CBN Ex-Chief, ANNAN Advocate Policy Coordination

For the umpteenth time, financial experts have called for policy harmonisation between the two sides of the country’s decision makers, in order to reach a sustainable point and avert looming financial crisis.

A former Deputy Governor of the Central Bank of Nigeria (CBN), Obadiah Mailafia, who led the renewed call for proper monetary and fiscal policies’ coordination, said it had become exigent.

Mailafia, in his paper titled: “Economic and Financial Instability’’, presented at the 23rd yearly conference of Certified National Accountants organised by the Association of National Accountants of Nigeria (ANAN), noted that structural reforms are vital as well as strong ethical codes, to avert the imminent crisis.

He suggested that international cooperation should be actively pursued and noted that “prevention is better than cure. As a lesson for Nigeria, financial crisis derive from various complex sources and uncertainty is a real challenge.

“Financial crisis can lead, not only to economic collapse, but also political upheaval. All nations are vulnerable. There is need to strengthen micro and macro prudential regulations.”

Mailafia listed currency crisis, sudden stops, foreign and domestic debts crisis and banking crisis among the current looming challenges.

He noted that elements of financial crisis comprised money demand outstripping supply; when banks ceased to advance credits; demand for early loan repayment; liquidation of financial assets and increase in collateral requirements and frozen financial markets as elements of financial crisis.

However, from the regulators to industrialists in the manufacturing sector, came the calls for more financial support and a conducive operational environment for Micro, Small and Medium Enterprises (MSMEs).

While calling for a review of SMEDAN Act 2003, with respect to how MSMEs should be funded, the Director-General of Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Dr. Dikko Radda said that the MSMEs were being encouraged to play the role of interventionists in order to shore up the economy.

He lamented that 37 million micro enterprises face major predicaments, as lack of access to funds to produce quality products for global competition still remain unsolved.

But in a move to absolve the Federal Government from blame, he said a lot of work and encouragement had been given to MSMEs by reducing their costs of registration from N10,000 to N5,000, as well as the establishment of the National Council on MSMEs.

A discussant and Director-General of Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadiri, said that there is need to diversify the nation’s economy, build the sources of income and foreign exchange.

“MSMEs are regarded as the engine and supporter of the manufacturing sector. The sector represents about 90 per cent of the manufacturing and industrial sector and employ almost 70 million workers,” but added that the Federal Government has a lot to do to enhance the relevance of the sector in the nation’s economy.

The National President of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Iyalode Alaba Lawson, said that MSMEs are the energies of every economy all over the world, reiterating that MSMEs engaged about 84 per cent of the total workforce of the nation.

“MSMEs must be given adequate attention to help the economy to grow. MSMEs contributed about 48.47 per cent to the GDP but only 7.27 per cent go for exports,” she added.

The Executive Secretary, Association of Small and Medium Enterprises (NASME), Eke Ubiji, said that the issue of quality products was key in producing goods that are of international standards, so that Nigerian products will not be rejected outside, adding that MSMEs still stand the chance of creating more employment for Nigerians.

Dozie: Banks’ Business Model No Longer Sustainable

The Chief Executive Officer, Diamond Bank Plc, Mr. Uzoma Dozie, in this interview, says banks are likely to be out-innovated and lose their market share if they fail to partner with emerging businesses to deliver superior services to customers.  He stresses the importance of partnership between telcos, fintechs and banks in order to continue to deepen banking penetration. Obinna Chima presents excerpts:

The Monetary Policy Committee at its last meeting raised some concern about the economy. What is your take on that and what do you think the government should be doing to avert another slide into recession?

This is talking to all stakeholders in every sector of the economy: private sector, public sector, regulators even foreign investors as well. Of course, Nigeria is no longer isolated from activities in the global economy. Of course, with the increase in interest rate in the United States, it means there is going to be pressure to retain foreign investors in Nigeria, which we depend on. In terms of what we must do, firstly is that we must ensure there is stability – financial stability and stability in our oil production. But then, there is another thing – the rule of law, which is very key. We must ensure there is transparency and reduction in corruption. And that’s one of the reasons why Diamond Bank is really driven on digital. Digital means pure transparency and means audit trail. Imagine if Nigeria has invested in technology, look at Nigeria Interbank Settlement System payment platform, look at the Bank Verification Number, you can even look at the fact that people are using their mobile phones to drive their businesses and so on. You can see the potential. So those are the things we need to do. So, those are fundamentals. If there is transparency, trust, reduction in corruption, despite concerns of elections, people will still bring money in. Of course, people are still going to bring in money during election. So, it is about ensuring that there is stable environment for people to continue to do their business and money will keep coming in.

KPMG’s recent 2018 customer survey rated Diamond Bank as one of the top five SME Customer Banks in Nigeria. Can you speak more on the bank’s focus on SMEs and what are its long-term plans for SMEs in the country?

Yes, you are correct. That space is our major focus area for us in the bank, and we have deployed a lot of resources towards growing that SMEs space. We call it emerging business in Diamond Bank. And that’s because if you look at the economy, 70 per cent of impact in the economy is coming from small and medium scale enterprises (SMEs). So, we deploy a lot services. Now, we are on a growth trajectory. What do they require? Access to finance, access to market, capacity building, networking. And so, we have deliberately tried to ensure we meet those needs. And again, another challenge in that sector is lending which is why our collaboration with Women’s World Banking is what we are using now to make sure we meet the needs of companies and individuals in that sector. So, we are now using the cashflow lending type of proposition to attack that sector. What does this do for us? We are still having collateral, but they are more flexible. We have three focus areas we lend to – agriculture, education and health. So, if I come to your hospital and you don’t have collateral, you have equipment that I can use as collateral. If you are school, there are computers in the school and other things. Normally, the traditional kind of lending you will not use such things because those things you may feel you may not be able to realise. But what the cashflow does for you is we look at the pattern of your business and how your cash actually flows. So, we are deploying a lot of that strategy to make sure we give them financing. Then in terms of capacity building, because what you find out from SMEs is that they need knowledge on how to run their businesses. We have an alliance with Lagos Business School through their Enterprise Development Centre. And over the years, we have continued to train entrepreneurs, supporting them with education on how to run their businesses, giving them skills that we belief they require to run their businesses. Now, beyond that, what we used to do was also to go round and educate our SMEs. That’s part of our non-financial services. We educate them on ow to run their business. We have an SME zone in Diamond Bank where our customers can go and educate themselves on different things – human resources, financial management and all of that. We believe once we can spread the SMEs training all over the country, it would really give us the edge that we require to grow that sector of the economy.

You talked about lending to that critical sector of the economy, but most SMEs have complained about accessing loans from banks as well as the high interest rate. How is Diamond Bank mitigating pains for the SMEs?

They complain about collecting money from banks is because of security. Indeed, you have to be sure that whoever you giving money to would pay you back the money. Of course, if they don’t pay you back, your final way out is the security and many of them don’t have. This is why I explained what we are doing with Women World Banking to ease that challenge. So, we are lending based on your cashflow. The only challenge with that is that because we need to see the cash flows, it’s not available to new businesses. So, because I don’t know your pattern of payment. I don’t know how your customers pay you and how long it takes you to convert whatever products or services into cash. But if you are an SME and you are in a business, all I need is to take your cash register, look at your pattern of payment and lend you based on how your money comes to you. That challenge is being addressed by our cash flow lending.

Can speak about your half year 2018 financial results that was released few weeks ago and what expansion plans the bank has for the future?

We have started transformation. What it means is that we are diversifying our portfolios. If you look at our portfolio today, you will find out that our assets are actually skewed towards oil and gas. With the slide in oil prices few years ago, it meant we had to reclassify and restructure some loans out there. One of things we’ve done even before I got here, was that we have started lending into retail space and focus more on corporate clients that had a value chain and  are actually into retail business, like telecoms, manufacturing, like the Dangotes of this world. What that meant was that you will see that our asset portfolio has been dropping because we are not lending billions into that space anymore. We are now focusing on driving retail business, the SMEs. Up to June this year, we have done more lending to small businesses than we have done in the last three years together. That is the focus of the bank. If lending is small and the duration is much shorter, it means that every month people are paying back. Until we build that critical part which is what we are trying to build. How you judge us is the transaction income coming out of that and the people we are beginning to lend to and even the platform we are building so that we can have access to more people. So, we are trying to build a more sustainable business that is bullet proof to shocks in the macro-economy. If we have another shock to the country again, if the economy is shocked by one per cent, ours should be 0.2 per cent because we have diversified our business base. That is what we are trying to do. And we know that it’s workable because what you see is the final number which is oil and gas, non-performing loans. What you don’t see is the engine. In terms of liquidity, we have ovef N800 billion of retail deposits that is driving the lending portfolio. We want to diversify that so that we can actually access more people. We’ve also come out of West Africa. We don’t think there is enough opportunity there, we were just deploying capital that were not giving returns like we have in Nigeria. We have also sold our United Kingdom office. Because of the drop in foreign currency, trade businesses have dropped, so we’ve diversify from that. Those incomes we’ve made from trade business; we’ve now replaced it with retail type business. We can see that that is working. Our lending to retail space is not only growing, but NPLs from that segments are actually much lower because we have learnt from previous lending as well. And that is the whole idea. These have enabled us to manage our capital and we are pursuing a national licence, which will mean oour capital adequacy ratio will be much lower and we can now focus on improved profitability and leveraging on technology that we have invested in.

You talked about transformation and my worry is you seem to be signing a lot partnership with foreign organisations. You made mention of MTN. How would shareholders benefit from majority of these?

If you look at what is going on in the world today, you will find out that banks are under attack. This happens every day. People are beginning to either do those things themselves or people are coming into your space. If it is transferring dollars to Nigeria or lending, many people are doing it. The point is, what are you going to do as a bank? There is a capability that banks have that other people don’t have. For instance, Flour Mills said the other day that the want to issue their own commercial paper to raise N70 billion to refinance their loans. It means that your current business model may no longer be sustainable in the nearest future.  We have this philosophy that says beyond banking, we have to do more for our customers. Now am I going to lend to all kind of persons or how can we partner to deliver the outcomes. That is because people don’t care about banking but outcome. They want to go to the movies, they want to make phones calls, they want to buy a house. So, if you want to talk to someone, you need to buy airtime. So, we decided to partner the telcos. So, the future for any business is the platform and you must do things to drive people to your platform. So for collaboration for a people business, you look at platform capable of delivering services. You look at the quality of your collaboration, number of people on the platform and the quality of partnership. So, we are in that business of partnering with people to ensure our platform is robust and we are able to do more for our customers. We belief that Nigeria has a huge population of men and women. We partner with the Women World Banking with a vision to get sizeable number of women globally financially included, we partner together Nigeria is a big market. To reach more people, we need technology to do that. There are many financial and non-financial partnerships that we are beginning to establish because we know that the future businesses is sharing and collaboration. But to do that will have a platform that technology driven and robust. So, no man is an island. If you are in business that is connected to the world, not connected for others to benefit maximally from, you cannot be a one stop shop for people. I want people to know that either through my mobile phone or myself they have a gateway, they don’t have to go to too many places. That is why we are on this journey. It is just like small businesses, nobody is going to give you money if you have not gotten yourself in a position to attract advisory services and how to position yourself in the market. People won’t give you money because they would say you won’t know how to deal with it because there is no market. For us, if we don’t build a platform people can connect wherever they are in the world.  That is what we are building because that is what our customers demand. We are in mobile-driven economy.

You talked about mobile economy. If you look at a country like Kenya, the telcos are the ones driving mobile money. In Nigeria, you discover that it is mostly the banks that do that. What is Diamond Bank doing in respect of financial inclusion? Do you think the banks or telcos should drive financial inclusion in the country or partnership would be the best one?

It is definitely partnership and not about capability. You should also look at how telcos became the dominant financial player in the case of Kenya you sighted in terms of transfer payment. At a time, the banking industry was backward then in Kenya, and so the only people that could do anything then were the telcos. People also forget that government was also a major shareholder in Safaricom. So, they had the regulation that allowed it to happen. But in Nigeria, things are completely different. Our payment platform is more advanced than even Kenya. Ours has been real time online a long time ago. It meant that there was no place for mobile money. Mobile money is a glorified transfer system. S, financial inclusion won’t work with bank alone because we are not going to go to many places. Telcos can never provide the sophistication. Banking is about trust, managing risk, convenience. So, the only way to be competitive is partnership. So, beyond the telcos, you need other people who have developed other business solutions in the world to be on the platform.

Telcos cannot provide full digital services without banks. It is that partnership that will allow you to achieve what you have set out to achieve in that sector. So, the fintechs are very important. If you look at Diamond Bank, all our foray into financial inclusion has been through collaboration with fintechs. Telcos cannot provide full digital financial services without a bank. On our Beta proposition, for example, what we found is that it is not about opening bank accounts, but about giving people incentives to save. As a bank, we are not going to open branches everywhere, MTN has branches everywhere. So, today, on our Diamond Y’ello, we have almost three million customers which we would not have ever had. We would have waited for when we open those branches to get to those places. But if you have an MTN line, you can open an account on your phone.  What has also helped that Beta customers is the fact that MTN has agents as well that can go to the customers and pay them when they need. So, what you need to drive financial inclusion is technology. The telcos have it, while the banks have the expertise. So, what is needed is that collaboration.

But if we are all moving into technology, we also need to look at the vulnerabilities, which is the question of cyber-attacks. What are the defence mechanism to ensure that customers are protected?

You put your defences round where your transactions are. Twenty years ago, if you go to a branch, you will see armoured vehicles and lots of policemen, in order to protect the money. Today, a lot of those things are not necessary because people are doing their transactions electronically. So, cyber-security is very important to us at Diamond Bank. Not only do we have in-house security, we also outsource security as well because security involves experts. We have experts that keep checking our systems against vulnerabilities. Technology also gives security. For example, BVN is more secured than my signature. Anybody can forge my signature, but nobody can forge my BVN. So, we are making sure that we are building that trust on all our channels. We have even gone one step further by using robotics to ensure that the back office is moving at the same pace. So, working with Deloitte, we have automated one of the most complicated automated systems and our customers are enjoying successful transactions.

Credit: ThisDay

Fidelity Bank Launches New Savings Campaign, Unveils a Novel Account Opening Initiative.

Lagos Monday October 8, 2018: Nigerian lender, Fidelity Bank Plc on
Monday unveiled a novel account opening initiative, just as it launched
a new savings promotion campaign aimed at rewarding new and existing
customers of the bank. The new account opening initiative, the first of
its kind in the Nigerian banking industry, enables members of the
public to open online savings accounts through a Quick Response (QR)
code which can be scanned from any of the promotional materials such as
roll up banners, fliers, posters and newspaper adverts.

This is expected to significantly ease the process of enrollment of new
accounts and deepen the penetration of the new savings promo tagged;
Get Alert in Millions Season 3 explained Executive Director, Shared
Services and Products, Fidelity Bank, Mrs. Chijioke Ugochukwu, during
the launch ceremony at the bank’s corporate Head Office in Lagos
Monday. “This new savings promo is the 8th in 11 years. As with the
previous ones, we are motivated to continue to empower our customers by
rewarding them with cash and gift items, whilst at the same time
promoting the savings culture, in line with the financial inclusion
drive of the Central Bank of Nigeria (CBN)” said Mrs. Ugochukwu, who
doubles as the Chairperson of the Promo Committee.

Speaking shortly before formally flagging off the promo, Fidelity Bank
CEO, Mr. Nnamdi Okonkwo thanked customers, stating that the bank is
motivated to continue to incentivize them for their patronage. He said
it was imperative to acknowledge the contributions of customers to the
growing fortunes of the bank. “Last week, we joined other institutions
across the world to observe the 2018 Customer Service Week and I want
to use this opportunity to again thank all our customers. Our
impressive half year results attest to your support and with your
continued patronage, we are on course to delivering on our financial
targets for the year” he said.

As a customer-centric bank, Mr. Okonkwo said Fidelity Bank would
continue to leverage technology, in line with its digital retail
strategy, to better serve customers, through innovative products,
services and solutions. He reeled our some of the products to include
the newly upgraded Fidelity Online Banking, *770# Instant Banking and
Flashkey. “Our online banking solution enables you to transfer foreign
exchange seamlessly just as we are the first bank to introduce a chat
banking solution that is known as Flashkey. This solution enables you
to effect monetary transfers whilst on any social media platform,
without recourse to the online banking platform installed on your
mobile device” he stated.

GAIM Season 3, as the new savings promo is called, is expected to run
for 9 months till June 2019. The bank, within this period will give out
over N120 million in cash and consolation prizes, including weekly
airtime rewards.

To participate, Head, Retail Banking, Fidelity Bank, Mr. Richard
Madiebo said “customers can open a savings account and grow it to N20,
000 or top up an existing account with N10, 000 or more to qualify for
the monthly draws to win N1million or N2 million. To qualify for the
star prize of N3m, he explained that customers are expected to grow
their account balances by N50, 000 monthly whilst accounts that
maintain a minimum of N200,000 qualify for the grand prize of a
whooping N10 million. “As a bank with branches across the country, the
draws ceremonies will be done to ensure that everybody, irrespective of
where their accounts are domiciled, stand equal chances of winning” he
explained. There will be a total of six draws to produce 77 cash and
108 consolation prize winners over the duration of the exercise.

The launch ceremony had in attendance the press, regulatory bodies and
some winners from previous savings promotion campaigns. Alhaji
GaffarAbdullateef; a previous winner thanked Fidelity Bank for the N3m
he won in the last promo, saying that it “significantly gave boost to
his business”. Assistant Director, National Lotteries Regulatory
Commission, Joy Okuna, praised Fidelity Bank for the transparency
displayed in the last promos. “As regulators, our duty is to ensure
that promos are conducted transparently and I must attest to the high
degree of transparency that we see with all Fidelity Bank savings
campaigns and we expect no less from this” she stated.

Diamond Bank, Facebook Train 20,000 SMEs

Diamond Bank is collaborating with Facebook to train over 20,000 Small and Medium Enterprises (SMEs) in Nigeria, as a way of boosting their businesses through online visibility. The digital training session, started at the weekend in Calabar, as the start-off point with over 120 SME customers of Diamond Bank. The session was anchored by SheLeads Africa, a representative of Facebook,

In his statement, Mr. Nkem Okoro, Head, Regional Businesses South of Diamond Bank disclosed this after the training: “We are leveraging technology with SME businesses. The programme is about collaboration between Facebook and Diamond Bank. The idea behind the exercise is to give our SME customers the platform to merge their business with their Facebook accounts.”

According to Mr Okoro, with the over two billion people on Facebook, they would be able to showcase their products, as well as, get links that will take their businesses far and wide.

Head, Emerging Businesses (SME Banking), Mrs. Ayodele  Olojede, said: “Diamond Bank is committed to supporting SMEs and we recognise that access to market is a limiting factor in doing business. We also recognise the contributing factor of women in the growth of GDP. It is, therefore, important to continue to support them to scale up and improve their productivity.

“What we are doing today is to create online visibility and teach them how to monetise that visibility. Just by being on Facebook, you can increase your sales by over 33 per cent and a lot of women are not aware of this. Facebook is already a market for 26 million Nigerians and yet business owners are not aware. So, if you are not online, you are missing the opportunity to be able to scale up your businesses. That is the reason for this training.”

Unity Bank Sensitises On SMEs Funding Initiative

Unity Bank Plc, has embarked on a one-day public enlightenment workshop across three states to create the necessary awareness on how SMEs can access funds, loans and grants available in the Funding Nigeria SMEs’ initiative. The Bankers’ Committee of the Central Bank of Nigeria introduced a new initiative to enable Small and Medium-scale Enterprises to access loans, funds and grants to grow their businesses.

According to a statement, the Funding Nigeria Small and Medium-scale Enterprises initiative is in line with the Federal Government’s commitment to growing SMEs.

The General Manager, Products and Channels Directorate, Bonaventure Okhaimo, said: “The initiative, which is part of the government’s economic diversification effort towards increased SMEs’ easy access to intervention funds, aims at growing small and medium-scale businesses for effective contribution to the Nigerian economy.”

Source: Daily Trust