NIGERIA'S UBA PARTNERS CHINA DEVELOPMENT BANK

UNCLAS SECTION 01 OF 02 LAGOS 000752 SIPDIS SIPDIS PRETORIA FOR TDA DSCHUSTER COMMERCE FOR KBURRESS ENERGY FOR PERSON, GAY TREASURY FOR DPETERS, RHALL, RABDULRAZAK STATE PASS USTR FOR LISER, AGAMA STATE PASS TRANSPORTATION FOR KSAMPLE STATE PASS OPIC FOR ZHAN, MSTUCKART, JEDWARDS STATE PASS TDA FOR EEBONG STATE PASS EXIM FOR JRICHTER STATE PASS USAID FOR NFREEMAN, GBERTOLIN E.O. 12958: N/A TAGS: EFIN ECON EINV ETRD PGOV PREL NI SUBJECT: NIGERIA'S UBA PARTNERS CHINA DEVELOPMENT BANK Sensitive But Unclassified; Handle Accordingly ¶1. (U) Summary: United Bank for Africa (UBA) is in partnership with China Development Bank (CDB) to fund Chinese investments in two trade zones, and in infrastructure and energy projects. UBA, which believes it currently has 20% of Nigeria's retail banking market, introduced a phone card that doubles as an ATM cash card, allowing the bank to begin to provide services to currently un-banked small entrepreneurs. End summary. CDB Deal: "Almost Infinite" Capital for Development -------------- -------------- ¶2. (SBU) United Bank for Africa, (UBA) on October 31 announced it had signed a partnership agreement with the China Development Bank (CDB). UBA Managing Director, Tony Elumelu told the Nigerian press that the CDB agreement gives UBA "an almost infinite amount of capital to execute projects". Ike Onyenokwe, UBA's Director of Strategy, elaborated, telling Econoffs that the agreement is a strategic move by CDB to support Chinese investments in Nigeria, especially those already planned for the Lekki and Ogun Free Trade Zones (FTZ). Onyenokwe noted that over twenty Chinese companies are planning to establish an industrial estate in the Lekki FTZ; these companies are likely to take off soon now that CDB has entered the market, he said. (Comment: The Lekki and the Ogun State FTZs, for which Memoranda of Understanding (MOU) between the governments of Nigeria and China were signed in March and July respectively, had seen little activity until recently. Both FTZs broke ground in early November. End Comment.) UBA expects trade between the China and Africa to grow, which fits with UBA's plan to expand to support trade through its subsidiaries in Ghana, Cameroon and Uganda. UBA will open two representative offices in China to support Nigerian companies there. ¶3. (U) The partnership will also allow the two banks to co-finance infrastructure and energy projects in oil and gas, power, telecommunications, roads and railways, solid minerals and agriculture. UBA's Corporate Banking and Global Markets divisions will lead the energy and infrastructure projects. UBA: 20 Percent of Banking Market -------------- ¶4. (SBU) Suzanne Iroche, Executive Director UBA Global Bank, said the bank's consolidated balance sheet size is over 1.5 trillion naira (USD 11.5 billion). UBA controls 20% of the Nigerian retail banking market with over 600 branches. UBA expanded its customer base and branch network by acquiring, pursuant to the Central Bank of Nigeria's purchase and assumption arrangement, four banks which had been unable to increase their capital to the requisite 25 billion naira (USD 192 million) under the recent recapitalization exercise. UBA took over the fixed assets and private sector deposit liabilities of the defunct banks, and was able to return deposits to customers whose monies had been trapped since January 2006. Iroche said most such customers were persuaded by UBA to open UBA accounts; only a few withdrew their funds. UBA's risks in taking over the banks were mitigated by promissory notes from the government. UBA Increases Services to Middle Income Customers -------------- -------------- ¶5. (U) Funmi Omitowoju, Chief Executive, UBA Prestige Bank (UBAPB) said Prestige Bank was established to effectively service middle income customers. Banking facilities targeted specifically at this segment of the market are limited, so UBAPB will expand its mortgage finance and consumer lending, she said. Bank Pioneers Innovative Microfinance Card -------------- ¶6. (U) UBA is also starting Microfinance Bank to empower the average Nigerian entrepreneur. Omitowoju said the bank introduced the UBA X-Change card to create banking records for people in the informal sector who currently do little or no banking. The X-Change card is a co-branded UBA/MTN (Nigeria's top telephone company with over 40% of the market) ATM card and telephone air-time top-up card combined. The card is available to UBA and MTN customers, which gives UBA LAGOS 00000752 002 OF 002 access to non-UBA MTN subscribers while providing MTN access to non-MTN UBA customers. Omitowoju, who moved from MTN to UBA to create the new card, said UBA anticipates the card will create a critical database for UBA's new microfinance bank. UBA Services Niger Delta -------------- ¶7. (U) On its operations in the Niger Delta, Ike Onyenokwe, said the bank has numerous branches in the region. It provides advisory services to the Niger Delta Development Commission (NDDC) on the optimal use of its funds, particularly with respect to infrastructure development. ¶8. (U) This cable has been coordinated with Embassy Abuja. Hutchinson