Mr. Ade Ayeyemi is Chief Executive Officer, Ecobank Transnational Incorporated. Ayeyemi speaks on the issue of access to finance, a hot topic of conversation in Nigeria currently, in this interview with Francis Ndubuisi conducted on the side-lines of the recent Nigeria Economic Summit. Excerpts:
How involved is Ecobank in the financing of infrastructure in the country?
Infrastructure has to be profitable so that when you are financing it, the money can come back. When we had the power privatisation in Nigeria, it was based on the assumption that the multi-year tariffs will be approved. But it was aborted. It’s like somebody went to court and said the tariff should not be there. So, do we have power today? No. And why don’t we have it? It’s because it’s not profitable. Why are the mobile phone companies profitable? It’s because when the SIM card came, for you to buy a SIM card, you pay N40, 000. Today, you can get the SIM card free with some airtime because the government allowed that industry to mature. So, all the people that invested in the power now, the companies have been bankrupt. There are non-performing loans in the financial institutions. We need to have real conversations with ourselves, if we really want to build infrastructure. We have to be willing to pay for it. It’s not about financing; we are ready to finance but our money are not grants– they are loans – which means they need to be paid back and for it to be paid back the company needs to be profitable.
We have a $21 billion balance sheet as a group and Nigeria is a large part of that group.
You were one of the panellists at the access to finance segment of the Nigeria Economic Summit. How can the problem of access to finance be resolved?
I think as a people and society, we are beginning to realise what our challenges are and more importantly, we are beginning to say ok, what can we do? And this morning, the question was what can we do? You think about the problems because from home, the question is still, what can we do? And imbibing these solutions, and the proof is going to be the follow-up, because we have to make sure we don’t just come in next year and have another set of debate. We need to figure out how to ensure that the things that we agree will be fixed then, because once we take one thing off the table, once we fix one thing, then it’s no longer going to be there next year.
At Ecobank, we have a segment of our business, which is in line with large companies, which is called the corporate and investment bank. We have a segment of our business that is commercial bank, which is to give loans to small and medium scale enterprises. We have a segment of our business which is consumer bank, which is to give support to individuals. We also have an investment arm and own microfinance companies, both in Nigeria and across West Africa. So, our business model understands that it is ensuring that those small and medium scale enterprises are successful. Then, we can have a successful society. Now capital is one of the things that they need access to. But the businesses need to be positive. For business to be positive, the business environment, access to infrastructure, access to power have to be guaranteed, and also when they supply people they need to pay them. All of us need to work; the financial institutions, like Ecobank, need to work. We also need to provide advice from our commercial banking to the entrepreneurs, guide them and have entrepreneurial clinics that we have from time to time that enable them to know how to manage their businesses. We do that. Have we done enough? No, we haven’t done enough but we need to continue to do more.
Looking at access to finance, one of the biggest challenges is interest rate. What is your position on this?
Interest rate is not the problem of the bank; it’s the problem of the society. We need to understand our problems so that we can find appropriate solutions. If you as the THISDAY Associate Editor have the opportunity to put your savings in the bank today and the bank tells you we will pay you five per cent and you can put it as treasury bill at 17 per cent, which one will you choose? You will definitely put it in treasury bills. So let’s try and not force a solution that is not sustainable. We need to solve the fundamental problem, which is that our inflation rate is high, our cost of lending to government is high and it’s because we don’t pay taxes so the government has to borrow. We have to choose whether to pay the tax or we pay high interest rates. So it’s something that we have to speak truths to ourselves. I can’t tell you all the banks will bring down the interest rates, it’s not going to happen because the government is borrowing at 17 per cent due non-payment of taxes.