For Bob Diamond Investing In Africa ‘Isn’t Five Minute Rice’
Atlas Mara, an Africa-focused investment vehicle set up by ex- Barclays CEO Bob Diamond, has experienced hard times in its efforts to become the leading financial player in sub-Saharan Africa and capitalize on the continent’s vast unbanked population.
Diamond set up the investment company in 2013 to buy African banks but has since faced a number of hurdles due to the fall in global commodity prices and depreciating currencies.
While Altas Mara has spread to seven countries across Africa, the company’s market value has slumped from about $800 million in 2014 to a paltry $244 million this year, Bloomberg reported.
But Diamond says his adventures into sub-Saharan Africa wasn’t meant to be easy and it will take time to succeed.
“This isn’t five-minute rice,” He told Bloomberg
The investment firm spent about $600 million to assemble its assets in Africa, a cost that is more than twice its current value.
It reported a loss of $6.7 million in the first quarter of this year and said it plans to cut staff starting next year, in efforts to save it $8 million in operating costs, Financial Times reported.
Last month, the company’s bid to buy Barclays Africa was dealt a blow after Carlyle, a US private equity group pulled out of the consortium with Atlas Mara.
This is a major blow to the expansion plans by the investment firm, which could have capitalized on Barclays Africa’s vast control of banks in ten African countries.
The company’s operations have been hit by the decline in currencies, market liquidity constraints in some countries and weakened economies that are mainly driven by commodities like oil and copper.
In Zimbabwe, one of the continent’s worst performing economies in Africa, bad loans and high operating costs greatly contributed to the $6.7 million loss.
Weakened currencies in Nigeria and Zambia contributed $ 1.1 million to the year’s first quarter loss. In Nigeria, Africa’s biggest economy, Atlas Mara has a 21 percent stake in Union Bank worth about $270 million.
The company’s stock value at the London Stock Exchange has fallen by 50 percent since 2014, mainly due to a battered Naira that hit its record low against the dollar this year. The Nigerian economy also entered into recession in August, BBC reported.
In Zambia, copper prices fell and kwacha, the national currency fell by 9 percent against the dollar. The mineral is Zambia’s top foreign exchange earner.
The company despite its falling fortunes is looking to expand in Nigeria and open operations in Kenya, which will be part of increasing its African base to about 15 countries.