Managing Director of Heritage Bank Limited, Mr. Ifie Sekibo, in this interview with Thisday spoke of the need for Nigerians to begin to look inwards by patronising made-in-Nigeria goods. Excerpt….
What is the latest on the bank’s integration process with Enterprise Bank?
On the integration, what readily comes to mind are the people; putting the people together, who are of different culture, different orientations and different experiences. This is a defining phase of our integration experience. But luckily, both organisations – Heritage Bank Limited and Enterprise Bank have very experienced and qualified people. So, for me, it was a matter of identifying talent and making them drive the process. Though we worked with consultants, I can confirm that the collective resolve of our people to achieve success with minimum friction, that helped us achieve that. That reinforces our tenacious spirit as a team. At some point, it was difficult to know who was from Heritage Bank or Enterprise Bank. That was one interesting feature of the integration. The next step was technology. Again, we were lucky to have competent people on our Information and Communication Technology, ICT platforms that were able to rise to the occasion. They even won an internal award for being the group which put in their best effort. All we have been able to achieve was made possible because of the quality of people who managed this process. Of course, the third was regulatory support. We had a lot of regulatory support. The regulators understood the challenges that faced such an organisation. We had legacy issues, a lot of cases in court over the AMCON takeover, but with the help of the regulators, we were able to settle most of those matters amicably and achieved a seamless integration between the two organisations. Effectively, we would say that integration took place on the 4th of September, 2015, and from the 7th of September, 2015, we had a new organisation. So, our birthday as a bank is on the 7th of September, 2015. We are actually less than one year old.
How did you resolve the labour issues arising from the integration of the two banks?
First, we took a decision as a group – both Heritage Bank and Enterprise Bank, to subject everybody from the General Managers to the last man, to a non-interference based general assessment. We hired consultants to look at our business plan and our job growth assessment. We did a job-role assessment for every person, everyone of us went through the process and at the end of this process, there were certain recommendations that came to us. These recommendations were to move people from one group to the other. Those who had to go, if at all they wanted to go, were those who had disciplinary issues before this process or they were not fit at all. That was why the rate was very minimal. We thought we would lose about 10 per cent of staff, but at the end of the day, we lost less than two per cent of our workforce. And it was not just for Enterprise Bank, it was in both organisations. Not only that, Aside the assessment by the consultant, we were also pro-active in dealing with it. We had union leaders who were invited to have a look at what we were doing. We also had our report open to the Board and some external parties, who were able to review them to ensure that there was no case of witch-hunt. We were transparent on all front so that nobody would hold anyone. We allowed them to do peer assessments. Secondly, we also believed in the value each person could bring to the table and after the evaluation, we decided whether we wanted to reduce the number or not. Before now, the Enterprise Bank that people though had too much staff, were having lower level cadre staff manning experience centers or what we call branches. So we had more operational staff than marketing staff. This posed a mismatch so all we did was to restructure and reassign people based on the assessment. The process was very transparent and when you are transparent, nobody is going to fault you. What we promised was that nobody was going to be sacked in the first six months so that we could have a transparent assessment of individual performance and subsequently. That gave everybody the comfort to go through the assessment and thereafter, anybody that needed to go knew that there was nothing anybody could do. Again, as I said, we had good labour relationship which enabled us to go through the process.
Now that the integration process is over, what is next for Heritage Bank?
I believe growth is defined by the industry you find yourself in. Today, what is the banking industry? What are the macro indices and what are the compelling reasons for growth? Sincerely, when I approached my Board, and they asked me about our growth projection, I said, sincerely, if anybody was asking for growth from me, then the person is not being realistic in the face of the current reality we find. Nigeria had pegged down her growth from 6.3 per cent to about 2.9 per cent. So, as a major player within the sector that would cause growth to happen, do you think the sub-sectors would grow very aggressively? The answer is no. So I told my Board that the major thing for me is to focus on efficiency and to stabilise my balance sheet. Those are the two major things we are focusing on. To be able to keep efficiency where non-core assets are taken out of our balance sheet, deal with cost efficiency and are the things we don’t believe are necessary for our bank doing business, we should be able to take them out. Efficiency costing is being able to see that every naira you spend gives you commensurate returns, be it in salary or administrative expenses. So, those are essentially the two things I am focusing on and the board agreed. That implies that we are deploying more technology so as to cut down the brick and mortar deployment, re-staff and get the staffing level of all our branches at an efficient level and essentially focus on the markets that make meaning by developing our retail strategy more robustly. These would think would help us create stability and efficiency in the system.
The naira is said to be currently on trial and there has been a debate as to whether to devalue or not to devalue the naira. What is the way out for the currency?
Interestingly, my position makes it imperative for me to be in the middle of that conversation from day one. Devalue or not to devalue is same coin of two sides. Where we are today, devaluation is a matter of how do we manage the process. By that I mean, what are the learning points which have led to these levels of distortion in the value of our currency? If we identify them, have we attempted to correct them so that if we devalue today, we will not find ourselves seeking for further devaluation within a month or year? If we do not learn those lessons or we don’t understand those principles, then devaluation may be meaningless. Devaluation is a sound economic theory in the concept of demand and supply which clearly has its arguments for and against in the life of any economy. But before the decision to devalue, let us look at the basic economic foundation of our country. Today, we are 80 per cent dependent on import, but our purchasing power for these imports are limited and affected by the price of the singular commodity, oil, that we export, which has now fallen to an all-time low. As a country, a lot of our elites send their children abroad and pay school fees from the same dollar chest that we do not have. Some others travel abroad to buy jewelleries, coffee and even groceries as well as stuff their hand luggage with all manner of things, and yet pay from the scarce dollars. With this development, we are unable to pay for our raw materials, while the money we are supposed to use to pay for these raw materials is used for all kinds of foreign goods which are not necessary. Can we as a nation sort ourselves out? Let us begin to use made-in-Nigeria goods or spend less of our money on frivolities. If we devalue the naira and still continue with our warped lifestyle, we may end up creating more problems with the devaluation. To be clear on this, devaluation itself is good. Today if we are talking on how to finance the Gross Domestic Product (GDP), if we devalue, the difference between the official rate and the unofficial rate in the black market is a big buffer. Since we do not pay our salaries in dollars, and even when we borrow, say, like one billion dollars, the quantum of the naira will be more. So, devaluation is not all evil. But on the contrary, it does not happen as easy as that because of the peculiar structure of our economy. Since we are mostly import dependent, even the made-in-Nigeria goods we want to produce, we need to import the raw materials.
How then can the country come out of this challenge?
So, as a way out, we need to get a plan as a country. It is that plan that will give us a clear picture as to whether to devalue or not to devalue. Those that are saying that we should devalue immediately are not also being very realistic. What have they done? They sit out there as portfolio analysts, but it only takes a secondary school student with a basic knowledge of demand and supply to know that you cannot sell a scarce commodity for a reduced price. If we devalue and the money gets finished, what happens? Secondly, the current level of dollar demand is unrealistic, it is not real demand, but they are padded up demand. If you say it is very urgent for you, go to the parallel market to buy. So, we don’t have to devalue for people to spend. So, on economics level, it makes sense as a country, to devalue, but as a country, we need to look at all the parameters that make sense for us to devalue. If we do not address these parameters, devaluation will lead to further devaluation.
What exactly is your own suggestion?
My personal submission is that I will not call it devaluation. What I would rather suggest is a currency adjustment against what we call devaluation. But the adjustment must be predicated upon a yardstick which sets out what we want to spend the scarce resources on. When we devalue, we must revalue our priorities as to where we want to put the extra naira made from devaluation, so that we do not squander it, but put it in areas that will lead to further economic growth. Most importantly, if we devalue the currency and continue to behave the way we behave presently, we will not get anywhere.
The real sector is complaining that banks are not lending to them despite the repeated assurance from the Central Bank of Nigeria (CBN) and the Bankers Committee. What exactly is the problem?
Let me quickly correct one impression. The money in the bank belongs to customers and if we lend to borrowers and cannot recover it, the customer must still get his money back. Today, the real sector is struggling and not performing because the fundamentals are not right. Today, we import things like eggs into the country. Can you imagine an economy where we cannot produce our eggs? We must understand that manufacturing is not about producing cars, television, among others. No. For instance, we can manufacture tomato paste. We have good materials to feed the whole of Africa. But how many farmers are able to buy tractors? Can we as a nation create a leasing company that will lease these tractors to the farmers for a fee, and with the money, we will be able to do co-operative farming. The only area Nigeria can compete today is in agriculture. Nigeria can feed the whole of Africa if we get it right.
A lot of bank customers are complaining of being short-changed with the sudden return of bank charges. What are the issues involved?
The bankers believe that charges on turnover ought not to be the proper way to express service to customers. But we must also know that we are in an Information and Communication Technology (ICT) age, where for every account you hold, the banks incur cost for maintaining the account. It is not a charity. The other is the card. You do not have to have a card. Financial services have to be inclusive and everybody must have access to it. For that accessibility, you have to deploy some technology. All over the world, the cost of technology has come down, but here in Nigeria, the cost is still very high. We pay three times what other parts of the world pay for data and every time you use your ATM card, you use data, and in the process, passing a cost to the bank, but the bank does not charge you until the customer’s fourth use. In other countries, once you insert the card they charge you.
In good times, the mortality rate of the Small and Medium Enterprises (SMEs) is very high. Now that the economy is bad, how do you think the SMEs can survive and will your bank continue to support them?
SMEs have to survive if the economy has to survive. It is not an option. It is the bedrock of our economy. The artisans, the fitters, the technicians… if they do not exist, our maintenance culture will be very poor. Funding is the last thing on the menu for SMEs. Let us begin to inject methods and give guidance to these companies. For some of the SMEs, the owner is the Chairman, MD and everything. The day he drops, the business dies. But what we are saying is that they can organize themselves into clusters and share responsibilities. Notwithstanding, SME remains a priority. We will continue to support and help them. All big corporations today, including our brother and mentor, Aliko Dangote, started as an SME. As a bank, we have set up an SME clinic and partnered with professionals who teach them proper methods of running and sustaining their businesses.
The Minister of Information said recently that some bankers were involved or collaborated in the looting of the nation’s resources. Do you not think this can erode customer confidence in the sector?
I am not privy to the information the Minister has, but banking is a very honorable profession. But there are a lot of things about banking that we do not understand and I want to put this in perspective. A banker seeks your deposit and you give it to him in the name of Company XYZ. If tomorrow, they found out that the money is stolen, the bank may be liable. Today, the customers are shouting that we are stretching the Know Your Customer (KYC) beyond reasonable levels. It is not because we want to, but because it has gotten to a level where you will hold me liable for money held on your behalf. The banker’s stock in trade is money and deposits. He also creates loan portfolios. That we have one or two bad eggs among us is a societal thing – and the banks, unfortunately, are in the middle of this.
What is the future of Heritage Bank?
I believe that as a bank, Heritage Bank was set up to do one or two things and there are three steps to it. One is the creation, preservation and transfer of wealth. We sat down as a bank and noted the difficulties faced by businesses and families in Nigeria in the area of generational wealth transfer, and so we are saying that Heritage Bank should be able to serve as a catalyst to create wealth, preserve it and fashion out a succession plan for the next generation. With this in focus, we believe a few things must be in place in the organization and also have a target we can measure. To us, the main target is that our activity, our investment, our catalytic behavior will help make businesses move from one level to the other. That is the goal.
When is Heritage Bank going to be listed on the Nigerian Stock Exchange?
We believe in the next three years or thereabout. Do not forget we are less than one year old. The capital market rule is that you must have run the business successfully for at least, three years before coming to the capital market.