Managing Director, Ecobank Nigeria, Mr. Patrick Akinwuntan, in this interview with journalists stressed that Nigeria’s fundamentals remain strong, just as he urged policy makers to leverage on the country’s comparative advantage in its human and natural resources. Obinna Chima provides the excerpts:
What is your outlook for the economy in 2019?
For us as I have explained, we look at the fundamentals, and you look at Nigeria’s population. You also look at the demography of the population, whereby over 50 per cent are less than 30 years old. That speaks of growth potential. It does have it challenges, but in terms of the economic activities it demonstrates huge opportunities for growth. You look at the intellectual capacity within the economy, as this is an aspirational economy, an economy where the average participant believes strongly he or she can do better.
And therefore for us, the focus in Nigeria should remain the fundamentals. One, infrastructure, power, rail, in order to harness the significant potential in Nigeria. I have commented about this and I will keep reiterating that Nigerians are very resourceful people, participation in services where you use your intellectual capacity, leveraging on the internet and leveraging on digital asses available globally. Nigeria should continue to focus on becoming a top player globally.
It is not by accident that Facebook’s founder came to Nigeria; it is not by accident that the telcos are growing exponentially in Nigeria; it is not by accident that the level of internet and broadband growth is at such a high pace in Nigeria; and it is not by accident that our Nollywood products dominate not just the continent, but now we are becoming globally accepted. You talk of box office performance of our various productions out of Nigeria now, you talk to somebody who is less than 25 years, they will struggle to understand that western films, Indian films used to be what people used to troupe out every weekend or every night to go and watch in Nigeria. Now, we export those things.
It is true we have oil but the oil should be our base, we should focus on the areas where we have comparable advantage and go ahead to realise our potential as a country. If you take fashion, Nigeria sets the standards in a simple matter as the kits worn by footballers at the football world cup. And you could see the frenzy and the willingness of people to pay for something created out of Nigeria. In the arts and culture area, we are natural leaders, we should explore it significantly.
Kenya is exploring tourism, Ghana is exploring tourism, Togo has focused on being the relevant port for commerce within West Africa. We have so much potential in Nigeria, I think what Nigerians should focus and discuss more are the opportunities we have and really highlight where we have comparable advantage and do need to scale. If you pick any country that we referred to as doing well, what they have done is concentrated their energy on their area(s) of advantage and make sure that everywhere in the world you refer to them. And it is their own way of attracting foreign direct investment, creating employment and making sure that the future is bright for their country. So for us in Nigeria, the discourse should be around the fact that we have a young demography that reflects youth, education and health and anything around basic food, basic nutrition are areas of growth.
In various ways there has been effort on focus on agriculture. The ability to feed ourselves and reduce the amount of importation of rice and various drinks. Not too long ago, bottle water had to be imported into Nigeria. But there are a lot of Nigerian entrepreneurs doing it at good level now. So, we should focus on our areas of comparative advantage and use the scale of production to bring down inflation, to bring down cost of doing business, bring down interest rates. Because in the long run for the productive sector of the economy to be funded, the cost of fund has to be affordable.
Given the ability of Nigerians to communicate, my own input will be that we focus on our areas of strength and keep discussing it till it becomes a global reference. Traditionally, where I come from, they say the way you call your calabash is the way every other person will call it. For us as a bank, we have demonstrated the ability first to be a true intermediator because the role of the bank is mobilising funds from the surplus parts of the economy and funding areas where there are shortfall and the need for capital and support to grow economic activities.
We have played that role significantly, whether as a group or Ecobank in Nigeria. In Ecobank Nigeria we have a balance sheet in the region of N2 trillion. And that shows that we have demonstrated the ability to be a reliable keeper of customers’ funds and a reliable supporter of people who wish to borrow money in order to grow their business or to do their activities. We have continued to grow the net value of the company; our shareholders have confidence in us to continue to invest adequately in order that we carry on our business. We have seen various rounds of capitalisation in Nigeria and Ecobank has always come out from it strongly. We have demonstrated that as a bank, we take prudent management of customer and shareholders’ funds very seriously. We have very strong corporate governance and ethics that guides our operations in dealing with our internal activities, in dealing with our relationship with customers and in dealing with our regulators.
It is true that in terms of a long term vision, the way you rate a bank that has the mandate that Ecobank has may not exactly be the same way you rate a one man owned entity. We are a global player, we are Pan African bank, we have a long-term vision. If you look at the things that I have explained, we had to build those rails in order to move to the next level of realising it. So, we are doing well, we need to do better, we never can get complacent. There are challenges to do with growing a business in Africa not just in Nigeria because we do not operate in a vacuum, we operate within the economy, within the society. But what we have proven is that as long as the society is carrying out economic activities, there is a positive role for Ecobank to play.
And so because of our diversification in different regions, in different levels of economic growth, in different level of economic environment, in some countries interest rates are going down, in some countries the interest rates are going up; in some countries the currency is strengthening, and in some, the currency is being devalued. That diversification that we have achieved through our geographic footprint and through the vertical integration between the multinationals, SMEs, medium scale companies and individuals and households, has really helped us to continue to improve from one year to the other. But there is much more work to do, we would bring banking services to every household, we would like to be the bank of choice to every business in Nigeria and in Africa.
Ecobank has been aggressive in the retail banking space in recent time with the aid of digital solutions. Few months ago, the Central Bank of Nigeria came up with guidelines for payment service banks (PSBs) and some telecom companies have indicated interest in acquiring PSB licence. Don’t you see these PSBs as threat to operation?
In the area of financial inclusion, the development of PSBs for us in Ecobank, we collaborate with fintechs and participants in the economy. It is true that it could be viewed as increased competition, but competition in itself Is not negative. It actually reduces the overall cost of participation because more capital is being put into the sector and the scalability of the sector is still there. We have less than 60 per cent of the population still fully banked. If you actually talk of active financial participation, the percentage will be less than 30 per cent because you have various levels. You have the banked, you have the underbanked and you have the unbanked.
If you add the underbanked and the unbanked, we will be closer to 70 per cent. And so, the opportunity is there for more participants. We have demonstrated in various countries like Ghana, Cote d’ivoire, Benin, Togo, Liberia, Kenya, Rwanda, Uganda, Cameroon, that we have the ability to collaborate well with telcos that have participated in this space. In Ghana, we partnered with MTN to even provide treasury bills investment opportunities to individuals straight from the mobile phone. At the end of the day, participants need a strong bank as the final repository. We look forward to collaborating with participants in this space. I gave the example of Axion; it was a collaborative effort. We had the ability to work on our own, but we also understand the value of collaboration and we will embrace collaboration in the evolving market space that we are looking forward to in Nigeria. I think it is a bold step by the central bank; it is a commitment to bring financial services to every household and because that aligns with our commitment as Ecobank, we will participate in furthering that agenda.
Clearly, the banking industry is changing globally because of the incursion by fintechs. How do you see industry in the near future?
Well, I think it is well known now that banking is not where you go, but what you do. In the past when you say I want to do any banking service, it is synonymous to travelling to the location to do banking. But now banking has come to your finger tips and we believe that increasingly, banking itself would become more affordable, more available but the differentiator will increasing be the effectiveness of the customer service that the bank brings to bear in adding value to the financial transaction being carried out by customers.
First the definition of who is your customer is being expanded from the person that has an account in your bank to the person that uses your financial service platform. So, if you look at ATMs, they are interoperable. So, if you have an account in X Bank and you come to use Ecobank ATM, you are my customer because you are using my service. And if you are happy with the service on an Ecobank ATM, not minding which other bank you got your card from, it reflects positively in your confidence in the Ecobank brand. And therefore, the concept of who is your customer is being expanded significantly. And that is why the steps taking by Nigerian Interbank Settlement System (NIBSS), the central bank in the establishment of Bank Verification Number is really forward thinking and should be supported by every Nigerian.
This is because what that does is that it creates an identity that enables banks really relate to customers in a non-restrictive manner because you know this is a participant in the economy and you provide the services. Therefore, customer will have more choice. The ease of access is improved, the transparency requirements are at the height because people can compare and therefore it creates growth. You will find the level of instant payments today; when I started my career in banking, if you want to make a payment from Lagos to somebody in Kano, you write a cheque and the person in Kano takes it to the bank in Kano. It takes 21 days to get the value. But today, it is at the speed of seconds, you do your transactions.
So, it is one of the segments that have leveraged development and technology to leapfrog challenges in infrastructure in Nigeria and make services affordable at a more reliable level to every individual. And so it is a highly dynamic industry, it is an exciting industry for young people to bring to bear innovation and that is why for us at Ecobank, we embrace innovation and we want to always be in the vanguard to do things better, such that more people will get better value for their activities.
You talked about mobile money and the lucrativeness of the business in Ghana and Kenya, I want to find out what challenges are crippling mobile money operation in Nigeria?
Like I did say it is important to focus on what is the vision and what we want to achieve. We should be looking at what part of this is critical for us in the journey that we are in Nigeria. The fact is that if you pick the experience in Kenya when it started mobile money. But today, from learning, there are more bank accounts than mobile money accounts in Kenya. And that was achieved through collaboration between the mobile money players and the banks in Kenya. So, the mobile money companies started but very quickly when it comes to deposit of customers’ money every economy understands that protection of small unit savers is a prime responsibility of the central managing authority in Nigeria, which is the central bank.
In Nigeria we started out with financial licenced institutions because the scale in Nigeria is such that any item that is not well managed, if it scales out of proportion, it is a big problem. And that is why the regulator tries to develop a stable framework before arriving at the level that we are now. And what we should be looking out for now that we have arrived at this point is how do make it work positively for the economy. But the real issue is now that we have this playing field how do we make it work very well? And our prognosis is collaboration because the field and the opportunity for growth is huge. The needs of Nigerians are significant and the supply side of it is not as high, and therefore every opportunity to increase the supply of financial services should be encouraged.