I travel to meet Dr Adesola Adeduntan in Edinburgh, where he has been invited to give a keynote address at the Edinburgh School of Business about the role of financial institutions in driving financial inclusion.Fittingly, as you land in Edinburgh, you are greeted by billboards from different investment funds advertising their credentials in responsible and sustainable investment and how environmental, social and governance (ESG) considerations underpin their activities.
With economists and politicians questioning capitalism and the Western liberal model, today the emphasis is very much on a stakeholder-based approach, whereby growth and prosperity is more equally attributed and takes into consideration the needs of the wider community. Sustainable investment has become de rigueur among corporate jargon.
Dr Adesola Kazeem Adeduntan, CEO of First Bank of Nigeria, is a veteran in the Nigerian banking and corporate world. His overriding message, clearly expressed throughout his interview responses, and also at the various talks he gave during the day (at the Business School and at a law firm), is on the importance of doing good if you’re to do well – financially – in Nigeria and indeed, Africa.
A telling sign
FirstBank is actually the oldest bank in Africa. It was established in Lagos in 1894 as the Bank of British West Africa. Last year it celebrated its 125th anniversary. It is also the biggest bank in Nigeria in terms of assets and branch network.
For Adeduntan, a veterinary doctor by training, it becomes clear, once we have settled down for our discussion, that the institution’s longevity is a telling sign: it not only proves the bank’s resilience, it also shows that it has the right structures in terms of governance and the right business model, with the country’s development at its core. The theme of the anniversary celebrations was about how the bank has been woven into the fabric of Nigerian society.
The clear message to the industry is that while it is possible to make a quick buck, you can only enjoy the sort of longevity it has if you conduct your business with the interests of the country at heart.
Nonetheless, it’s apparent Adeduntan does not want to dwell too long on past glories. Using the analogy of a car, he says that there is a reason why the windshield is large whilst the rear-view mirror is small.
The challenge of fintech
As in most sectors, traditional ways of doing business have been coming under increasing disruption from ever-evolving technology. The banking industry is no exception and seems to be under siege from an expanding fintech onslaught.
I ask him if he is worried that non-financial companies will be entering the banking sector, especially given the recent change in regulation by the Central Bank that allows non-traditional finance institutions, namely mobile operators, to enter the fray.
He says he is not worried as his bank has one of the best defined strategies when it comes to financial inclusion and that it has the largest digital banking network in Nigeria.
Much of this has been developed through the bank’s FirstMonie Agents system: 46,000 agents represent the bank across the country. Currently, 9m customers transact on their USSD platform (by mobile phone, both smart and analogue) in addition to 3m customers transacting on the FirstMobile platform.
The agent network, the biggest of its kind in the country, enables the bank to provide services to the most remote rural communities; and because it doesn’t need to have an extensive branch network, it means that these services can be supplied at a fraction of the cost of a ‘legacy’ banking model.
Adeduntan prefers to use the phrase ‘financial deepening’ when talking about the unbanked. Financial inclusion has increased from the low 20s to approximately 40% in Nigeria over the past seven years and is expected to double to the mid-80s within the next five years.
He says ‘financial deepening’ occurs when financial inclusion starts playing an important role in economic development. It’s about layering additional products on the current agency banking network – services such as micro-credit, micro-insurance and micro-pension.
The aim is to provide value-added services whilst at the same time increasing the savings rate; this aspect, which is critical in driving investment rates, has been one factor behind Asia’s rapid growth.
It is in this area, he says, that the bank has a vital role to play and a distinct advantage over new entrants. Technology, he emphasises, will play a crucial part in broadening financial inclusion. In addition, it is important to partner and collaborate with different stakeholders such as NGOs and other organisations dealing with the bottom of the pyramid, to help them reach out to different groups and also improve financial literacy.
Last year saw a boom in venture capital investment into Nigeria. For example, $400m was invested in a number of fintech start-ups during November alone. Is he not worried that these fintech players, with their lower cost base and ability to use technology, AI and big data to overcome traditional hurdles, are going to take the majority share of the pie when it comes to servicing the unbanked?
He says that will only be the case if the banks do not manage to reinvent themselves. In Edinburgh, he actually spent a large part of his day visiting tech hubs around the university in the city and speaking to fintech companies. FirstBank, he adds, has a number of partnerships with fintechs as well as its own Digital Laboratory developing new solutions for the bank.
Nevertheless, he firmly believes that the ‘legacy banks’ will still continue to play a very central role, especially “in this part of the world where banks are quite dominant and they have significant buying power”.
In terms of settlements and deposits, he sees many of these new players as partners they can work with, even if in some areas they will be competitors.
Scope for growth
Despite the impressive strides made by the banking sector in Nigeria, Adeduntan believes there is still a massive scope for growth for the sector. He points out that none of the country’s top banks have made the Top 10 Banks in Africa list, despite Nigeria being the continent’s largest economy.
He thinks that with the signing of the African Continental Free Trade Agreement, “we are entering a very interesting period for the banking sector, not only in Nigeria but Africa in general”.
On the domestic front, does he expect further consolidation? “Within certain thresholds,” he answers. “Anything that would allow the strengthening of the entire banking sector, I am sure the Governor of the Central Bank would be positive about.”
He also points to demographics and the high rate of the unbanked as great opportunities for the growth of the sector continentally. “According to UNICEF, two billion babies will be born in Africa in the next 30 years,” he says. “And in places like DRC [where FirstBank has a presence] financial penetration is as low as 5%.” Put the two sets of figures together and, in theory at least, you get vast opportunity. But he adds the all-important caveat that demographics are only good if managed properly.
Supporting national champions
It hasn’t all been plain sailing for the bank, however. Adeduntan inherited a bank with several large exposures in the oil & gas and energy sectors, at a time when the oil & gas prices fell considerably, resulting in the devaluation of the naira against the dollar.
He says his management weathered the storm, reduced NPL levels to under double digits, and has strengthened the risk infrastructure, thus enabling the bank to better deal with cyclical downturns in future.
Discussing the role of large companies in the commercial landscape, Adeduntan says it is essential to have big banks like FirstBank, just as it is vital to have national champion companies that have the scale and wherewithal to make transformative investment. Such companies require financial institutions of similar scale to support them. The Dangote Group’s investment into what will become the continent’s largest oil refinery is a case in point, he adds.
Role of the Central Bank
We move on to the regulator and the role of the Central Bank. Does he think that it is too interventionist, dictating how much banks should lend, where they should place their assets?
Adeduntan refused to be drawn into criticism of the regulator, with whom he says he, and other bank CEOs, have a strong relationship. But he did say that the role of a central bank in the development of an emerging economy is clearly different from the role of a central bank in a developed economy.
“It is not unusual that the Central Bank intervenes in critical sectors allied to the loan to deposit ratio. It’s about economic growth; it’s about development; it’s about channelling credit in sectors that are very important for the national economy.
“Let us take agriculture – again, we are one of the biggest lenders into that sector. We found the Central Bank intervention in some of those critical sectors extremely useful and not just for us as a bank, but for the country as a whole. When you look at intervention in agriculture, you have to put it in the context of the size of the population. Nigeria is a country of 200m people today. The business of feeding 200m people is a strategic business. Everything that is being done to ensure that at least we are self-sufficient in food production is strategically important. We find the Central Bank intervention in those areas quite useful and of national importance.”
He reflected the positive attitude of many Nigerian entrepreneurs to the country’s future. He says he has a lot of time for the Economic Advisory Council – composed of credible business leaders and economists – that has been put together by President Muhammadu Buhari. And despite reports that the government is not economy-minded, he thinks that it is a pro-business government.
It is nearly 10.00 in the evening when we finish our talk, his day having started at 07.30am. We go back to sustainability and the role of financial services to make sure they are lending to institutions that are ethical about their business and operating in a sustainable manner.
He says that the journey has started even if it is still early days. “But ultimately,” he says, “this is where we are headed. The Nigerian Sustainable Banking Principle speaks to this particular question. I think it’s evident from the points that I’ve made today, you can say that FirstBank is a bank that is happy to forego a few basis points in terms of its net margins, if that means it is contributing to development in a more ethical and sustainable way.
“We’ve always made a point that profitability is very important for us at FirstBank, but economic growth and national development is equally very important and speaks to the sustainability question.”
Culled from African Banker
PRESIDENT GOODLUCK JONATHAN’S ADMINISRATION.
Niger Delta youths back Akpabio, NDDC Interim Management Committee, warn detractors
Youths in the Niger Delta region on Tuesday extolled the sterling qualities of the Minister of the Niger Delta Affairs, Chief Godswill Akpabio, describing him as a man of honour.
Besides, the youths, under the aegis of Niger Delta Youth Movement (NDYM) praised the National Assembly for working with the Ministry of Niger Delta Affairs towards the realization of its objectives.
At a gathering in Calabar, the youths expressed delight and satisfaction with the high degree of determination so far exhibited by Senator Akpabio to move the Niger Delta region forward.
‘Senator Godswill Akpabio is a shining example, a model to all of us, of what service is all about. He has so far demonstrated an admirable commitment to doing everything possible to develop the Niger Delta region the youths said.
Addressing newsmen after their one day conference in Cross River State, Secretary General of NDYM, Dr. Raymond Umanah said the youths praised Akpabio for embracing the challenge of developing the region with a missionary zeal, restructuring the Niger Delta Development Commission (NDDC) and reintroducing public accountability for the use of public resources.
‘’Senator Godswill Akpabio, a man of great organizational ability, has continued to carry himself with grace and dignity without compromising his integrity’’
The youths commended the growing unity and understanding among stakeholders in the region.
They youths emphasized national development, patriotism, transparency and accountability.
The youths also praised the Minister of the Niger Delta Affairs for tackling effectively impediments in the way of improving development in the region, pulling the Niger Delta Development Commission (NDDC) back from the state of retrogression and giving the region the desired sense of purpose and direction.
COVID-19 HAS UNDERSCORED NEED FOR CONTINUOUS RE-STRATEGIZING TO MEET NEW REALITIES – SANWO-OLU
Lagos State Governor, Mr Babajide Sanwo-Olu has said the global Covid-19 pandemic has clearly underscored the need for the people to adopt a lifestyle of continuous re-strategizing and repositioning to keep up to speed with new realities.
The Governor, who spoke while declaring open a 2-day virtual training for members of the Committee of Wives of Lagos State Officials (COWLSO) on Protocol, Security and Etiquette, said the pandemic was a perfect pointer to the fact that people must be willing to constantly review, adjust and innovate to suit changing times.
According to him, “It is important that we keep re-strategizing and position ourselves for optimum performance in the future. It is important because life, as we used to know it, has been drastically altered and we need to adapt and innovate with the changing times and we can only do this effectively when we are willing to review, adjust and innovate to suit changing times, priorities and needs. In the new normal, this is an absolute must!”
He said it was particularly commendable that the COWLSO leadership did not allow the virus to slow down the activities of the Committee, saying that in itself, was made possible through innovation.
“I must say that much of this year has gone by in a blur amidst the global Covid-19 pandemic that has ravaged much of the world, to date, with Lagos State and Nigeria at large, not being spared. We are, however, emerging slowly out of the perilous season, even though there is still so much we do not know about the virus or the rate of contagion.
“It is therefore apt and pleasing to note that this conference is being conducted virtually, a sign of our new season and times and it is the third in a series of the seminar organised for COWLSO members.
“I want to thank the First Lady, Lagos State, Dr. Mrs. Claudiana Ibijoke Sanwo-Olu and the wife of the Deputy Governor, Mrs Oluremi Hamzat for not allowing the pandemic to slow them down. They have taken advantage of the difficult times we face to educate members of the Committee,” the Governor said.
Speaking on the essence of the workshop, he said it was designed to enhance professional skills of COWLSO members in representational duties coupled with a solid and sufficient grasp of the security implication of state assignments, while supporting their spouses who hold key public positions.
“As spouses of the officials of the Lagos State Government, you all have very key important roles to play in shaping, influencing and communicating the policies and programmes of our administration. This can only be done when you have been properly equipped through training such as this.” Sanwo-Olu said.
He enjoined participants to make the best of the training to benefit the society, adding: “It is important to know that it is not about the position but how much we influence lives around us in our churches, mosques and our society generally for a better nation.”
Besides, the Governor expressed solidarity with COWLSO leadership and members as they plan for the 20th edition of the annual National Women’s Conference scheduled to hold between the 14th and 15th of October, 2020, just as he promised to extend the necessary support.
In her opening remarks, COWLSO Chairman and Lagos State First Lady, Dr. (Mrs.) Claudiana Ibijoke Sanwo-Olu said the training was in line with the vision of the founding mothers of the Committee towards training and retraining of members to complement their spouses in delivering good governance to the people.
“Our world and times are changing and so we too have to continuously do a needs assessment and improve ourselves. We need to be incident commanders at all times in the home, in the environment, state and nation.
“We need to bridge the gaps in communicating the ideals of the government to our people, be the listening ear, be the voice of the voiceless galvanizing the youths and women, caring for the aged, lifting each other up, teaching technology to the grassroot women in rural areas, having clean environment, better health facilities, improved learning techniques, having clearer and sharper communication skills, and defending the welfare of our state and country at all times,” the First Lady said.
Other topics to be discussed at the training include Financial Literacy, Crop Agriculture, Fish Farming, Health Awareness, Public Speaking, Law, Motivational Talk, Aerobics, among others.
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