Africa must integrate before pursuing a common currency, says Access Bank chair Aig-Imoukhuede

Access Bank Group's chairman Aigboje Aig-Imoukhuede has argued that African financial institutions need to prioritize productive finance and better utilization of existing capital over simply attracting more of it. During the Africa Financial Industry Summit in Luanda, Angola, Aig-Imoukhuede outlined three key priorities to achieve this shift: unlocking capital trapped in commercial transactions, mobilizing long-term savings for long-term investments, and mitigating government borrowing that restricts private sector access to financing.

One major opportunity lies in financing small and medium-sized enterprises (SMEs), which drive significant economic value through production and commercial activities on 90 to 120 day cycles. SMEs often struggle to access financing, even though they generate credible commercial transactions. Aig-Imoukhuede believes that financial institutions should assess these transactions based on the creditworthiness of the buyer rather than the weaker credit profile of the small supplier.

This could be facilitated through digital invoicing systems, as demonstrated by India and Brazil, which generate vast amounts of registered invoices.

Another priority is mobilizing long-term savings for investments that require financing over 20 years. Aig-Imoukhuede stressed that banks cannot continue relying on short-term deposits to finance long-term projects. He emphasized the need for developing investment structures that enable ordinary investors to participate in major projects over appropriate time horizons. This would require financial institutions and markets to provide such avenues, rather than leaving opportunities to a small pool of investors.

Lastly, Aig-Imoukhuede highlighted the impact of government borrowing on private sector financing. While acknowledging the legitimate funding needs of governments, he cautioned that public borrowing can limit capital available to businesses. He stressed the necessity of collaboration among monetary authorities, fiscal policymakers, and the private sector to achieve a balanced approach between government financing requirements and private-sector investment.