Segun Agbaje: Using Fairs to Redefine Retail Banking and SME
Lending
Segun Agbaje, the
managing director/CEO of Guaranty Trust Bank (GTBank), is not a popular man. To
many, he is aloof, too strait-laced, not your typical run-of-the-mill Nigerian.
As one of Nigeria’s foremost bankers, he has a reputation for running a tight
and efficient ship, is unflinching in his pursuit and recovery of loans from
the country’s systemically chronic debtors who have a sense of entitlement believing
that they can borrow depositors’ funds without paying back, and does not give a
hoot about those critical of his take-no-prisoners approach to banking.
In the media space, he
does not seek publicity, he lets his work speak for itself, could not care less
if his story or photograph makes the front page of the newspapers, limits his
bank’s advertising spend to what he believes is necessary to market and promote
GTBank to a wider audience, and through NdaniTV and Ndani Blog understands the
power of the social media in reaching out to youths that make a larger
percentage of Nigeria’s and regional demographic where the bank operates.
To me, Agbaje is the
ideal banker. He is not my friend and we only interact sparingly and strictly
professionally as the need arises. Yet, I cannot help but wish that we had more
bankers like him in this country. If we did, fewer Nigerian lenders would have
to make provisions for unpardonable impairment charges on bad loans given to
delinquent debtors, fewer banks would engage in reckless insider lending that
threaten their capital adequacy and liquidity ratios, more banks would
recognise that they have a fiduciary responsibility to manage their customers’
deposits with care, and more banks would know how to sweat their assets in the
most cost-efficient manner to make the most attractive returns to their
shareholders.
In all the key
parameters used in defining the size of banks, GTBank, among the five Tier 1
banks in the country, is not by any stretch of imagination the biggest. In
terms of total assets, loans and advances, customer deposits, number of
branches, and presence on the African continent and beyond, FirstBank, Zenith
Bank and United Bank for Africa (UBA) stand head and shoulders above GTBank. By
Nigerian standards, the “big three” could be called banking behemoths and are
very difficult to supplant. Still, GTBank, with its cost optimisation strategy,
asset quality and stability ratios, among others, has over time proved to be
the most profitable bank in the country. Its stock has remained the bellwether
in the banking segment of the Nigerian bourse for years, signposting the
confidence institutional and individual investors have in the bank.
But this article is
not about GTBank’s financial performance. Its annual and quarterly reports,
including those of its peers, are public documents that can be readily accessed
for in-depth comparative assessment. What I have found more interesting about
the bank is its focus on corporate social responsibility (CSR) and
interventions in key economic sectors targeted at strengthening small
businesses through not-for-profit fairs and capacity building initiatives. For
two years in a row, GTBank has solely funded and hosted its Food and Drink Fair
and Fashion Weekends, making them social and tourist events that feature
prominently on Nigeria’s social calendar. That is not to say that the bank has
not focused on other areas of CSR. Its 2016 annual report showed that GTBank
spent about 58 per cent of the N449.62 million of its CSR funds on education
alone while community development accounted for another 30.8 per cent.
But it is GTBank’s
focus on food, drink and fashion that have been the most impactful publicly,
bringing together scores of promising, talented and recognised local and
international chefs and food vendors, drinks makers and merchants, fashion
houses, milliners, fashion accessory designers and leather goods makers in a
dizzying, well-put together and well-thought out extravaganza that leaves the
public yearning for more. Both events, which are open to the public, have been
attended by several thousands of people, including children, for two years
running that have left attendees breathless and wondering how the bank manages
to package the two fairs in areas where it has no competencies.
The trick, says
Agbaje, whom I had to hound to open up on the success behind both fairs, is
getting and attracting the best participants and controlling costs by getting
the bank to work directly with the contractors who have to build the stalls,
decorate the venue, create play areas and cooking classes exclusively for
children, and provide the music, etc., during both fairs; no middlemen or
consultants are used by the bank. For him, the fairs present an opportunity for
GTBank to deepen its footprint in the retail banking space and increase its SME
lending from 2 per cent of the bank’s loan book to 10 per cent over the next
five years.
With time, he would
also rather extend more loans to small and medium-sized businesses that are
more impactful on the economy and achieve a loan recovery rate of 70-80 per
cent, than pursue Nigeria’s so-called “big men” with woeful credit track
records. Although he was demur about what it costs his bank to host both
events, he was emphatic that making money at this juncture is not the
overdriving objective, at least not in the short-term, but recognises the
long-term benefits not just for GTBank but other Nigerian lenders.
Beyond this objective
and given the magnitude of both fairs and their potential to grow into annual
events that could attract millions from across the global, Agbaje’s vision is
not one to be trifled with. Already, the GTBank Food and Drink Fair and the
GTBank Fashion Weekend create thousands of direct and indirect jobs and referrals
for hundreds of young Nigerians who have to build the stalls, decorate the
venue, and provide the music, entertainment, security and other support
services to make them a resounding success. And they have the potential to
create even more.
Aside the suppliers,
vendors and designers that make brisk business and achieve record sales during
the fairs, the Master Classes included in both events are helping to build
capacity and drive innovation in the creative industry that has proved to be a
major magnate for Nigerian and African youths. By bringing them under one roof,
GTBank has also provided a platform for shared services and given them the
exposure that help these small businesses to grow and create more employment
opportunities.
Without doubt, both
fairs are worthy initiatives. But they could be better. In the last two years,
GTBank has handled both fairs singlehandedly without support from other
institutions and/or the Lagos State government, a direct beneficiary of the
events and their spin-offs. In 2016, the food and drink fair alone
attracted 25,000 people; this year, it attracted 75,000 people. I do not have
the numbers for the bank’s fashion weekends, but I can imagine that the number
of visitors will not be far off from those who attended the food and drink
fairs.
Given the swelling
numbers, both fairs have already started to cause traffic gridlocks on the days
they are held. They are also attracting touts and hoodlums who mill around the
roads leading to the venue and try to pounce on unsuspecting visitors as they
alight from their cars or walk to the venue. On a positive note, big and
boutique hotels, restaurants and food caterers on the Lagos Island experience
an upsurge in occupancy rates and patronage by participants and the international
media who have flown in to take part or cover the events. All these translate
to more tourist dollars, taxes and revenue generation for the federal and Lagos
State governments.
The import of this
should not be lost on the federal and Lagos State governments.
They have to do more
than just show a passing interest in what GTBank has started. Given the
potential for both fairs to become global destinations for tourists and
visitors on the African continent, Lagos State in particular needs to improve
on its infrastructure in and around the venue where both fairs are held. It
must improve on traffic management and security to ensure that visitors can
move about with ease and feel secure. According to Agbaje, in terms of support,
the state government has not yet stepped up to the plate, nor has his bank
sought for any. But he does acknowledge that with time, GTBank will have to
reach out to Lagos State because of the interest both fairs are generating in
terms of attendance and participation.
Right now, Agbaje
appears to be satisfied with what his bank has accomplished in terms of
bringing both fairs to the public’s consciousness. But do the federal and state
governments understand the roles that they have to play in institutionalising
them and ensuring that they outlast his stewardship in GTBank? Cities like Rio
de Janeiro, London, Paris, New York and Melbourne that host major sporting,
fashion, carnivals, music and film festivals every year, attracting thousands
of visitors do not owe their success just to corporate sponsors but to the
municipalities, state and federal governments that understand their roles and
lend the required support to the private sector. As such, Lagos State needs to
buy into the GTBank fairs as a public-private partnership that can and should
work.
/cdn.vox-cdn.com/uploads/chorus_image/image/56218701/Trump_defends_Charlottesville_comments.0.jpg)
Would you give N1000 to save my life?
L