Forex Crisis: FCMB Plans Expansion To East Africa

FCMB Group Plc has revealed plans to expand its operations in at least two African countries as the plunge in oil prices reduces opportunities and income for banks operating in Nigeria, the continent’s biggest producer of the commodity.
Chief Financial Officer of the bank, Patrick Iyamabo told Bloomberg that FCMB had identified key markets within the continued and is in plans to expand over the next three to five years.
“We have identified a key market in East Africa and another key market in West Africa. While Nigeria is having trying times, the other markets can be doing great” he said, declining to identify the nations as the information is confidential. 
He said the expansion will enable FCMB to “smooth revenue and profit volatility, with a return on equity that compares or exceeds what you have in Nigeria, greater value can be created for shareholders.”
Nigeria is reeling from a slump to near 12-year lows in the price of oil, which is the major source of government revenue and 90 percent of foreign currency earnings. Efforts of the Central Bank of Nigeria to manage the foreign exchange crisis by restricting foreign currency trading by banks has caused a shortage of greenbacks, hampering companies from expanding or accessing imports.
“Because of the inability to access foreign exchange, the cash flow circle of businesses has been negatively impacted, which has implications on their abilities to pay their loans,” or do more transactions from which banks can earn fees and commissions, he said. 
Shortcomings by the government to meet some of its obligations to contractors and the difficulties businesses have accessing dollars “means fewer transactions and increased risk for banks,” Iyamabo said.

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