First Bank of Nigeria on African banking trends

Transcript

The African banking industry is attracting huge interest worldwide, where the opportunity of an untapped market in Nigeria, where 35 million adults keep their cash at home, shines bright. World Finance speaks to Bernadine Okeke from First Bank of Nigeria about the market’s potential.

World Finance: Well Bernadine, let’s start with the private banking industry, which is still emerging in Nigeria. How does it stand today and how do you see it developing?
Bernadine Okeke: Many of our clients are entrepreneurs, and therefore it’s new wealth, first generation wealth, emerging wealth. And therefore it needs to be managed in a particular way. It’s not the same as it is in Europe or in the US. Our entrepreneurs are learning how to invest and manage wealth, rather than simply churning it into their businesses.

So it gives us an opportunity to actually educate an entire nation about the next opportunity to manage wealth, to grow wealth and to transit this wealth. From one generation to the next.

I know that a lot of foreign banks are very interested in the Nigerian private banking space. But I also believe that the domestic market has room to grow. And that many Nigerians are finding their way back to Nigeria and bringing this wealth back, so it creates a massive opportunity for us to capture this market.

The other trend that we see is a reduction in barriers to trade between west African countries and other countries on the
African continent

World Finance: Well Nigeria has the highest population in Africa and also the strongest economy. So what kind of an investment opportunity is it, and how does the economy stand today?
Bernadine Okeke: We have well over 170 million people, and the saying goes ‘one in every five black people on this earth is a Nigerian.’ You can imagine the investment opportunity of having 170 million wallets, in the space of the size of Texas in the US, to be able to sell your goods to.

Also there has been a recent rebasing of our economy, and that has actually shown that rather than having or believing that the economy is all oil and gas, there were many other industries that actually contributed to the revenue of the country. And these include telecoms, agriculture, financial services; even human capital development, among several others.

Each of these are actually private sector driven and therefore presents an opportunity for massive investment, if you want to take the risk of being in a third world economy that is emerging. And what we’re finding is, the returns are fantastic, because with an economy that is growing at well over 8.1 or 8.2 percent per year. The risk return ratio will be probably about the best in the world.

World Finance: Well, First Bank of Nigeria operate internationally, so what trends do you foresee impacting the African banking industry in the coming 12 months?
Bernadine Okeke: Families in general are becoming more connected to the internet, and as a result of that they are expecting many of their banking services to be delivered electronically. This is a great opportunity for banks like ourselves to use technology to create financial inclusion.

We can actually use mobile phones to deliver services to customers and then use the electronics base for online banking. I’m sure you have heard of M-Pesa out of Kenya, where they actually deliver services through a mobile phone. At FirstBank we have Firstmonie, which does the same thing, and therefore I can text money to you or I can pay for services using a mobile phone.

What this really will do for the African continent is actually help us leapfrog, from cheques to cards to mobile phones, and we might end up not having as many cards in our wallets, as you find in most western countries.

The other trend that we see is a reduction in barriers to trade between west African countries and other countries on the African continent.

World Finance: So how do you see Nigeria’s economy growing and how are you set to capitalise on this?
Bernadine Okeke: We have focused in the past, and will continue to focus on, the small and medium scale enterprises. Providing them with the necessary credit financing; also with the skills acquisitions they need to run their businesses because a lot of times, they do not have those skills. And then to support them as they move into other markets. Also supporting the government through our ability to fund private public partnerships and things like that.

Our bank is 120 years old older than the country. And I think we have been a major player in the growth of the economy, and we will be around for another 120 years, doing just that.

World Finance: Well finally, what’s First Bank of Nigeria’s strategy for future growth?
Bernadine Okeke: To focus on the SME space, the retail space, but also innovation. Being the go to bank for new solutions as things come up. There are some regulatory head winds which will impact everyone in the Nigerian space. But we will come up with whatever we need to do, to be able to remain a viable player and a profitable bank, for the next 120 years.