ERGP to Lift Nigeria’s Economy, Says RMBN Boss

The Managing Director of Rand Merchant Bank (RMBN), Mr. Michael Larbie has expressed optimism that the implementation of the federal government’s Economic Recovery and Growth Plan (ERGP) will help stimulate economic activities in the country.

The ERGP, a medium-term plan for 2017 – 2020, was developed to restore economic growth while leveraging the ingenuity and resilience of the Nigerian people – the nation’s most priceless assets.
Larbie, who spoke in an interview, highlighted the contribution of his bank towards ensuring that the ERGP realises its objectives.

He stressed the need to drive sustained and inclusive growth in the economy.
“There is an urgent need to drive a structural economic transformation with an emphasis on improving both public and private sector efficiency,” he added.

The ERGP aims at increasing national productivity and achieving sustainable diversification of production, significantly grow the economy and achieve maximum welfare for the citizens beginning with food and energy security.
The ERGP focuses on three strategic objectives: restoring growth, investing in our people, and building a competitive economy.

Commenting on the contribution of his bank toward Nigeria’s economic growth, he said: “RMBN provided trade and working capital facility to Olam Nigeria (Flour Business) and Wacot Limited (Cotton Ginning). Also, RMBN assisted in the creation of a local Agric giant through advising BUA on the sale of it wheat milling, pasta and flour manufacturing assets which supports the ERGP aimed at reducing food imports and becoming a net exporter of major agricultural products.

“Also, in addition, RMBN supported Nigeria’s ERGP by providing Indorama Eleme Petrochemicals Limited with $50 million and N6 billion facilities to grow the fertilizer business to increase agriculture output, reduce reliance on fertiliser import, and become an exporter of agriculture products.

“We acted as a financial adviser to GB Foods in the acquisition of a local fast-moving consumer goods (FMCG) business which plans to backward integrate creating employment and reducing importation of tomato paste thereby conserving foreign exchange.

“RMBN also provided GZI with N17 billion loan as part of a syndicate to fund the first of its kind production of aluminium beverage cans thereby supporting the Economic Recovery and Growth Plan aimed at increasing the Research and Development, technology and innovation to generate the competitive edge needed to penetrate the global economy,” he added.

Furthermore, Larbie pointed out that his bank supported BUA with N5 billion for manufacturing and backward integration.
According to him, the BUA facility was for the funding of raw materials for the company’s cement factory and thereby assisting in increasing their production capacity in Nigeria.

“We also supported the TGI (Chi), the trade and working capital facility to the CHI group. This assisted the company in stocking up enough raw materials to produce their beverages and snacks business in Nigeria.

“In addition, our funding also assisted TGI in the Agricultural space where WACOT has been able to import fertilisers which is a major agric value chain input.
“RMB Nigeria provided AIG with N6 billion funding to support local steel production to build local technical, managerial skills and capacity encouraging development of value addition industries.

“AIG has been able to channel exports of over $40 million through RMBN and they have capacity to do more over a period of time,” he added.
In addition, he disclosed that his bank structured a term loan facility for Interswitch to deepen financial payments infrastructure with the aim of increasing the volume of transactions processed and encouraging rapid ICT penetration.
RMBN also facilitated N3.5 billion funding to Axxela to extend the gas supply network for industrial clients in line with the ERGP to expand domestic gas production, he said.

Moody’s: Technology Shaping Future of Banking

Digital innovation in financial services is placing a premium on efficiency and opening up competition that will continue to drive disruption across banking business segments, including payments, lending, capital markets and wealth management, Moody’s Investors Service stated in a new report.

According to the report obtained Monday, banks that consistently assert digital leadership, would thrive and prosper, while laggard banks that lack the vision or resources to develop competitive digital strategies would be disrupted.
It noted that aging legacy financial platforms had created opportunities for new nimble entrants to capture a portion of banks’ profits by offering more customer-focused, responsive and efficient channels.

Furthermore, Moody’s noted that bank of the future would cater to high and rapidly evolving customer expectations by harnessing key enabling technologies, leveraging increasingly mature and dependable digital distribution channels, and applying these tools across multiple businesses and product segments. “Customers will gravitate to providers that best meet their demands for convenience, personalisation and affordability, with privacy and data security a growing competitive differentiator.
“Amid the shifts in technology and consumer demand, competition will stiffen among banks, big technology companies and small fintechs.

“In the face of these threats, successful incumbent banks will be those that, either on their own or in collaboration with others, pursue aggressive digital transformation to become more efficient and responsive to evolving customer demands,” Moody’s analyst and co-author of the report, Fadi Abdel Massih said. Continuing, he added: “Disintermediation of the customer relationship would be a threat to this business model if it ends up reducing banks’ pricing power by transforming them into providers of a ‘back-office’ balance sheet for customer-facing apps/businesses.”

Also, the report noted that digitisation would offer efficiency enhancement opportunities for incumbent banks through the optimisation of branch networks, data collection, analysis and reporting process but not without high initial investment.
“To date, regulatory requirements have been a moat protecting incumbents. The traditional, more regulated banking model — reliant on cheap, sticky deposits — retains a significant advantage for incumbents over nonbank platforms. “However, recent regulatory initiatives signal increasing openness to fintech. “Regulatory sandboxes and open banking initiatives indicate a shift in authorities’ willingness to encourage innovation and competition,” Moody’s assistant vice president-analyst and co-author of the report, Megan Fox explained.

According to the report, competitors may opt to avoid regulatory barriers by relying on a bank partnership to satisfy regulation.
In this disruptive scenario, banks would remain subject to all regulatory requirements, while “white labelling” their products, and big tech partners will hold the key customer relationships and avoid regulatory barriers, it added.