Uzoma Dozie: Digital Leadership Key to Leveraging Technology for Economic Diversification
Uzoma Dozie is the Founder and Chief Executive Officer of Sparkle, a digital microfinance bank that is licenced by the Central Bank of Nigeria (CBN) and the Nigerian Deposit Insurance Corporation (NDIC). Dozie, a former Chief Executive Officer of Diamond Bank, which was acquired by Access Bank in 2019, says Sparkle, using technology provides financial, lifestyle and business support services to Nigerians across the globe. It is a smartphone enabled platform that offers many traditional banking products – providing loans, enabling savings, shopping transactions, paying bills, buying airtime, and sending money to third parties. In this interview with Obinna Chima, the entrepreneur who believes that technology along with good governance has the power to push Africa forward, talks about Nigeria’s financial technology ecosystem as well as the his experience so far with his start-up. Excerpts:
Few months back, THISDAY ran a series of stories indicating that tech is now the new oil. What is your view about that, is tech really the new oil for Nigeria?
Technology has always been around. Let’s go back to all the industrial revolutions, they were all technology-driven. It started from horse-power, then we went to steam engine which brought about the first industrial revolution; then we had electricity and then computing. All those were advancement in technology that resulted to increased productivity and enabled countries and businesses to thrive, especially in places like the United States and Europe. In fact, it was steam power that enabled the then Great Britain to conquer half of the world. So, technology has always been there and it simply brings about a change or revolution in the way people do things. Now, what we are talking about is the fourth industrial revolution and leveraging on those things like cloud-computing, artificial intelligence, big data and a lot more. 5G is coming in which would allow people to do many things such as 3D printing and wide range of other things. Now, it is not just having technology, everything revolves around how you use technology to achieve the things you want to achieve such as to raise productivity.
For example, how you use technology to increase productivity in agriculture; how you use it to educate your population in a cost-effective manner; how you use it to improve security and safety. So, these are the things that matter. There is financial technology (fintechs), we have agritech, and different industries leveraging on technology to drive growth and productivity. When I was in Diamond Bank, we leveraged on technology to become completely paperless to the extent that I believe we were the only organisation in Nigeria that internally we weren’t signing any paper document. Everything in the bank then was online. So, if I couldn’t sign anything online, then it is not something we can do. So, we leveraged on technology then to actually achieve that. So, if we don’t leverage on technology we are going to be left behind as a nation. So, if you are in the food business, how are you going to leverage on technology to lower cost? If you are in education, what value can you add to the system by adopting technology? If you are a government, how are you going to educate your people? Are you going to be buying books or are you going to be thinking of ipads and mobile learning and changing the curriculum in a very cost-effective way, so that we can reduce the cost of education? So, technology is not the new oil, it is a necessity.
Our focus as a country and as businesses should be how to leverage technology to reduce my cost of doing business and increase productivity, and survive. So, there is no business today that can thrive without the use of mobile phones or electronic payments, which are technology. How will such a business survive? How did people survive during the lockdown last year? Technology. Look at this interview we are having presently, it is virtual, but if it were before, it would have been physical. But now, we can speak for hours with less cost, because you would have driven to wherever I am. Then, people didn’t accept it, but now is generally accepted. So, that is the fallout of the lockdown. So, using technology is actually a necessity. Today, people who are resistance to change are going to be like outsiders and they are going to be excluded from the numerous benefits of technology. So, technology is a necessity.
So, as nation, how can government levels leverage technology to diversify its foreign exchange earnings?
It requires collaboration between the public and private sector. The first thing is realising that infrastructure is key. And the infrastructure required involves making sure there is internet availability across Nigeria. In India, they have succeeded in doing that, which is why in that country you don’t have things like Unstructured Supplementary Service Data (USSD), it is all internet. Secondly, we must now consider smart phones and mobile devices as part of the infrastructure. Even the government should design a policy to make sure there is smart phone in the hand of every citizen. Once you can do that, then they have access to resources and services in a cost-effective manner. The third one is legislation and regulation.
We must look at those laws and legislations that we have and change them to facilitate adoption of digital technology. For example, the Central Bank of Nigeria (CBN) is doing a laudable job with the introduction of e-Naira. But, without people having smart phones in the village, how would they be able to access or use it? So, infrastructure is key and technology devices should be classified as part of that infrastructure, legislation and regulation are also required, but more importantly, digital leadership. It is not about talking about it, but it is about using it. One of the reasons why Diamond Bank and other places I had worked in the last 10 years went paperless was because I am paperless. If you give me any paper document to sign, I am not going to sign. So, that digital leadership is very key to leverage on technology and without these factors I listed, we would still be in the dark ages. There are many countries you can look at where there is a direct relationship between digital infrastructure and productivity.
We have seen a lot of fintechs owned by Nigerians attract huge amounts of Venture Capital financing. What is the driving force behind that?
Nigeria is the land of opportunities. Where there are lots of problem, there are lots of opportunities. We have 200 million people here; we have intelligent and highly educated people here, compared with other parts of Africa; and we have a conducive climate here and we don’t have earthquake and other natural disasters. Above all, we have a very young population – one of the youngest population in the world where 75 per cent of the people are under the age of 22. So, investors look at all these before investing in Nigerian fintechs, which is what is attracting all these monies. But what is unfortunate is that it is the outsiders that are actually seeing these opportunities in Nigeria and not the local leaders. That is why we keep talking about leadership. Nigerian fintechs as well, when they talk to Nigerian investors, they are not as structured as they would be if they are talking to a venture capital. As a Nigeria, if I don’t see that structure and organisation, why will I invest in you?
You ran a traditional bank for years and today you are running a start-up, what has been the experience moving from leading a commercial bank to leading a fintech?
It has been an interesting journey. An interesting journey because my last four years in Diamond Bank which I was the Managing Director, we did a lot of work going into the retail space. For us to go into the retail space, we had to partner with fintechs. For Diamond Y’ello, which was a collaboration with the fintechs, we worked with the fintechs; what we did with BETA Banking, was also a collaboration with fintechs. So, I was very conversant about what financial technology can do in terms of driving retail and driving scale in a cost-effective manner. I am also very aware of the limitations of traditional and physical banking. For example, financial inclusion has to be digital for you to get the last mile. Traditional banks can only take you far, but fintechs can take you to the last mile. But fintechs do not have the balance sheet, they don’t have the customer base, so it has to be a collaboration. Now, in coming to Sparkle, we started on the ground floor. The difference is that as the Managing Director of Diamond Bank, it was like driving high-end Mercedes that has great shock absorbers. So, if you are driving on bad roads, you won’t feel the bumps, but you will just be cruising.
But when you are operating a startup, it is like driving a car without shock absorbers. Even if it is on a smooth road, you will feel every single bump on the road. So, we are learning every day. I am learning new stuffs that I would never have learnt if others were running it. So, we are starting from the ground floor and we are now beginning to understand what people want. Today, I am talking to people who are half my age, so I have to come down to their level; you have to have that entrepreneurial mindset. Although in my family, we have always been entrepreneurs, and I am bringing that to bear with Sparkle. For me, in terms of technology, I have always been good at using it, but now you must have a good understanding of how it comes together, risk management and even data. I can tell you some stories about data that would shock you and I would never have known that before. So, it’s been an exciting journey and it is one that helped me to better understand what we need to do in the financial sector to help the economy grow. I don’t know how many chief executive officers that had worked in a commercial bank and has started a start-up that is really thriving.
In the course of this interview, you have made reference to Diamond Bank on more than two occasions, do you have any regret about what happened to that financial institution?
I don’t have any regret at all. It been over two years now and so I can reflect and look back at what happened, you look at all the stakeholders , you look at what has happened to the new entity. Access Bank just published its first half 2021 results and you can see the numbers. What you will normally find is that bad mergers bring companies down, but that merger actually elevated Access Bank. It also elevated the staff and when you look at it from the shareholders’ perspective, they are very happy because the financial institution has moved from a tier-2 to a tier-1 bank. And the regulator must also be very happy as well because I am sure that it was one of the successful mergers. Access Bank before wasn’t considered a retail powerhouse before, but it is certainly one today. For me, I have moved on to play my role in the financial sector in a much different way, but in an exciting way. So, I have no regret and like I said, it has helped to develop my entrepreneurial skills. Sparkle is not up to two years, but we are already getting attention. So, I have no regret at all.
Can you speak about the regulatory framework for fintechs in Nigeria what do you think the regulators are not doing right?
What I would like to see is the regulation of activities in the sub-sector. So, Sparkle is a microfinance bank that leverages on technology to do things. Of course, there are limitations in the things we can do and so we can’t do things such as foreign exchange. Then we have merchant banks and the commercial banks. So, because the world is evolving, the limitations should be removed. With digital, anybody can open an account anywhere in Nigeria. That is, for those that want to do foreign exchange transaction, you stipulate the capital requirement, if you want to open branches, you stipulate the capital requirement. Our capital requirement is N200 million, but we spend so much more on that, even the technology we deploy are far above that N200 million. Also, if you want to use technology, then you must invest in cyber-security and all that. For me, it is the regulator coming out to state the risks of a microfinance bank doing foreign exchange. That is because microfinance banks are doing much more than people know. For the Central Bank of Nigeria, we criticise them a lot, but when you compare them with other regulators around the world, they are doing a good job.
We have seen the Know-Your-Customer (KYC) initiative, we are now seeing the e-Naira initiative as well. So, they are doing well in terms of regulation, but what they can do better is to communicate much better and I guess there is also need for a lot of education because we on the private sector side need to be more informed about the processes and the concerns of the central bank. On the other hand, the central bank needs to understand what we are trying to do, where the risks are so that they can better regulate. But at the end, it boils down to making sure that the right people are in the market. Part of the central bank’s concern is that people are using their licences to do crazy things which if left unchecked might lead to financial instability and distrust in the system. Once there is distrust in the market it has far-reaching implications. Let’s cryptocurrency as an example, it is only a few Nigerians that are actually benefiting from that because the infrastructure requires that you have a smartphone, data and that you can actually download an app. How many Nigerians can do that today? It is only a handful. So, when people say by banning crytocurrency transactions the central bank is taking people back to the dark ages, of course not. So, there is need for more collaboration and it will be nice if the central bank can be giving us more information because when you give little information about a situation, people would naturally fill the gap with whatever they feel like.
Now how has the journey been for Sparkle and what do you consider to be your firm’s biggest story since it was launched?
Sparkle is a microfinance bank that leverages on technology to reach our customers. We have two set of customers: Individuals and small businesses. For us, we have quite a few success stories. The first one was that we were able to forge strategic partnership with global companies such as Visa, Microsoft, to build solutions. That came from my working with these companies in my traditional banking years. The second one is that we built our banking applications from the scratch, we didn’t buy any banking application. We only look at the expectations of Nigerians and built app around that. So, if you open Sparkle app today, the look and feel is completely different and it is like bringing out your wallet to either give someone money or to receive money.
It is about really leveraging on data. And there are so many firsts that we have for consumers and where we are really excited is on the small business segment and that is because of my background from traditional banking. So, on the business side we are also excited because firstly, you can open a business account without actually going to the bank, only by using your Taxpayer Identification Number. No bank does that presently. Secondly, what we have also done to the business bank account is that we have added business support services onto that application. When you open a business bank account, you will see your staff icon that allows you to do your staff payroll, you can upload your inventory and you can also generate invoices for your customers. What that means is that you are carrying your business banking on your mobile. But it is much-more than that. All the information actually required to run a business are on your phone.
Today, with the lockdown, most businesses are online and they are being started in the living room. Secondly, we are also collaborating with different digital organisations to help customers do whatever they want to do. Today, you can sit down in your house and register your business through the Sparkle ecosystem. Another thing is transparency, if you go to the Sparkle website, you will find a dashboard there that gives you our operational efficiency every day. For instance, if the NIBSS Instant Payment (NIP) is down, you will see it on the dashboard. We are the first financial institution to always inform our customers when network is down. There are so many things that we are going to do differently. In a couple of months we are going to start lending and I assure you that our lending is going to be completely different from what other financial institutions are doing. The journey is just beginning and we are really excited. What we say at Sparkle is that after this pandemic, the world needs to Sparkle.
So what is your expansion plan and how do you intend to make Sparkle acceptable to more Nigerians?
We are creating awareness and in the next couple of months we are going to go on a marketing drive. We haven’t made enough noise because we wanted to be sure that the system was capable of scaling and we are very comfortable that we can scale, that we have enough products and services that can excite people when they use the platform. Believe me, for us we do not have any expansion plan outside Nigeria. If you look at the Nigerians abroad and even the remittances, there is no country in Africa that can match that. If you are a Nigeria and you are in any part of the work, you can start your business and open a Sparkle account for ease of transactions as long as you have a Bank Verification Number. So, our platforms are available globally and meet global requirement so that Nigerians can join the Sparkle ecosystem.