Bakare: COVID-19 Will Slowdown Nigeria’s Growth


On April 1, 2017, Mr. Hafiz Bakare was appointed the Managing Director/Chief Executive Officer of Keystone Bank Limited and he successfully steered the transition of the financial institution during that crucial period and laid the foundation for its subsequent growth. In this interview with Oluchi Chibuzor, exactly three years after, the former CEO of the bank speaks about his achievements at the bank and issues in the economy. Excerpts:

Can you just tell us about your career before joining Keystone Bank?

Let me start by saying that I was appointed MD/CEO of Keystone Bank by the then new owners, the Sigma Golf/River Bank Consortium following the successful divestment exercise which led to the transfer of ownership from the Asset Management Corporation of Nigeria (AMCON) in March 2017. Before then, I was the bank’s Executive Director in charge of Corporate Bank and Treasury, and also overseeing the Lagos and West commercial directorate, having been appointed to the immediate past board by AMCON in July 2014. So, with that sort of background, I was not necessarily coming in from outside Keystone Bank.

I had been in the bank for about three years before I was appointed MD/CEO to lead the transition from a government owned bank to a private financial institution. I had wide-ranging professional experience that cut across management consulting, banking, insurance, manufacturing, health and other sectors, locally and also across Africa.

I was Chief Strategy Officer for First Bank of Nigeria, where I was responsible for bank and group strategy; mergers and acquisitions; conception and incubation of new subsidiaries; group coordination; new business development; economic intelligence; local and international ratings; investor relations; brand management and corporate communications. Also, I was, at some point in my career at First Bank, overseeing the products portfolio covering consumer banking products, money transfer, agriculture business and wholesale banking products.

In the course of my career, I was also Group Director at Industrial and General Insurance (IGI) PLC, an insurance conglomerate with business interests in other sectors locally and internationally. At some point, I was Non-Executive Director at a company called SONARWA i.e Societe Nouvelle d’Assurances du Rwanda, which is the premier insurance institution in Rwanda, as a representative of IGI on the board and as part of my oversight responsibilities.

It may also interest you to know that I am a qualified Pharmacist. I equally have an MBA from IESE Business School, University of Navarra in Spain and was top of my class at the preparatory programme where I had a record of 25 As in 26 courses. My main consulting experience was nurtured at Andersen Consulting, which later became Accenture and I was on the firm’s outstanding track. Before I was appointed to the board of Keystone Bank as Executive Director in 2014 by AMCON, I was actually running my own management consulting and capacity development practice, which I founded to assist different organizations across different sectors, and post-Keystone, I have resumed management consulting practice among other business endeavours.

I was also a Consultant for Knowledge Factory International, UK; an alumnus of the European Bank Training Network’s International Banking Summer School; a Senior Member of the Chartered Institute of Bankers of Nigeria; a Fellow of the Nigerian Institute of Management and a member of the Institute of Directors. In addition to these, I have received executive education at Harvard Business School, USA and Wharton School University of Pennsylvania, USA while I have participated in major international conferences including the IMF/World Bank Annual Meetings, World Economic Forum on Africa, and Economist Conferences.

I have also been a panelist at the African Business Conference of the Harvard Business School at some point and a council member of GLG, Gerson Lehrman Group, in the USA, which is the world’s largest knowledge brokerage and expert network comprising thought leaders and specialists in different fields.

How did you start your leadership in Keystone Bank, what were your responsibilities when you joined them and what were your first pronouncements and actions as CEO?

Like I said, I was appointed by AMCON to join the board as an Executive Director in charge of Corporate Bank and Treasury. We did what we needed to do to make sure that we worked with the available resources to improve things further in order to make a mark within the organisation, providing adequate support to the then CEO, Philip Ikeazor. When it also happened that one of the Executive Directors who was in charge of the Lagos and West Commercial Directorate had to move on, I had to take on that additional responsibility. There were a number of other things that I had responsibility for as an Executive Director – for example, even the divestment programme itself that is, the divestment of AMCON from the bank, was within my purview from the bank’s side.

So, I was the one designated by the erstwhile Board of Directors of the bank as Project Co-ordinator, to oversee that entire process and I was managing the interface with different stakeholders. So, I mean that was what I had to do in my capacity as a member of the erstwhile AMCON-appointed board.

After the divestment, I was appointed to lead the transition by the new owners under a Transition Board with Alhaji Umaru Modibbo as Chairman while one of my colleagues on the AMCON Board Mrs. Yvonne Isichei was retained as an Executive Director. My leadership of the bank took effect from 1st April 2017, incidentally a Saturday, but the first working day was actually Monday 3rd April 2017. With respect to my first major pronouncements and actions on the way forward which were effected on the very first day as the CEO to lead the transition, let me mention a few: One was the strategic direction of the institution, which I had to indicate to all staff would be hinged on six major strategic imperatives that would drive all our activities thenceforth.

These were (1). Governance; Customers; employees and resources; processes; delivery channels – branches, alternative delivery channels; and finally, considering where we were coming from, earnings. So, that was one of my first major pronouncements, stating basically that these would be the six major imperatives to drive every activity of the bank and that performance measurement with well-defined key performance indicators would be intensified for every job position. In fact, what we did by publishing performance ranking or “league table” on a monthly basis, changed behaviour across the institution and also gave staff the assurance that change didn’t necessarily mean that we would start changing the people, because, of course, in any transition that’s the initial fear.

Then, what we did in terms of external communication and engagement, was to send personal mails and letters to all customers of the bank between my effective date of assuming duty on 1st April 2017 which was a Saturday and the actual first working day on Monday 3rd April 2017. It was important for the CEO to personally engage all customers through mails and letters, so, we had that communication and basically it was to inform them, first, about my assumption of office, then to also indicate the successful completion of the divestment programme, that the bank had become a privately-owned financial institution. To also let them know about the leadership transition, seamless handover from the immediate past MD and to equally build confidence that I would leverage the institutional memory to the advantage of everyone, in view of the fact that I was a member of the immediate past board and management of the bank. So, that message needed to go out, seeing as customers were a bit apprehensive, not knowing who the new owners were, but because I had been around, that gave them some level of assurance. In the course of the transition, we followed this with face-to-face business development and confidence building marketing calls to Chairmen and CEOs of our various major customers across the country while establishing new relationships.

I also sent on that very first day, personal mails and letters to all CEOs of other banks, to introduce myself because I knew that I would be working with them thenceforth. And of course, like I earlier mentioned, there was personal communication in form of an e-mail to all staff of the bank, to lay down the strategic direction and my leadership philosophy. I subsequently had meetings with senior management staff.

Later that same day Monday 3rd April 2017, I had a town-hall meeting with all staff of the Corporate Head Office, a face-to-face, real-time meeting with everybody in the building. In the course of the transition, we followed that with similar sessions across all the different regions of the bank to meet all staff around the country.

Still talking about my first pronouncements and actions on the very first working day as CEO, I equally set up a multifunctional committee, with people of varied backgrounds and interests across the bank, focused on Business and Service Optimisation. This helped us a lot during the transition period to resolve a lot of issues on operations, systems, products and processes

Then, also, the immediate commencement of a bank-wide revamping of our branches, to bring life to those branches. Considering the state of most of our branches at the time, they tended to create a wrong impression in the minds of not a few customers and members of the public that maybe the bank was not even operational. So, it was important for us to send that immediate signal that could not be ignored indicating that the bank had witnessed positive change and that we were very much in business while also building confidence in our people as well as the banking public. This was done in phases and the feedback from customers and members of the public was quite positive in all respects.

You really understood the power of communication. What were your main objectives that led you to attain success and the desired performance?

The major objectives, like I’ve said, were anchored on six strategic imperatives, which I made very clear to all staff from the very first day. Recall I mentioned, governance, customers, employees, processes, delivery channels and earnings. Those were the major anchors. Then, as part of these objectives we had looked at a few things that we felt were very key, going forward. There was need for some culture change and continued engagement, which was why we had to do all of those things about communication, being open and transparent.

And then, capital injection. Of course, if you had a divestment programme it was expected that moving from being a government-owned institution to a privately-owned institution would substantially enhance the capacity of the bank to be able to do things that it hitherto was not able to do. So, under the “Governance” strategic imperative, we highlighted capital injection as one major anchor of what should ultimately happen going forward with the support of the new owners along with forbearances requested from the Central Bank of Nigeria, some of which were granted both during the transition and subsequently.

It was equally necessary to further build the confidence of customers to facilitate deposit mobilisation and retention because the life blood of any bank, is to be able to mobilize deposits that you can lend to your customers. It was important that we built public confidence, such that we were able to retain existing customers and develop new business relationships, which provided foundation for post-transition customer attraction, retention and business growth.

Something that had been an issue generally in the Nigerian banking industry and particularly at the time, was the issue of non-performing loans. As a player in the industry, the bank had its fair share of non-performing loans. Some of those loans became non-performing, essentially due to the fact that the country had gone through recession and therefore, the companies operating within could not be completely divorced from what was happening in the economy. A number of the loans were both syndicated and stand-alone facilities in strategic sectors which had been affected by significant changes in the assumptions underlying the original government roadmaps even as these companies had significant verified government receivables.

As the economy itself was gradually getting out of that recession, it was important for us to also find a way of working very closely with these customers. So, one of the major anchors was risk management, something that we were very keen on, particularly in the areas of loan recovery, rejuvenation of business activities along with resumption in meeting obligations and perhaps most importantly, collateral enhancement to ensure adequate coverage. We took concrete actions in these areas during the transition with positive results that transcended the period as the succeeding management followed this lead which was reflected particularly in first-half 2018 results underpinned by reversal of impairment charges.

I had earlier mentioned branch transformation and this was about improving the façade of our branches as a form of brand projection. We did not contemplate changing the bank’s name from Keystone to something else because at the time, we needed to send a strong message first that we were back in business, projecting the brand through the outlook of our branches/service outlets, the quality of service delivery and also continued media engagement. There was sustained media presence as a number of our visits to Chairmen and CEOs of customer companies were given publicity, to create further confidence and use that as a basis for projecting the institution positively.

Would you say you succeeded in repositioning the bank and laid a foundation for the subsequent management team?

With all modesty, I would say yes! I have mentioned the bit about performance management, which remained very key. Performance stood at the very base of all the cultural transformation, by way of leading by example and the signal that came from the approach and style of the leader. Everybody took a cue from that. So, with the cultural transformation and performance management it became clear that it was an open environment where anyone could succeed.

You didn’t have to know anybody, you didn’t have to be my friend, just do what you had to do. We developed very clear performance parameters and followed the strategic direction which was well communicated to all staff leading to a very seamless and successful transition. Let me mention a few of the key highlights in addition to those already indicated: Deposit liabilities increased significantly even within the first four months post-divestment despite the intensely challenging and competitive operating environment at the time, especially for a bank in transition; loan recoveries increased by over 100 per cent and the number of profit-making branches also increased considerably while there was a resurgence in dormant and inactive account reactivation; there was 40 per cent growth in activity levels on self-service channels and improved efficiency of operations with considerable growth in ATM transactions, POS collections, internet banking and mobile telephone banking volumes.

Alongside operational improvements, cost-to-income ratio improved consistently every month during the transition; we enhanced controls leading to effective cost containment, revenue recovery through optimization of revenue assurance tools and enhanced compliance. Specifically, the bank successfully processed USA Foreign Accounts Tax Compliance Act (FATCA) with Global Intermediary Identification Number (GIIN), to facilitate correspondent banking relationship and thereby reduce cost. On July 31, 2017, after very intensive cross-functional teamwork which I supervised personally, we launched Keystone Bank’s Unstructured Supplementary Service Data (USSD) product with the original unique *533# short code so that we could stand to be counted in the industry.

It was necessary to ensure our customers continued to have confidence in the bank and have every reason to enhance patronage as we offered them convenient service comparable to, and even better than what was offered by competitors. Our PIN driven product at the time was superior to a number of already established USSD offerings in the industry as we consciously combined customer convenience with security. This provided the foundation for the succeeding management which further fine-tuned the product with subsequent changes in the short code. So, under my leadership, we gradually repositioned the bank during the transition, building on the work done by the previous AMCON-appointed team of which I was a key member. We put the bank on a turnaround path and laid the foundation for subsequent growth.

Can you give an evaluation of the conduciveness of the business environment from an investor’s point of view, since you had this relationship with all the investors especially during the divestment, what are your insights?
Well, I will just say a few things here. You know, government itself had to put together some initiatives towards having a business-friendly environment. I believe this has impacted positively in the last couple of years and further improvements are expected once some of the things that the government is trying to do are fully implemented. What we’ve seen in previous efforts by government to reform the policy and regulatory landscape didn’t quite deliver the significant results that were expected, because the efforts were fragmented and there was also inadequate prioritization at the highest level.

Now, to overcome these challenges, the federal government set up what is called the Presidential Enabling Business Environment Council (PEBEC), chaired by the Vice-President, with its membership drawn from the Central Bank and the key Ministries, Departments and Agencies (MDAs) that are involved mostly in providing such services. It has yielded positive results over time with considerable improvement in the country’s Ease of Doing Business ranking and my belief is that when PEBEC initiatives are fully implemented, this will create an even more business-friendly environment for both existing and potential investors.

On the sale of the bank to investors, it is important to state that while the AMCON-appointed Board had me as Project Coordinator on the basis of which I anchored the interface with different stakeholder groups during the divestment exercise itself, the responsibility for evaluation of bids and final selection of the preferred bidder was exclusively that of AMCON. In that regard, AMCON was the Seller and Keystone Bank was the Target. To guide AMCON’s sale decision, there were reputable Transaction Advisers like FBN Quest, Citibank, Ernst & Young, Banwo & Ighodalo and CrosswrockLaw, that supported in making the process thorough, competitive and transparent.

What do you think is the growth prospect for Nigeria in the light of the COVID-19 crisis?
The current situation has made the approved subsisting 2020 budget with its assumptions, revenue and expenditure projections, unrealistic. The federal government is already working towards adjusting the budget with a planned 20 per cent reduction in capital expenditure across ministries, departments and agencies (MDAs) and 25 per cent reduction in both recurrent and capital expenditure of government-owned enterprises leading to an estimated N1.5trillion reduction in the size of the N10.59 trillion budget. And with the planned reduction in oil price benchmark for the budget from $57 per barrel to $30 per barrel, the implication is an increase in the budget deficit from N1.8trillion to possibly over N3 trillion.

Growth would therefore be a struggle in the circumstance! There has been a significant drop in oil price to 17-year low at under $30 per barrel due to the effect of COVID-19 on economic activities across the world with our major trading partners, some of the worst hit. This is coupled with the direct implication of the trade war between Saudi Arabia and Russia, having United States also in the mix. Notwithstanding our genuine diversification efforts through the non-oil sector, we still remain a mono-product economy driven by hydrocarbons. So, the dynamics of the oil industry as earlier indicated will ensure a drastic reduction in oil, hence foreign exchange revenue.

Limited accretion to the foreign reserve due to reduced FX inflow would put pressure on CBN’s ability to sustain the naira at the level it has been for the past three years and we are already seeing the signs with CBN’s recent N380/$1 peg for interventions at the Investors & Exporters and Bureau De Change windows, which the apex bank has termed price adjustment. In view of this, planned FX borrowings by the government would have to be put on hold given the potential to spend more naira than budgeted to support servicing such loans if the pressure on the currency reaches a breaking point despite the controlled exchange rate management regime.

And it appears this is well understood by both the executive and legislature given the current disposition to the proposal for $22.7 billion foreign borrowing which was initially enthusiastically pursued but now suspended. In that case, even the laudable infrastructure projects might be held back as government devises alternative sources of local funding like the N1.5trillion Infrastructure Fund, an idea which has just been conceived by the CBN working with the private sector to develop the modalities.

So, putting it mildly and without delving into details on other macroeconomic variables, economic slowdown is expected but this would not be Nigeria-specific as the world economy and most individual economies across the world are expected to slow down as a direct result of COVID-19. I acknowledge government’s proactivity through the CBN with the earlier mentioned Infrastructure Fund and others amounting to over N3.5trillion to cushion the COVID-19 effects on the economy in addition to forbearances on loan structure and interest rates.

Finally, the phrase, “change begins with me” what did that mean to you and Keystone Bank then?

Well, when the federal government’s campaign started, it was essentially aimed at educating and enlightening Nigerians to appreciate the values of integrity and accountability, and it was part of the government’s National Re-orientation Programme. When the President launched it in 2016, the slogan was about the need for us to see change, not just in economic terms, but also in terms of our personal behaviour, how we conducted ourselves, how we engaged our neighbours, friends and generally how we lived within the larger society, in a positive and definitive manner, so that we could promote the common good.

Those were some of the things the President said at the point of launching the campaign. So, what that campaign meant to me and to Keystone Bank was how the philosophy of the leader would permeate the organization by the symbolism of the leader’s words and actions as he led by example and the entire organization took a cue. Therefore, as a leader I believed (and still do) that the key principles that would ensure a changed and better work environment must be hinged on attributes like personal discipline; work ethics; fairness to everyone; no special privileges to anyone considered your friend or “loyalist”; openness; transparency; being true to your words and regard for everyone whether contemporary, superior or subordinate; and inclusive decision making to give a sense of ownership and worth, while leaving no one in doubt that as the leader the buck stopped on your table! Remember I said on the first day I assumed duty as CEO, we formed a multifunctional committee, with people of different backgrounds (and interests!) to look at issues of business and service optimisation, just so that people had a sense of being part of the decision making.

And we achieved a lot with this during the transition. Finally, especially given the context of the bank, it was paramount to be prudent while following due process in all respects despite one’s privileged position as the leader. So, I believe these were the ways we internalised and manifested “change begins with me” in a manner that gradually improved the mood and culture of Keystone Bank. I wish the shareholders, current board, management and staff the very best as they continue to move the bank forward on this journey as a privately owned financial institution.