Ibukun Awosika: Changing the Fortunes of FirstBank

THE BANKING SERIES III

 Chairman of the Board of Directors of FirstBank Holdings of  Nigeria Limited, Mrs. Ibukun Awosika, who is also a renowned entrepreneur in this interview with Ayo Arowolo, Obinna Chima, Nume Ekeghe and Ugochukwu Aliogo, spoke about the strategic role the bank has been playing in Nigeria’s economic development as well as in some African countries. The bank’s chairman also spoke about how in line with their strategic plan, the board and management of the bank intend to help the financial institution to regain its industry leadership position.

As the first female Chairman of First First Bank, how has it been so far  on the seat?

 It has been sixteen months since we started because we are a whole new team. One thing I would say is that it has nothing to do with gender. It has been tasking in many ways if you understand the environment that we are in right now. This team took over in what was a crisis environment in terms of policy changes and in terms of where the economy was and all the headwinds hitting all segments of industries especially the financial services industries. So it has been a lot of strategic thinking, strategic planning and re-tooling how we do the business. The other part of it is that we have been a team and we have worked as a team. That essentially means we had to reorganise, re-think and rebuild in many ways and we have also as a team decided to be transparent, open and dedicated in moving the bank forward.

Now when you think about the fact that we have got a bank that is about 123 years old, that is a lot of history. And it is a lot of legacy handed over to you over different generations. The bank has been moved in different ways and largely it has been moved forward which is why we were handed over an institution that came with so much legacy, which is its strength.  When you are outside of First Bank and when you are inside, are two different things. If you are sitting outside, people would tend to think it is an old bank and all of that. I can tell you one thing that if you are looking for an institution, First Bank is what is called an institution. And the institutional strength and structure of First Bank gives you the foundation to move it forward no matter where it is at a point in time. You would find that within all of its various segments, there is strength that is there and you need to use the talent, season and the time to bring all these together in order to get the best out of it.

How has it been in the past sixteen months?

It has been a challenging, tasking, but exciting period in many ways. There are moments that you would be wowed, but then you remember that there are 1.3 million shareholders. Some days ago, we did an estimate of how many people are dependent on this brand. We have a direct staff base of about 21,000 then we have got our banks in six other African countries, a bank in UK, we have got operation in Paris and we also have a representative office in Beijing. We just shut down our South Africa and Abu Dhabi operations because they were no longer relevant to our goals.

So when you think in terms of your touch points and you think of your direct employees, for every direct employee you think of how many are dependent on that employee. Also, you think of how many businesses live because of our business, then you realise that we are a strategic institution. To be honest, I don’t think it ever dawned on me the share strength and importance of this bank until my announcement as Chairman and I saw the share response and reaction of people. I was almost scared because for a lot of Nigerians the brand First Bank is personal. For many people, in their mind First Bank is still their national asset, yet it is a private institution owned by shareholders. But because of its key position in the economic terrain of Nigeria, people attach a lot of importance to what happens to First Bank and that is what keeps us awake.

The thought of how many people’s life investments, saving, pensions and retirement monies are invested in our bank and also how many look to what we do either as a sign of pride or pain, puts us totally on our heels. And it is our driving force to daily reset and re-build to ensure that governance works very well. Does that mean that we do not have challenges? Obviously when you have an institution as old as this, you would have cycles. There would be moments where some things would not work and you need to reset and you need to re-boot and re-plan which is why institutions have changes over and over.

So as a new team, our commitment is to reset for the greater good of our institution and to clean up our practices and our ways so that we can build strength and we have done that in different ways.  We have a lot of new members on our team on executive management and across the cadre. From the outside you can have the general perception that First Bank is an old people’s bank, whereas 75 per cent of our workforce are under 40 years. Our Managing Director is 48 years. He is actually 47 years, but I like to make him feel older (laughs) and I am probably the youngest Chairman they have ever had. I became chairman at 52. Our Deputy Managing Director is 53 years.  So essentially, our entire team is under 55 years old. And on our board, we have got what I consider a very beautiful diversity because our board consists of people from just about 40 to 70 years. So that gives you experience of thinking and options of mind-set that can only bring strength to a board with diverse skills. And part of what we have done is to strengthen our board by bringing some other people with skills in the area we felt we needed on board in order to increase our ability to deliver value.

We are in a season where if you don’t understand the fundamentals of business, you would be out of play. But when you are a bank as big as ours, you are bound to be involved in the largest spread of businesses in different areas that are crucial to national development. Sometimes, that plays for you but when there is trouble in the economy, it can also play against you. We are a great supporter in terms of our investments in energy, power sector. So when you have a situation where there is a headwind in the oil sector, it would affect us. Also, we are an institution that has strategically always been committed to nation-building in many ways and we are working through it in the best way we can with full dedication to our business, finding the right skills to support us through, making the necessary adjustment where necessary, re-thinking our processes and the ways we access our situation so that we can have the best in the environment that we are in.

The way to look at it is that if you look at our numbers, you would see how our business is doing. When you see all the bottom line, you would see that we have got a machine that works whether we are asleep or we are awake. All that is needed to bring out the best value out of it. That is what our team is committed to doing.

What time frame are you looking at for the cleaning up exercise; should we expect to see the dividend of the exercise?

The way we have looked at it is that we have our strategic plan and we expect that by the time we get into 2018/2019 at the latest, you would begin to see that we have totally cleaned up as we plan to. We are not acting out of plan. We have a definite plan which we are following and at the end of it, all our shareholders would be happy with us.

Are there any particular areas in the cleaning up exercise that you want to pay attention to?

When you look at the size of our operation and when you look at the history of our bank, unlike some of the smaller banks, we have so much brick and mortar. We have so many branches which then was the pattern and the way to go. This was also regulatory based because the central bank would require you to open branches in certain areas. Every time we try to close down a branch, you actually get protest. People would actually write to central bank, some would write to the National Assembly, and you would get people coming to you and those are the type of things that happen when you want to close a branch based on efficiency. However, what that does to a bank of our size is that the cost-to-income ratio is not maybe as efficient as some of the smaller banks. But one of the things we have done well as part of this plan we are following is that we have been able to aggressively reduce our cost-to-income ratio, which is currently about 51per cent.  We have the second best cost-to-income ratio in the entire market.

We would like you to explain the impact your bank is making on entrepreneurship, especially small and medium scale enterprises?

We are the biggest lender to the SMEs sector. The reason why our non-performing loans is slightly higher than everybody is that First Bank is the only bank that is embedded within the economy. Recently, the federal government decided to push the agriculture sector and the only bank that they decided to bring onboard was First Bank. The Minister for Agriculture, Mr. Audu Ogbe, selected our bank and we had a big agriculture exhibition recently. We also are working with them to see how we can make credit available. There was a survey that was carried by the Lagos Business School (LBS) on SMEs about loan support from banks. Sixty per cent of the SMEs said First Bank offers them more support than any other bank. During the end of the former President Goodluck Jonathan tenure, the international oil companies decided to divest from a number of assets and government decided to encourage local content especially Nigerian entrepreneurs to take part in oil and gas. We are also the biggest lenders to that sector. We have supported the likes of Sahara Energy, Seplat, and the key stakeholders in that sector.

Again, it is not only about profitability, it is about economic development and empowering the incoming generation. We are tied to Nigeria’s nation building. First Bank is personal to Nigerians and that is our driving force. It makes you understand that we have such responsibility to the nation and the citizens of the country. We cannot but be totally committed to the process that institutions work and in working we are able to create the most value for our country and shareholders. For the SMEs sector, we work with Lagos Business School (LBS) on sustainability and also work in every major region in the country. For the agricultural sector, we are working with the Ministry of Agriculture to look at how to support farmers. The federal government has identified some areas to focus on within the agriculture sector.  We are working very closely with the Bank of Industry (BOI) and After School Graduate Development Centre (AGDC) as a team. We have a project currently going on known as the Ignite Enterprise. Our target is one million new young entrepreneurs and what we are doing within the partnership is to give five percent interest on the loan to young entrepreneurs for prove of concept. Once the business is proved and it can grow, then they can apply for additional money from different buckets of money that is within the BOI circle.

We are supporting in many ways especially through training, empowering them with the type of skills that will be able to help them to move their businesses forward. We are also thinking of many different areas of empowerment because we realised that there is a knowledge gap when it comes to entrepreneurship.

If you followed in the last three years, we made serious investment with Lagos State, in television programme known as Ignite TV. I anchored the programme and we had about 52 episodes within two seasons which is on Youtube for all young entrepreneurs to watch in order to take the learning to help them build necessary skills for business. Therefore, in terms of what we are doing across different spaces, we are investing heavily in nation building because we are a bank that is extremely conscious of national development. We are aware of our responsibility, the key role that historically we have played in Nigeria and our duty as a strategically important institution in the development of Nigeria.

Would your experience in the past discourage you from lending to SMEs and other volatile sectors such as the oil industry?

Sixty per cent of SMEs now bank with us and that in itself is an opportunity. You ensure that you learn from the lessons of what you have done in the past. We will continue to support the SMEs, we cannot leave them.  We are working with our risk people to ensure that we build structures that would ensure that we continue to support SMEs. Part of what we are doing is that we are working to overhaul our entire credit process. We have gone to check the areas where we made mistakes; we also brought in KPMG who did a diagnostic of our credit process and made some series of recommendations. Those recommendations are what we learnt on our own to strengthen our credit process. But that is just on the process and policy. We are investing heavily in technology because today, between banking and technology there is a very thin line. We are investing heavily in enterprise risk management systems that enable us to have a lot of analytics and can tell us when things are going wrong.

Due to the large size of our bank and the retail focus, we realised that a lot of people across the country want to access credit, therefore we are setting up a new credit appraisal system; there is online and real time. The individual does not need to physically come to the head office, he moves from the individual to the next person who needs to approve, ultimately to people like us at the head office depending on the approval limits required. This gives us speed; it helps us to keep proper record of who did what on a particular credit. Therefore, we believe that by the time we are done with all the changes we are making we will have a much stronger credit environment.

How does your Africa expansion to these six countries fit into your strategy?

If you look at the trend of Nigerian businesses, you would realise that they have in many ways championed expansion into other Africa countries such as Dangote who is not just operating in Nigeria, but have footprints in other African countries. There are also other small businesses and SMEs Nigerian businesses who are exporting into West and East Africa. There are some young Nigerians with new generation businesses that are all moving in different directions. What we are trying to do is to follow the money and where the Nigerian companies are moving into. Also follow the emerging countries within Africa where we see that there are opportunities. We are in the first trimester of our Africa investment because you know when you invest in those countries, there is going to be a price for a period for the companies to settle, find their feet and before you begin to extract real value. Therefore, all what is going on right now, is that we have an executive assigned to all those businesses within the Africa region on the business side. We also have a team that is fully reporting to the team here in terms of operations.

We are setting up a lot of structures to make sure we achieve that efficiently because most of our key functions also have oversights within those regional banks. We are still in the trimester of our investment in those Africa regions. We are in countries such as Ghana, Democratic Republic of Congo, Senegal, Sierra-Leone, Gambia and Guinea. Also we have our United Kingdom branch, we have an office in Paris. We have our representative office in Beijing, China that looks for Chinese businesses that are trying to come into Nigeria and create a connectivity to drive our business. There is a programme we are building which is helping to build the next generation of entrepreneurs.

Being an entrepreneur of note what legacy do you want to leave as the Chairman of First Bank?

 A chairman cannot stand alone. He or she has to work with a board of management and achieve synergy together. Our goal is to leave an institution where all structures of governance are well entrenched in a way that you can rely on the system to work as it should, to build an institution where processes for our businesses are efficient, reliable and ultimately delivers the best value to all our stakeholders especially our customers. We want to build an institution that is smart, light on its feet, innovative and ultimately makes its age a value, not a liability but it is standing to compete real time with any institution of its like, size and in its environment anywhere. We will continue to be a place that is fair, just and creates the most value for its workforce and shareholders.

What is your forecast for the year 2017?

What we are seeing is that there is a general positive growth in the economy right from the last quarter of 2016 into the first quarter of this year. Remember that what pulled us as a country into recession was the dramatic fall in the price of crude oil worsened by the fact that our volume of production dropped drastically because of restiveness in the Niger-Delta. Two things have happened -prices have stabilised at $50-$52 per barrel. The price went as low $27 per barrel which is almost double. Production fell dramatic in fact at some we heard it fell below a million barrel. Over the last five months production has gone up almost somewhere between 1.7 and 2 million barrels, therefore more money into the economy which has empowered the Central Bank of Nigeria (CBN) to pump more dollar liquidity into the economy. What we are seeing is a general improvement in the state of the economy. The general belief is that the National Assembly is expected to pass the 2017 budget any time from now. That will enable government to inject more money into the economy and then we will witness a general positive outlook.

I think there is a subtle advantage and with what we have been through, the fact that the experience of last year into this year in many ways is good for us as a country because a lot of people had to readjust their lifestyle. They had to come to reality with their real disposable incomes rather than a false sense of value and a sense of worth that a lot of people tend to live with.

The other thing which is good for the productive sector of the economy is that the taste for a lot of foreign made goods has dropped. The devaluation of the naira created a reality check which made a lot of people to begin to look for alternative value within the Nigerian economy which then increased the production for Nigerian businesses. That also supports the made-in-Nigeria drive that the government is pushing and it is ultimately good for us as a country because we are creating businesses, helping local businesses to grow which is also good for the finance sector because with that trend, we can realise that we need to support the growth of local businesses, because they have better market opportunity. Honestly, all hands must be on deck to create a dynamic productive economy that will create jobs for our people because at the rate which technology is moving, jobs are being eliminated daily because of the efficiency that technology is bringing into the workplace.

No country can go to sleep, the reality is that we have to have a holistic productive agenda that leads to job creation for our people. You need to retrain people for new job opportunities that are coming. There are new careers that didn’t exist before which are emerging in this trend, there are new businesses. We have dynamic youthful population that are forthright in thinking, and smart, things that were not businesses before, they are turning them into businesses. Therefore, they need the unusual kind of support which means that banks have to think differently too, we cannot remain in traditional assessment of where we must invest or who we must support. We have to be able to see trends in certain areas.

For us as a bank, we are right thinking. Last year we had the Fintech conference where we brought together many technology companies. We are still going to have the conference again. We brought all the top players in the tech space and most of them are between 20s and 30s. At the conference, we told them we don’t understand the industry and how to support them, but that we needed to sit together and talk about how the bank can support them. We used that forum to share knowledge, so we can close the gap between us. For us, we are not just looking at technologies, but new emerging areas, within the economy that need help. We are focusing on looking at all of those areas and communicating them so that we can see what we are doing, and where we are coming from. Then we will be able to know how to close this gap so that we create a value for all of those segments for the development of our nation. It is not a time to be settled in your ways, rather it is a time to be innovative and adventurous.

It is a time to have a team that has the liberty of mind to engage and challenge us as leaders in the institution to think differently, come up with new ideas. If a team comes up with an area of interest because of their encounter, experiences and age, we have to listen to them. The future is bright and we have a lot to look forward to. Everything we are doing right now is to clean up and set the right foundation for the kind of future we want our bank to have. I believe that by the time we are done we would have done that and the generation we are handling over to will have a great institution to run. That is our commitment and goal.