Connect with us

NEWS

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

Published

on

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

Continue Reading
Advertisement
Click to comment

Leave a Reply

NEWS

UBA Continues to Innovate as RED Radio’s Podcast Now Live 24/7

Published

on

The United bank for Africa (UBA) is leading again through innovation as it launches a podcast, RED Radio, which is available 24/7. The dynamic and creative online radio channel, RED Radio now provides round the clock informative and entertaining content, bringing out the best of Africa.

RED Radio www.itsredradio.com  was berthed as part of the communication suite of UBA to provide real time content to listeners across the African continent and globally.

UBA’s Group Head Corporate Communications, Bola Atta, explained that the platform is an affirmation of the leading role that UBA is playing in the innovative space on the African continent as the bank keeps seeking more ways to reach out to and galvanise people.

She said, “RED Radio can be described as a meeting place. It is an avenue to discuss all kinds of issues that affect the youths on the continent, whether it be business related, health, relationships, sports, lifestyles.. anything. As we bring people together, we also entertain them with music from across the continent.’ ‘it’s such a cool and diverse platform with shows in different languages to appeal to a wide section of listeners.  I leave it on quietly on my ipad constantly, catching up with anything I have missed’ she added.

Some of the flagship shows on RED Radio include the Barbershop Chronicles – a talk show featuring Shody, Sess, Alhaji Popping and Femisoro who discuss life matters from the perspective of men; Diary of an Africana follows the journey of a young African woman as she manoeuvres through various obstacles whilst she explores her true self; The Red Pill which brings you exciting news and music from the Congo and so much more.

The shows are recorded in video format and are also available on REDTV.

You can access the podcasts via www.itsredradio.com

Continue Reading

NEWS

WE’LL DELIVER SIX-LANE IBEJU-LEKKI-EPE HIGHWAY PROJECT FIRST QUARTER 2022 – SANWO-OLU

Published

on

Barring unanticipated event, the construction of 18.7-kilometre six-lane rigid pavement carriageway from Eleko Junction in Ibeju Lekki to Epe T-Junction in Lagos State will be completed and commissioned. This was the assurance from Governor Babajide Sanwo-Olu when he and members of the State Executive Council went on an on-the-spot assessment of the project, on Monday.

Sanwo-Olu was excited by the pace of work on the road, persuading the contractor handling the project to increase its momentum in order to push the progress to an encouraging level before the end of the year.

The Governor flagged off the first phase of the expansion on the Lekki-Epe Expressway last November, kick-starting the rehabilitation of the 40-year-old infrastructure. The second phase of the project, which will start later this year, stretches 26.7Km from Eleko Junction to Abraham Adesanya Junction in Eti-Osa axis.

At the time of the Governor’s inspection, the contractor had completed a stretch of 3km on the lane from Eleko Junction inward Epe, while the right-of-way for the entire project has been fully cleared.

After communicating the work progress to the Governor, representatives of the contractor led Sanwo-Olu and cabinet members on legwork for assessment of features on the completed stretch, including drainage channels, kerb and segregated lane for heavy-duty vehicles.

The Governor was optimistic the project would be delivered on record time, charging the contractor to scale up the pace of work.

He said: “This exercise is an on-the-spot assessment to view the status of the 18.7Km six-lane rigid pavement road construction we are doing from Eleko Junction to Epe. The contractor has been active on site in the last six months, and they have touched every part of the entire stretch. We are currently assessing the project from the 3km lane already completed. On either side are three lanes. Two lanes are for cars, while the last lane is for heavy-duty vehicles. There will be 1.5km pedestrian walkway on both sides.

“We are happy with the progress of the project, because the contractor works day and night. I believe the work is on track. Residents on this corridor are also happy with the level of work done. They are waiting on us to hand over this important infrastructure to them in earnest.

“The beauty of the work is that it has reduced the journey time, even as the road is still being constructed. There is no hindrance on the road; motorists have the right-of-way for free movement. Not until when we finish the entire construction, we would have the full benefit of this investment. We are happy with what we have seen and we believe that the contractor should be rounding off the work by end this year or first quarter next year.”

Continue Reading

NEWS

Lagos-Ibadan Rail Line: Amaechi, a Personification of Service – Eze

Published

on

Erstwhile National Publicity Secretary of the defunct New People’s Democratic Party (nPDP) and Chieftain of the ruling All Progressives Congress, Chief Eze Chukwuemeka Eze, has joined the lengthy roll of Nigerians and Nigerians in the diaspora, aliens and diplomats alike, who have felicitated with the President Mohammadu Buhari/APC-led Federal Government for the giant strides it has continued to record in critical areas of governance especially, the revival of the nation’s moribund rail infrastructure, covering a country mile and traversing the nook and cranny of the Nigerian territory and choreography.

Recall that President Buhari, Thursday, June 10, 2021, inaugurated the commercial operations of Lagos-Ibadan railway project at the Mobolaji Johnson Railway Station, Ebute Metta, Lagos.

In a statement made available to media houses in Port Harcourt, Eze said the efforts of the Transportation Minister, Rt. Hon. Chibuike Amaechi, in driving the Buhari administration’s policy on infrastructural development is selfless, worth commending and cannot be overemphasized.

He said Amaechi’s display of rare dexterity in public administration has continued to break new grounds and discover and open up opportunities for Nigerians to sustain their livelihoods in the face of the harsh economic realities of the times, and called on those on whom the responsibility of leadership is saddled especially, in the public sector, to brace up and take a clue from the Minister.

The party Chief said aside priding itself as the first double-track standard gauge rail in West Africa, the 156km Lagos-Ibadan rail project is renowned for its peculiar status as the first Nigerian railway line to be started and completed by the same administration, since 1960.

With a holding capacity of over 6,000 passengers, Eze said the Ebute Metta Station, known as the Mobolaji Johnson railway Station, is the largest in the West African region.

Describing the feat as another milestone in the drive of his administration to revitalize the railway system and establish it as a choice mode of transportation for both passengers and freight, Buhari pledged his administration’s commitment in ensuring that priority is given to modern railway system as a transportation backbone that can transform industrial and economic activity in the country.

Reeling out the benefits of the Lagos-Ibadan corridor as well as other on-going railway projects across the country, President Buhari said the project establishes what he described as an end-to-end logistic supply chain in railway transport within its short corridor, Lagos – Ibadan, as goods to the hinterland would now be transported by rail directly from the Apapa port Quayside straight to the Inland Container Depot located in Ibadan from where it can be distributed to other parts of the country.

Lamenting the challenges posed to the nation’s economic growth by absence of strong and effective infrastructure, the President said in addition to other other ongoing railway projects, his administration has embarked on the completion of the outstanding segment of the Lagos – Kano railway, which is Ibadan – Kano.

He emphasized that the Lagos – Kano railway project when completed will link the Kano – Maradi line at Kano and a rail link from the Nigeria southern ports of Lagos to Maradi in Niger Republic will be achieved.

‘‘The connection through rail would position Nigerian ports as the choice for import and export business of the people of landlocked Niger Republic”

The project, Buhari said, would be beneficial to the economy through employment from new business opportunities and wealth creation.

Expressing delight that his directive to the Federal Ministry of Transportation and Ministry of Finance on reaching financial agreements with appropriate co-financiers to partner with the Federal Government for the development of the Ibadan – Kano railway was yielding results, President Buhari noted that Ibadan-Kano project would have a connection to the Tin Can Island port as well as the West – East Coastal rail line from Lagos to Calabar linking Onitsha, Benin, Warri, Yenagoa, Port Harcourt, Aba and Uyo.

‘‘From the beginning of this administration, railway infrastructure development has been given the priority it deserves and various milestones have been reached, right from when the Abuja – Kaduna railway was flagged-off for commercial operation in 2016 to this Lagos – Ibadan railway project being commissioned today for full commercial operation,’’ he said.

Commending the Minister of Transportation, Rotimi Amaechi, for his drive and tenacity in achieving the milestone recorded today, the President praised the ‘‘wonderful team in the Ministry’’ for a job well done.

“It is noteworthy to state that work commenced on the project in March 2017 and test-run commenced around December 2020 and today, what seemed a dream has come to full materialization under Buhari and Amaechi”, Eze said.

Similarly, Chief Eze hailed Buhari and Amaechi over the official launch of assists under the Integrated National Security and Waterways Protection Infrastructure, also known as Deep Blue Project in Lagos.

The project which is the first integrated maritime security strategy in West and Central Africa is aimed at tackling the incidences of piracy, sea robbery, and other crimes at sea. With three categories of platforms to tackle maritime security on land, sea, and air, the deep blue project was jointly initiated by the Federal Ministry of Transportation and Federal Ministry of Defence, and being implemented by NIMASA the to secure Nigerian waters up to the Gulf of Guinea.

The land assets include the Command, Control, Communication, Computer, and Intelligence Centre (C4i) for intelligence gathering and data collection; 16 armoured vehicles for coastal patrol; and 600 specially trained troops for interdiction, known as Maritime Security Unit comprising personnel from the Nigerian Navy, Nigerian Army, Nigerian Air Force, Nigeria Police, and Department of State Services. The sea assets include two Special Mission Vessels and 17 Fast Interceptor Boats. The air assets comprise two Special Mission Aircraft for surveillance of the country’s Exclusive Economic Zone (EEZ); three Special Mission Helicopters for search and rescue operations; and four Unmanned Aerial Vehicles.

Eze said Amaechi has manifestly justified the confidence reposed in him by  President Mohammadu Buhari and Nigerians and called on Nigerians to continue to support the Amaechi as more dividends are set to be delivered.

Emphasizing the need for Nigerians to imbibe the culture of protecting public infrastructure, the party Chief said it is grossly subnormal for countrymen, who should be proud patriots to engage in acts of vandalism, destroying critical assets and frustrating the efforts of government in putting the country on the right track.

Continue Reading





FOLLOW US ON TWITTER

Trending