Aigboje Aig-Imoukhuede: Influenced By A Book to Become A Wealthy Business Owner
Aigboje Aig-Imoukhuede, CEO Access Bank, looks back at 25 fulfilling years of banking; talks about the economy, sustainable banking and civic responsibility in an interview with Phillip Isakpa (Editor), Tayo Fagbule (Editorial Board Chairman) and Patrick Atuanya (Senior Analyst) of BusinessDay
Aigboje Aig-Imoukhuede, CEO Access Bank
Q:We have seen Access Bank grow from 69th position out of 70 banks in 2002 to a respectable fifth position. Can you tell us about the journey from that 2002 till now?
A: You did mention that we have gone from a certain position to fifth today, and this brings me back to about a year ago I was at a forum where I was being asked questions by a bunch of equity analysts and investors and they spoke about this remarkable transformation story from a second tier bank to a first tier bank that Access is today.
I told them that actually I needed to correct that, it is not from second tier to first tier; it is actually from a position of maybe around about fourth tier really. Before we came in, Access Bank was between the 70th and 90th bank in an industry that had 90 participants in 2002.
And so we have enjoyed a journey that has seen us basically leap from fourth world to first world.
If I think back to when I got into banking, 25 years ago, the Nigerian banking industry really had about five models. You had the government-owned model which was either government interest in nationalised foreign merchant banks or government interest in the big four commercial banks as they were then called: First Bank, UBA, Union Bank and Afribank.
You had family-owned cum big man bank, i.e., government contractor, or former military general-owned bank model. Then you had the owner-managed banks, the first of which in the true sense of it was FCMB or First City Merchant Bank as it was called, that opened the way for IBTC, Diamond Bank, GTB and Zenith Bank among others.
The successful banks you see today are either the owner-managed banks or one of those big four institutions that I alluded to where the government interest has over time been sold down in one form or the other, with the exception of maybe Afribank which is now Mainstreet Bank.
I think the key thing to note is that the banking industry, more than any other sector in Nigeria, has been able to attract significant talent. Talent that is capable of competing with bankers anywhere in the world.
When you combine intellectual capital and entrepreneurs who have access to financial capital you have the type of results in Nigerian banking.
I worked in GTB, a successful bank by any measure, as a professional. I rose to executive director in the bank and I guess in my own small way I contributed to a bit of the success the bank has recorded.
I was trying to come to terms with the reasons for being restless while at Harvard Business School (HBS) in 2000 for a three-month senior management. My late brother in-law [who]had just finished his MBA from HBS gave me a book “Buyout”, by Rick Rickertsen, a Harvard MBA. Essentially the book speaks to professionals in any industry. It is a road map for a professional in an industry to move from being a high earning professional to a business owner.
I read the book and [discovered] the cause of my restlessness: I had seen the owner-managed model and I wanted to enjoy a similar experience.
I didn’t want to be just the manager or a CEO of a well established bank. I wanted to have on my track record or CV the establishment or the creation of a world class institution or at least that I tried and I failed in the process.I convinced Herbert who was a highly respected executive director of a high performing bank as well. I said to him let’s do this together, and he saw the opportunity, he bought into the dream and so we crafted a vision of basically a world class commercial institution run by Nigerians, owned by Nigerians as well as any other investor who found the story compelling.
But irrespective of what the industry size was we wanted to rank in the top five. We came up with a clear game plan of how to do this. We used to have a boss who said “when your customer says jump, don’t jump, ask your customer: how high? And then jump higher.”
It was about sitting down with our customers and saying you know together we can jump higher than anybody else.
It was a model that in essence dictated the type of institution we would be in terms of our standards, in terms of our values. Essentially we said to ourselves we would take a large corporate player in a sector, we would understand the value chain of that sector, dissect it to the minutest detail, just the way consultants would, and then we would seek, through product, services or interventions to add value by lowering the cost of business in the value chain or increasing revenues and ensuring that the incremental benefit accrues to our customers.
In practical terms, I will just take you through MTN, for example. MTN came on the scene in 2001, our story started in 2002.
In 2002 our balance sheet size was less than N10 billion, our shareholder funds was N2 billion or thereabouts and our foreign currency balance sheet, I always joke was $500,000, less than Aliko Dangote’s credit card limit at the time.
So how does this bank join the likes of First Bank or GTB and say you want to serve MTN? We didn’t have the balance sheet, whether in local currency of foreign currency, so we had to bring in additional innovation.
So we sat down with MTN and said to them let’s look at this value chain. You are in the business of providing airtime that carries voice and data, and ancillary services. You have a value chain that requires you to get this airtime into the hands of consumers. The first thing is that in Nigeria we don’t have retail, so you don’t have the option of Kenya or South Africa of going to large retailers or malls and so on and buying your airtime there.
As you know the airtime was sold on the streets by hawkers. Think about how tens of millions of Nigerians got this airtime; we stood in the gap. The first thing is that we created dealers; remember that this sector didn’t exist, so these dealers did not exist. The reason I am telling you this story is that when you speak to growth, job creation, SMEs, this is how it happens.
We literally looked for Nigerians who believed they had what it took to be airtime vendors. We did this in partnership of course with MTN, and we looked for certain qualities, we preferred the graduates or HND type, gave them basic training, the same thing that you have in SME clinics and so on, and we came up with a credit system, as well as a cash management system to mop up the cash and get to MTN as quick as possible.
Selling airtime is one thing but ensuring that you roll out your infrastructure for airtime is another thing.
Once again we created something called a cell site in a warehouse. Literally a huge warehouse with just in time ordering systems for all a cell site needs: a generator, fuel, telecoms equipment, a mast and so on under one roof.
Equipment came from South Africa, sometimes China, sometimes Germany, just in time to a warehouse and literally Nigerians, once again, would contact MTN and say, I would do a hundred base stations for you. We would finance it when they get the contract they come to the warehouse to roll it out.
Very quickly after six months we became one of MTN’s largest bankers. Imagine this model being rolled out for MTN, Dangote, and across the sectors that we chose to focus on, which is the real sector.
This story continues, this value proposition was found to be quite compelling, and very quickly corporates latched onto it.
Remember I told you we had always felt that an inorganic growth strategy would be pursued along this high growth value chain driven strategy.
In fact something very interesting happened. Joseph Sanusi was then the CBN Governor, and he was driving a payments system revolution. When he (Joseph Sanusi) was putting in place the infrastructure, or platform for the great things that are taking place now, he realised that the settlement system whereby every bank in Nigeria was basically its own settlement bank didn’t make sense. He wanted a system where you had only large clearing banks, and other banks would clear through them.
In 2004, we went to HSBC, before Soludo announced the Soludo solution of consolidation, and asked to be advised on M & A, even though they were not a local adviser, they would not handle the advisory mandate locally; globally they gave us the advice.
In a sense, by the time Soludo came up with consolidation as the route to leveraging the banking sector we were ready.
When in 2004 Soludo read to us the new game plan and gave us till 31st December 2005, I could see shock on a few faces, but my text message to Herbert was, “our dream has come true”.
The CBN had made it possible for banks to pursue inorganic growth. On the flight back to Lagos, I told Atedo Peterside, then CEO of IBTC, that before we do a merger we need to build our capital and that I wanted IBTC to take us to the market.
Soludo’s announcement was in July, Atedo said when, I said August, he said “we are committed to someone right now and we don’t want to bring two banks out at the same time”. We agreed for September.
The announcement was in July; by September we were out in the market and raised a significant amount of money. We called it ‘an offer you can’t refuse’; it was significantly oversubscribed, truly oversubscribed. Then we acquired two banks.
We picked those banks deliberately because they had a lot of international involvement, Credit Lyonnais for example and Marina, which used to be managed by Allied Irish Bank.
This allowed us to integrate those banks without much dilution. By 2005 we were well within the top ten banks in Nigeria.
We went further to raise capital again in 2007 and took our capital base of about N3 billion in 2004 to N140 billion. Leveraging on that capital base, we calibrated our plans, that by 2012 we would rank among the top five banks, expand our corporate banking division to include the SMEs, our retail business as well as, competing outside Nigeria.
Today, we are a significantly important financial institution as far as Nigeria is concerned; we are a Tier-one bank, and definitely one of the top five banks in Nigeria.
We have a very strong bank in Ghana, which is a top ten institution, we have a very strong bank in the UK, focused on trade finance and treasury, we have presence in a number of other African countries, and we are consolidating that presence around Ghana, Gambia and Rwanda.
Essentially we see sub-Saharan Africa (SSA) not from a perspective of wanting to be in all the countries, but from a perspective of wanting to be in the high performing countries. The reality is that if you look at SSA today, South Africa, Nigeria, Angola, and Ghana account for almost 80 percent of GDP.
We have five-year medium term plans, 2013 marks our next one, which will see us basically ranking top 3 in any market that we play in. You know also that we have sequenced our planning horizon in such a manner that I can now retire and Herbert, my deputy, steps in to take this bank to a higher level than I have been able to take it. That is the story.
Culled from Businessday Online Newspaper
