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ADESOLA ADEDUNTAN, CEO, FIRSTBANK – HOW TO DO WELL BY DOING GOOD

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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.

 

Financial deepening

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.

 

Ethical banking 

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

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APC: Oshiomhole bows, says he accepts dissolution of NWC in good faith

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Former National Chairman of the ruling All Progressives Congress (APC), Comrade Adams Oshiohmole, says he has accepted the decision of National Executive Committee (NEC) to dissolve the National Working Committee (NWC).

The NWC was dissolved on Thursday following the recommendation of President Muhammadu Buhari. Yobe State Governor, Mai Mala Buni, was thereafter appointed the Chairman of the party’s caretaker committee.

Addressing a press conference in Abuja on Saturday, Oshiomhole said he had also directed his lawyers to withdraw his appeal pending at the supreme court. He was challenging his suspension as the party’s National Chairman.

According to the former governor of Edo State, he had no regrets for the role he played in the party. He also highlighted his achievements as party chairman.

“The APC under my chairmanship has done its best and the results are there. Of course we have now been dissolved and I have accepted that dissolution in good faith,” Oshiomhole said.

“I’m not going into the question of legality or illegality. The bottom-line is that the president who invited me to lead the party and who mobilised all the support for my emergence as chairman also presided over the meeting where the NWC has now been dissolved.

“Mr President graciously invited me to run for the office of chairmanship of the party in 2018 precisely about two years ago. The president told me then that if we do not reform the APC, we can as well forget about the party.

“You know that reforms are challenging and it will entail taking difficult decisions. Mine has been a life of trouble and I accepted this and I believe I did my best.

“I’m happy that at the end of the day, 2019 elections have come and gone thanks to Nigerian people, our president had more votes in 2019 than we had in 2015. We have more members in the senate and house of representatives.”

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BreakingNews: Senator Abiola Ajimobi Burial Set for Sunday

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Burial arrangements for His Excellency Senator Abiola Ajimobi

Details of the funeral ceremony of His Excellency Senator Abiola Ajimobi have been released by the family.

In close consultation with the governments of Lagos and Oyo States, the date for the burial ceremony has been announced. Barring any changes, his body will be interred at the Senator Ishaq Abiola Ajimobi Central Mosque at Oke Ado, Ibadan at 12noon on Sunday the 28th of June 2020 after the traditional Muslim prayers.

To ensure that strict COVID-19 protocols are adhered to and in light of the current circumstances of our national health challenges, the family appeals to the public to observe strict adherence to COVID-19 protocols in their participation. Furthermore, details of the live media coverage of the funeral ceremony will be made public by tomorrow.

In the near future, details of a larger funeral gathering will be announced where a lot more of his well wishers will have the opportunity to pay him their respect.

Signed

Bolaji Tunji
SA Media
26 June 2020

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$2.8 BILLION AKK PIPELINE PROJECT: BUHARI STRIKES AGAIN!

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By Femi Adesina

Something good is already happening. Something marvelous is in store, as Federal Government kickstarts the $2.8 billion Ajaokuta-Kaduna-Kano (AKK) National Gas Pipeline Project next Tuesday. It’s another humongous signature milestone by President Muhammadu Buhari, which will leave his footprints inexorably on the sands of time.

Roads. Bridges. Rail. Airports. Social Investment. And many others. Buhari is doing great things, which will pedestal him in the pantheon of great Nigerian leaders. And now, he has struck again. He is kicking off the AKK pipeline project, which will carry gas between the southern and northern parts of the country. The project will eventually extend to North Africa.

The Nigerian National Petroleum Corporation (NNPC) initially announced tenders for the project in July 2013. A project proposal was submitted to the Infrastructure Concession Regulatory Commission in June 2017, and the Federal Executive Council granted approval in December 2017. I tell you, this President Buhari has the heart of a lion.

If the intention was to continue to run the NNPC as an automated teller machine (ATM), as we have seen before in this country, will such staggering project ever be approved, not to talk of taking off? And some people are still asking for Change, when it is right before their very eyes.

The 614 kilometers-long national gas pipeline is Phase One of the Trans-Nigeria Gas Pipeline (TNGP) project, to be done on build and transfer public-private-partnership. It will transport 3,500 million metric standard cubic feet per day of dehydrated gas from several gas gathering projects located in southern Nigeria.

The project will be in three phases. Phase One is 200 kilometers-long, between Ajaokuta and Abuja, at a projected cost of $855 million.

Phase Two is 193 kilometers-long, between Abuja and Kaduna, to cost an estimated $835 million, while Phase Three is 221 kilometers-long, between Kaduna and Kano, at an approximate cost of $1.2 billion.
The project will eventually reach North Africa in subsequent phases.

What will AKK pipeline project do for Nigeria? Great and wonderful things. It will create steady and guaranteed gas supply network between the North and South, and will enhance power generation capacity. The industrial sector will be strengthened, local usage of gas will be promoted and increased, and the country’s revenue generation boosted through export of natural gas.

Nigeria is ranked the 7th most endowed natural gas country in the world. She sits on about 180 trillion cubic feet of natural gas deposits, which can be utilized as gas to power, gas to petrochemicals, liquefied natural gas (LNG), liquefied petroleum gas (LPG), compressed natural gas (CNG), among others.

Over the years, Nigeria has exploited its oil resources more, to the detriment of gas, which incidentally fetches more revenue, but is also more expensive to prospect.
One big advantage the average Nigerian can look forward to is the evolvement of compressed natural gas (CNG), which is still at pilot stage in the country.

While presenting his performance report to the Federal Executive Council recently, Minister of State for Petroleum, Timipre Sylva, spoke extensively about CNG, and what it can do for Nigeria as an alternative to petrol.
He listed the challenges of the oil and gas sector to include; under-recovery, crude theft, insecurity, high cost of production, very low LPG penetration, refineries shutdown, long contracting cycle, among others.

Sylva stressed that the oil and gas sector remains critical to the Nigerian economy, even as we strive to diversify. He identified CNG and LPG penetration as priority.
Said the Minister: “The switch to CNG will help reduce the burden of petrol subsidy on the finances of the country, and government should encourage Nigerians to use CNG as fuel for transportation.”

CNG began as a pilot project in the country in 2006, but target for conversion workshops was not met till 2015. About 4,000 vehicles run on CNG in Benin, Edo State, and it’s about 50% cheaper than petrol.
Vehicles running on CNG, statistics show, save about N1,143 daily, compared with petrol. This amounts to over N30, 000 monthly. The cost of converting the car can thus be recovered within six months.

Gas is cleaner energy, cheaper than petrol, and more friendly to the environment. Global warming will, therefore, be slowed down.

More than 175,000 vehicles run on CNG in America today, and 23 million worldwide. Nigeria will join the number, and boost productivity.

The Buhari signature projects will remain landmarks in Nigeria. Help me count them: Roads, rail, bridges, airports, agriculture, AKK… and may more.

Surely, we will always remember this President for good.

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