<p><em><strong>Dr Adesola Kazeem Adeduntan, Chief Executive Officer of First Bank of Nigeria and the bank’s indomitable forward man in sales, in far away Edinburgh School of Business, schooled the international community and Africans on business ethics and success. He says “if you must do well, you must do good” as culled from African Banker Magazine </strong></em></p>



<p>I travel to meet Dr Adesola
Adeduntan in Edinburgh, where he has been invited to give a keynote address at
the Edinburgh School of Business about the role of financial institutions in
driving financial inclusion.Fittingly, as you land in Edinburgh, you are
greeted by billboards from different investment funds advertising their
credentials in responsible and sustainable investment and how environmental,
social and governance (ESG) considerations underpin their activities. ;</p>



<p>With economists and politicians questioning capitalism
and the Western liberal model, today the emphasis is very much on a
stakeholder-based approach, whereby growth and prosperity is more equally
attributed and takes into consideration the needs of the wider community.
Sustainable investment has become de rigueur among corporate jargon.</p>



<p>Dr Adesola Kazeem Adeduntan, CEO of First Bank of
Nigeria, is a veteran in the Nigerian banking and corporate world. His
overriding message, clearly expressed throughout his interview responses, and
also at the various talks he gave during the day (at the Business School and at
a law firm), is on the importance of doing good if you’re to do well –
financially – in Nigeria and indeed, Africa.</p>



<p><strong>A telling sign</strong></p>



<p>FirstBank is actually the
oldest bank in Africa. It was established in Lagos in 1894 as the Bank of
British West Africa. Last year it celebrated its 125th anniversary. It is also
the biggest bank in Nigeria in terms of assets and branch network.</p>



<p>For Adeduntan, a veterinary
doctor by training, it becomes clear, once we have settled down for our
discussion, that the institution’s longevity is a telling sign: it not only
proves the bank’s resilience, it also shows that it has the right structures in
terms of governance and the right business model, with the country’s
development at its core. The theme of the anniversary celebrations was about
how the bank has been woven into the fabric of Nigerian society.</p>



<figure class="wp-block-image size-large"><img src="https://openlife.ng/wp-content/uploads/2020/03/FirstBank-1-1-1024x866.png" alt="" class="wp-image-2571"/></figure>



<p>The clear message to the
industry is that while it is possible to make a quick buck, you can only enjoy
the sort of longevity it has if you conduct your business with the interests of
the country at heart.</p>



<p>Nonetheless, it’s apparent
Adeduntan does not want to dwell too long on past glories. Using the analogy of
a car, he says that there is a reason why the windshield is large whilst the
rear-view mirror is small.</p>



<p><strong>The challenge of
fintech</strong></p>



<p>As in most sectors,
traditional ways of doing business have been coming under increasing disruption
from ever-evolving technology. The banking industry is no exception and seems
to be under siege from an expanding fintech onslaught.</p>



<p>I ask him if he is worried
that non-financial companies will be entering the banking sector, especially
given the recent change in regulation by the Central Bank that allows
non-traditional finance institutions, namely mobile operators, to enter the
fray.</p>



<p>He says he is not worried as
his bank has one of the best defined strategies when it comes to financial
inclusion and that it has the largest digital banking network in Nigeria. ;</p>



<p>Much of this has been
developed through the bank’s FirstMonie Agents system: 46,000 agents represent
the bank across the country. Currently, 9m customers transact on their USSD
platform (by mobile phone, both smart and analogue) in addition to 3m customers
transacting on the FirstMobile platform. ;</p>



<p>The agent network, the biggest
of its kind in the country, enables the bank to provide services to the most
remote rural communities; and because it doesn’t need to have an extensive
branch network, it means that these services can be supplied at a fraction of
the cost of a ‘legacy’ banking model.</p>



<p><strong>Financial deepening</strong></p>



<p>Adeduntan prefers to use the
phrase ‘financial deepening’ when talking about the unbanked. Financial
inclusion has increased from the low 20s to approximately 40% in Nigeria over
the past seven years and is expected to double to the mid-80s within the next
five years.</p>



<p>He says ‘financial deepening’
occurs when financial inclusion starts playing an important role in economic
development. It’s about layering additional products on the current agency
banking network – services such as micro-credit, micro-insurance and
micro-pension.</p>



<p>The aim is to provide
value-added services whilst at the same time increasing the savings rate; this
aspect, which is critical in driving investment rates, has been one factor
behind Asia’s rapid growth.</p>



<p>It is in this area, he says,
that the bank has a vital role to play and a distinct advantage over new
entrants. Technology, he emphasises, will play a crucial part in broadening
financial inclusion. In addition, it is important to partner and collaborate
with different stakeholders such as NGOs and other organisations dealing with
the bottom of the pyramid, to help them reach out to different groups and also
improve financial literacy.</p>



<p>Last year saw a boom in
venture capital investment into Nigeria. For example, $400m was invested in a
number of fintech start-ups during November alone. Is he not worried that these
fintech players, with their lower cost base and ability to use technology, AI
and big data to overcome traditional hurdles, are going to take the majority
share of the pie when it comes to servicing the unbanked?</p>



<p>He says that will only be the
case if the banks do not manage to reinvent themselves. In Edinburgh, he
actually spent a large part of his day visiting tech hubs around the university
in the city and speaking to fintech companies. FirstBank, he adds, has a number
of partnerships with fintechs as well as its own Digital Laboratory developing
new solutions for the bank.</p>



<p>Nevertheless, he firmly
believes that the ‘legacy banks’ will still continue to play a very central
role, especially “in this part of the world where banks are quite dominant and
they have significant buying power”.</p>



<p>In terms of settlements and
deposits, he sees many of these new players as partners they can work with,
even if in some areas they will be competitors. ;</p>



<p><strong>Scope for growth</strong></p>



<p>Despite the impressive strides
made by the banking sector in Nigeria, Adeduntan believes there is still a
massive scope for growth for the sector. He points out that none of the
country’s top banks have made the Top 10 Banks in Africa list, despite Nigeria
being the continent’s largest economy.</p>



<p>He thinks that with the
signing of the African Continental Free Trade Agreement, “we are entering a
very interesting period for the banking sector, not only in Nigeria but Africa
in general”.</p>



<figure class="wp-block-image size-large"><img src="https://openlife.ng/wp-content/uploads/2020/03/firstbank-2.jpg" alt="" class="wp-image-2572"/></figure>



<p>On the domestic front, does he
expect further consolidation? “Within certain thresholds,” he answers. “Anything
that would allow the strengthening of the entire banking sector, I am sure the
Governor of the Central Bank would be positive about.” ;</p>



<p>He also points to demographics
and the high rate of the unbanked as great opportunities for the growth of the
sector continentally. “According to UNICEF, two billion babies will be born in
Africa in the next 30 years,” he says. “And in places like DRC [where FirstBank
has a presence] financial penetration is as low as 5%.” Put the two sets of
figures together and, in theory at least, you get vast opportunity. But he adds
the all-important caveat that demographics are only good if managed
properly. ;</p>



<p><strong>Supporting national
champions</strong></p>



<p>It hasn’t all been plain
sailing for the bank, however. Adeduntan inherited a bank with several large
exposures in the oil &; gas and energy sectors, at a time when the oil &;
gas prices fell considerably, resulting in the devaluation of the naira against
the dollar.</p>



<p>He says his management
weathered the storm, reduced NPL levels to under double digits, and has
strengthened the risk infrastructure, thus enabling the bank to better deal
with cyclical downturns in future.</p>



<p>Discussing the role of large
companies in the commercial landscape, Adeduntan says it is essential to have
big banks like FirstBank, just as it is vital to have national champion
companies that have the scale and wherewithal to make transformative
investment. Such companies require financial institutions of similar scale to
support them. The Dangote Group’s investment into what will become the
continent’s largest oil refinery is a case in point, he adds.</p>



<p><strong>Role of the Central
Bank</strong></p>



<p>We move on to the regulator
and the role of the Central Bank. Does he think that it is too interventionist,
dictating how much banks should lend, where they should place their assets?</p>



<p>Adeduntan refused to be drawn
into criticism of the regulator, with whom he says he, and other bank CEOs,
have a strong relationship. But he did say that the role of a central bank in
the development of an emerging economy is clearly different from the role of a
central bank in a developed economy.</p>



<p>“It is not unusual that the
Central Bank intervenes in critical sectors allied to the loan to deposit
ratio. ;It’s about economic growth; it’s about development; it’s about
channelling credit in sectors that are very important for the national economy.</p>



<p>“Let us take agriculture –
again, we are one of the biggest lenders into that sector. We found the Central
Bank intervention in some of those critical sectors extremely useful and not
just for us as a bank, but for the country as a whole. When you look at
intervention in agriculture, you have to put it in the context of the size of
the population. Nigeria is a country of 200m people today. The business of
feeding 200m people is a strategic business. Everything that is being done to
ensure that at least we are self-sufficient in food production is strategically
important. We find the Central Bank intervention in those areas quite useful
and of national importance.”</p>



<p>He reflected the positive attitude
of many Nigerian entrepreneurs to the country’s future. He says he has a lot of
time for the Economic Advisory Council – composed of credible business leaders
and economists – that has been put together by President Muhammadu Buhari. And
despite reports that the government is not economy-minded, he thinks that it is
a pro-business government.</p>



<p><strong>Ethical
banking ;</strong></p>



<p>It is nearly 10.00 in the
evening when we finish our talk, his day having started at 07.30am. We go back
to sustainability and the role of financial services to make sure they are
lending to institutions that are ethical about their business and operating in
a sustainable manner.</p>



<p>He says that the journey has started even if it is still early days. ;“But ultimately,” he says, “this is where we are headed. The Nigerian Sustainable Banking Principle speaks to this particular question. I think it’s evident from the points that I’ve made today, you can say that FirstBank is a bank that is happy to forego a few basis points in terms of its net margins, if that means it is contributing to development in a more ethical and sustainable way. “We’ve always made a point that profitability is very important for us at FirstBank, but economic growth and national development is equally very important and speaks to the sustainability question.” ;</p>

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