Wednesday, November 22, 2017

Interview - Rohit Wahi (FirstRand Bank India)

When anyone thinks of doing business in Africa we want them to think of us  

 

FirstRand Bank India, a branch of FirstRand Banking Group South Africa is the first bank from the African continent to be granted a full scale commercial banking license in India. FirstRand, which commenced its banking operations in India in April 2009, is looking forward to becoming the “banker of choice” in the Indo-Africa corridor for trade and investment activity. ROHIT WAHI, CEO AND COUNTRY HEAD, FIRSTRAND BANK INDIA, spoke to SHRIKANT RAO on the role played by his organisation as a project and business ‘enabler’ in the Indo Africa Corridor.

 

 

Give us an understanding of the role played by FirstRand since it began operating in India?

 

If you look at Africa there are only four of the 55 countries that are investment grade – Botswana, Namibia, Morocco and South Africa. The larger continent of Africa has been perceived as higher risk from a point of view of economy, currency and other factors. It has commodities but what it doesn’t have is adequate infrastructure like roads, power, ports, irrigation, water treatment plants, and refining capacity. That infrastructure is required to be built through projects and that is where FirstRand comes in. We are the second largest bank in South Africa. With South Africa being the largest economy and the gateway to Africa we are a very significant player in the African continent. Admittedly though we are very sub Saharan in terms of physical geographical presence. Outside South Africa we have a presence in the following 10 countries – Nigeria, Kenya, Tanzania, Zambia, Namibia, Botswana, Angola, Mozambique, Swaziland and Lesotho.  We believe these countries are important from an India trade and investment point of view. Overall we have risk appetite on most of the African countries where we can assist Indian businesses. The bank’s India business’ primary focus is to facilitate trade and investment between the Indo Africa Corridor. By that I mean contribute in areas where we are present and where we can add value to the client on both sides. Africa is our backyard, a young economy and we understand Africa risk. We facilitate trade into these jurisdictions by mitigating the country risk for the Indian customers. For example, if there is an Indian firm which is exporting to an African country and thereby getting exposed to African Bank-Sovereign risk, we have the appetite to take over such risk. We are assisting Indian exporters in these jurisdictions by taking over their credit exposure to Africa. We have supported Indian companies in the past for investments in Africa, both greenfield and inorganic, in areas such as commodities, telecom, pharmaceuticals. We have also helped various industries for acquisitions. On account of our on the ground presence in the continent we help identify targets for Indian corporates and then provide them with advisory, structuring, funding and subsequently with transactional banking. We enable the flow of investment and trade between the Indo-Africa Corridor. Right now it is more of India going to Africa rather than Africa coming to India. In fact it is more South Africa having ambitions to come to India. The economies of other African countries are yet to develop size and scale to have large international ambitions. Apart from supporting various construction and infrastructure projects we also facilitate import of gold from South Africa to India which is the largest gold consuming country in the world.

 

 

What are the construction infrastructure projects taken up by Indian firms in Africa that FirstRand has supported?

 

Our confidentiality clause forbids us from naming our clients but suffice to say that our engagement has been in areas like power transmission and distribution, road building, irrigation, water treatment, oil refineries etc. Some of the projects have been located in Botswana, Mozambique, Zambia, Nigeria, Kenya and Namibia. For example, the Dangote Group is building a refinery in  Nigeria and a number of Indian infrastructure and consulting companies are engaging for the same. Then there are multiple solar power projects in South Africa which provides potential opportunity to Indian companies. A lot of our business is taking over other bank risks. Let me give you an example. There is a power transmission project in Mozambique and the local government requires a local bank guarantee. That’s where we came in. Since we have a local presence in Mozambique and understand sovereign risk, we facilitated the local issuance of the guarantee on behalf of Indian infrastructure companies or their banks. Apart from banking and financial services we also play an advisory role. Very often we have Indian companies approaching us for information such as local government regulations, processes, currency and sovereign risks. Of course the support we offer varies from project to project. There is obviously very specialised on the ground advisory services they need, and that is where we play a big role. Since we are an African bank we have a very good understanding of the various local issues, conditions and regulatory processes. We have local expertise in structuring, in financing and our experience and understanding of the environment allows us to play in that space. Our investment banking arm is on top of almost all league tables for Africa transactions. 

 

 

What are the opportunity zones for Indian companies in Africa? Can you name the players who are already present there?

 

We see a great need for support in pharmaceuticals, power transmission,  agriculture, irrigation, water and sewage treatment, oil and ore exploration, refining, services like education and health care. Then we also see great prospects in mining – and by extension rail, road and port building. With regard to Indian players in Africa the large Indian companies present are – Reliance Industries, L&T, KEC, Jyoti Structures, Essar, JSPL, Vedanta, Airtel, auto manufacturers like Tata Motors, M&M, Bajaj Auto, Piaggio, Ashok Leyland, TVS Motors, Hero Motors, pharmaceuticals like Cipla, which acquired Medpro in South Africa, and Bliss GVS Ltd which acquired a Clinix business in Kenya, Lupin, Dr. Reddy’s, Aurobindo Pharma and a number of Indian banks. General economic slowdown has brought down investment and slowed activity but the interest continues because of the enormous prospects in Africa. I would think as our economy improves there will be a surge in the corridor activity. 

 

 

Can you give us an understanding of the size of the business opportunity that is Africa?

 

An FMCG major mentioned in an interview that his company had acquired almost 500 million clients in India. Now say a 10 per cent growth in India is not exciting enough and Africa could well provide an opportunity to add another 300 to 400 million customers. So the possibilities are enormous. Africa is the emerging world of tomorrow and is a long term opportunity to provide primary infrastructure and services. Probably 30 or 50 years won’t be enough to fully provide for Africa’s development.

 

 

From a FirstRand business perspective how important is engaging with India – both here and in Africa?

 

India is a very significant area of focus for us. We are an African regional bank with presence in places outside Africa in London, Dubai, Shanghai, Mumbai and Australia where we have a commodities business. We have identified that Africa’s growth will largely depend on a few corridors, notably India and China. For strategic, also for historical reasons, we decided to be more here in India than in China. That should indicate how critical India is to our strategy. South African companies have only recently begun to acquire size and scale in terms of expanding their businesses internationally. Our arrival in India in 2009, though seemingly late, corresponds to the South African overseas growth drive as well as our own evaluation of India as a huge business opportunity. As far as our exposure here in India is concerned our clients are large banks both in the public and private sector and leading Indian corporates. We also have a retail business in country and are active in financial inclusion, opening accounts for the urban unbanked  with our ‘Easy Banking’ product. We also offer the highest savings bank interest rate of 8.5 percent above a threshold amount. The DNA of the bank is in giving back to society and we engage in various social responsibility programs.
 

 

Which are the South African firms that are already in India for business or are looking to engage?

 

There aren’t many South African multinationals but India is a favoured destination. If you take infrastructure you have Airports Company South Africa which participated in the Mumbai Airport. Then we also have SAB Miller plc, a beverages company and Ibibo, whose parent Naspers is one of the leading companies in Media and e-commerce platforms, then there are those in the healthcare business – Life Healthcare, there are other financial institutions, pharmaceutical companies and even hospitality firms which are evaluating India keenly. South African companies related to consulting, architecture and design, road construction would also be interested in opportunities here.  

 

 

What is your outlook and ambition for India-Africa relationship?

 

There is a huge business opportunity out there. I would therefore say the outlook is very positive. As far as FirstRand is concerned we are looking at India as a long term business. We want to be the banker of choice in the Indo-Africa corridor. When anyone thinks of doing business in Africa they must think of us.

 

 

 

 

 

 

 

 




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