Mrs. Joyce Dimkpa, Head, Oil & Gas, Access Bank Plc
Obviously, the oil and gas industry cannot survive without an enhanced support from the banks. The oil industry is capital intensive owing to its sophistication and technology involvement.
Some indigenous operators have expressed concern about banks tepid response to support them.
Mrs. Joyce Dimpka, Head, Oil and Gas of Access Bank Plc, spoke recently to journalists at the 16th Aret Adams Foundation Lecture, where she was one of the panelists, that banks are willing to support small businesses in the oil and gas industry provided the corporate governance are well structured.
She disclosed that $1.4 billion has been given to fund the sector while Access Bank seeks for 150 women it will support in terms of entrepreneurship.
What role has the banks played in the oil industry?
$1.4billion has been given to the sector, we have supported the two divestments as well which took place in 2011 and 2014. A lot would not have happened in the oil industry without the local banks taking a role, who knows these companies more than we do and who is willing to take risk more than we are. This is really how a lot of funds had gone.
Today, 30% of the total asset in the industry is supporting oil and gas and Access Bank is contributing about 10% of that to the industry by contributing to it. So, 30% of total asset is oil and gas, then 10% of that is for Access Bank as a loan because it is direct lending, all of it is for upstream. The downstream focuses more on contingent aspect of the industry.
What are the challenges that make people not to easily access fund in the banks?
The fact is that the right corporate governance should be put in place because it is key. If you don’t have the right structure in the business and you are willing to take certain business risk as a business owner, you can pass all the risk to the institution. Once the corporate governance is instituted, it is easier for the bank to take certain action and takes risks as well. The bank would have known that you have done structural work for your business and it will be easier for it to put its money because it is also a risk and a good bet will be taken on that.
Is it true that the banks don’t support small indigenous operators but rather prefer bigger players in the industry?
We don’t prefer them but the challenge could be not having some of the structures, not going to the right place and not having access to the information that is also required. Sometimes, the banks guide customers in this process and someone who is independent and have a different view in the oil industry so as to prevent over risk that will pull the operator back thereby causing trouble for the business. But not everyone takes advice from the bank.
There are businesses that have diverse cash flows and individual on board that will direct it in the future, they are easier to take risk because if one person is willing to take a higher risk, one person is willing to pull back. The information and distillation of the board will be weighty and deeper as opposed to one person running the business. For instance, $5 million is a lot of money to give to any business, if it is given to one person, it will be a challenge. It is not that the bank does not want to support but there should be some thorough work done in order to put things in the right perspective.
What is your advice to these small businesses willing to take loans from banks?
My advice is that as a business owner when you see a bank that is willing to take you in that direction, not too many banks are willing to that, but, if there is one that is willing to take you in, work with it.
I have clients who started with half a million dollars, today, they are doing a lot more. We tell them to get a good board in place including an auditor that the bank will rely on the financial statement they will compiled. Since they did well, when they came and asked for $3million, we were able to give that support because when you are willing to do your part, it means you are not going to run away with the money and you are willing to play your role. This is what the banks want and expect from every business owner or would-be ones.