said in an interview with Bloomberg TV.
Nigeria would add another major market to Absa’s African network and strengthen its presence beyond the three countries that currently drive most of its earnings.
The expansion plan comes as Absa also seeks to increase its ownership in Kenya. The bank recently raised its stake in its Kenyan business to 72%, below its earlier target of 85%.
Charles Russon, Absa’s Group Executive for Africa Regions, said the lender could increase its stake further when the timing is right.
“Ideally, we would like to have as big a position as possible,” he said.