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NIGERIA
A new business climate |
Read our exclusive interview
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 African International Bank Limited
Focused on Breaking New Grounds
Manager:
Managing Director/CEO
Mohammed Sabo Nanono
Contact:
African International Bank Limited
Central Office
AIB Plaza, Akin Adesola Street
Victoria Island
P.M.B. 1040 Apapa, Lagos, nigeria
Direct Line: +234 1 26202266 -7
Fax: +234 1 2620270
E-mail: nanono @ aib. com. ng.
Internet: http://www.aib.com.ng |
Strategy
Established by strong and successful private shareholders in August 1979, African International Bank Limited (AIB), is totally committed to being a dependable commercial bank, which upholds the values of exceptional service, integrity and reliability. With a total asset of N14.5b ($169m), deposit of N10.4b ($121m) and capital of N0.5b ($6m) at end of December 1998, AIB is ranked by Agusto
& Co. as one of the top 10 banks in nigeria. According to Agusto, ‘’the strengths of the bank are: strong liquidity, low cost of fund and strong market share’’. Currently, Capital base has been increased to =N=1.0b.
With 974 staff and 51 branches spread across nigeria including Abuja, AIB is strategically well spread to take advantage of business opportunities in nigeria. This has paid off in making AIB one of the fastest growing banks. In the last four years, asset base increased from N4.3b to N14.6 b, deposit rose from N3.3b to N10.4b, and pretax profit rose from N22.5m to N937.7m. In FY 1998, ROE was
46% and ROA was 4.5% ahead of 1997 industry averages of 36% and 2.3% respectively. Good performance not withstanding, capital adequacy was 17.8% at YE 1998.
AIB offers full range of commercial banking and research-based financial advisory services to target middle-upper market and the nigerian government. This covers retail, corporate and international banking The strong commitment to quality service and breaking new grounds has been sustained by high level investment in its people, technology and research. The bank has already spent over $4m in linking all its branches via a single IT system. Its correspondent banks include Merrill Lynch, Bankers Trust Company and Standard Chartered Bank.
In 1988 the bank championed the use of the nigerian banking payment system for collections of revenues/tariffs for state-owned enterprises (SOE) starting from NITEL , the telecom utility company. The bank is also one of the proponents of Privatization as a means of national economic growth. This earned it the appointment by the nigerian government as the Technical/Financial advisors for the privatization of its fertilizer company, NAFCON in conjunction with Nomura International Plc. Through its public sector desk, the bank is one of the market leaders in servicing the government. Beyond revenue collections, it is heavily involved in fund management, advisory services and World Bank projects, for the government It is also a shareholder of the Cairo–based African Export –Import Bank (Afrieximbank), for which it acts as a Trade Finance Intermediary on export finance. AIB is also in the consortium of 26 nigerian banks promoting the Smartcard electronic payment system.
According to Sabo Nanono, the Managing Director/CEO, "banks have a special role to play in the economic growth of nigeria in the new democratic setting.’’ Nanono a former lecturer at Ahmadu Bello University and Harvard alumni, believes that " given political stability, the entrepreneurial culture of nigerians, a skilled workforce and abundant natural resources. nigeria is surely marching unto prosperity in the 21st century’’. Prime ingredients of the prosperity will be an investor-friendly environment, genuine steps towards deregulation and the ability to attract foreign investments.
Nanono foresees a more dynamic economy, better-regulated banking industry, emergence of new and stronger players, new competitive initiatives especially based on technology and global integration of the nigerian market. To break new grounds in this setting, AIB believes in dialogue and strategic alliances with global players. One of such is Nomura. AIB will naturally bring into such relationships, its strong local knowledge, well-spread banking infrastructure, customer base and business network.
Financial highlights (N million) N100 = $1.00
| YE Dec |
1996 |
1997 |
1998 |
| Income Statement |
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| Gross Earnings |
1106 |
1548 |
2,269 |
| Profit before Tax |
529 |
291 |
938 |
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| Balance Sheet |
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| Total Asset |
11,169 |
12,043 |
14,406 |
| Total Deposit |
8,180 |
9,740 |
10,361 |
| Shareholders Funds |
743 |
927 |
1448 |
 CURRICULUM VITAE
MOHAMMED SABO NANONO
Bio-Data
Date of Birth : 11th April 1946
Nationality : nigerian
Place of Birth : Tofai-Zakirai District of Kano State
Marital Status : Married with two Wives
Number of Children : Eight [8]
Academic Qualifications :
Primary School Certificate, Zakirai and Gwarzo
Birnin-Kudu Secondary School - WASC, 1966
Government College, Kano - HSC, 1968
Ahmadu Bello University [ABU], Zaria
B.Sc [Business Administration: 2nd Class Upper Division] - 1972
University of Wisconsin, Madison, USA
Masters in Public Policy & Administration [Development Economics] – 1977
Advanced Management Program [AMP]
Harvard Business School, Boston, Massachussets, USA - March to May 1994.
Other Qualifications :
Certificates of Attendance:
World Bank organised Project Analysis Course,ABU, Zaria - November 1972
Financial Control & Reporting Systems and Management of Public Enterprises, Administrative Staff College of India - February to April 1975.
Seminars on various aspects of World Capital Market organised by Business Research International, London - October 1981/82 and 1985.
Various Seminars organised by the Chartered Institute of Bankers of nigeria.
Fellow, Institute of Management Consultants of nigeria.
Member, nigerian Institute of Management.
Member, Institute of Directors
Participant, Forbes Annual CEO Forum, 1997 and 1998.
Employment :
Central Bank of nigeria, Kano: Clerk Grade ‘C’ - January 1969 to September 1969.
Kano State Government: Planning Officer - 1972 to October 1973].
Ahmadu Bello University, Zaria: Lecturer - October 1973 to June 1978.
New nigeria Development Co. Ltd., Kaduna: Senior Investment Executive - July 1978 to January 1980.
Kano State Investment & Properties Limited: Managing Director & Chief Executive - February 1980 to May 1983.
Bank of the North Limited:
Assistant General Manager [Corporate Finance] - June 1983 to March 1988.
Executive Director - April 1988 to June 1990.
African International Bank Limited:
General Manager - December 1991 to August 1995.
Managing Director & Chief Executive - August 1995 to date
Board Memberships :
Served as a Director on the Boards of the following institutions on part-time basis:
Benro Packaging Co. Limited, Gboko, Benue State - 1978 to 1979.
Ceramics Manufacturers Limited, Kano: 1978 to 1983.
Kano Textile Printers Limited, Kano - 1980 to 1983.
National Trucks Manufacturers Limited, Kano - 1980 to 1983.
Kano Cotton Ginnery Limited, Kano - 1980 to 1983.
Kapital Insurance Co. Limited, Kano - 1980 to 1983.
nigerian Victory Assurance Limited, Kano - 1980 to 1983.
nigerian Hotels Limited, Lagos - 1980 to 1983.
Northern nigerian Flour Mills Limited, Kano - 1980 to 1983.
Roof Company Limited, Kaduna - 1983 to 1988.
Gaskiya Textile Mills Limited, Kano - 1984 to 1989
Kano Hotels Limited [as Chairman] - 1987 to 1982.
Matasa Community Bank Limited, Kano - December 1992 to March 1996.
Academy Press Business Forms Limited, Lagos - 1994 to date.
Visa Investments & Trust Limited, Lagos – 1995 to date
Express Discount Limited, Lagos – 1996 to dat
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Committee/Council Membership
Also served on the following Committees and Councils:
Governing Council, Kano State Foundation - 1988 to 1992
Sub-Committee on Privatisation & Commercialisation of
nigerian Ports Authority - 1988
Hadejia/Ja-amaare River Basin Authority - 1989
Kano State Privatisation & Commercialisation Committee [as Chairman] - 1990 to 1992
Hobbies :
Horse Riding
Watching Documentary Videos
INTERVIEW WITH
MOHAMMED SABO NANONO,
MANAGING DIRECTOR AND CHIEF EXECUTIVE
OF AFRICA INTERNATIONAL BANK LTD.
September 2d, 1999
African International Bank was incorporated as a commercial Bank in 1979 the operation started in Lagos and moved to Kano. It is a medium-sized Bank by nigerian standards the capital being approximately 1 billion Naira or
100 million USD. It now has 51 branches nationwide and 9 cash centers, therefore 60 outlets. It is represented in most major business centers e.g. Port Harcourt, Kano, Abuja, etc... Its' asset base is currently between 13-15 billion Naira and is looking for between
17 and 19 billion by the end of 1999. It has about 100 employees although this has dropped to about 700 with the recent computerization of all branches, they should all be on -line in the next 2-3 months. It is ranked in the top 25 Banks in the country, approximately between 10 and 15. The top 25 Banks in the country control approximately 75-80% of the market. The profit for 1998 was approximately 6 million USD after tax.
Mr. Nanono was asked, how in his opinion, the Central Banks (CBM) Policy has made banking operations more difficult.
He agreed with the statement and went on to give a little history behind the problems.
Up until 1986 before the introduction of the second tier foreign exchange market the Banks policies were very much controlled by the Government. As a matter of public policy the very location of branches was controlled. The rural policies of the Government meant that Banks had to open branches in areas where it was clearly not viable. It also had a lot of influence over where the Banks actually lent their money. They were forced to lend to specific sectors, eg agriculture and a certain percentage had to go to industry. They was direct control in every activity of the bank. After 1986 with the deregulation of the Foreign Exchange market they was a shift in public policy. By 1989 the situation had improved greatly there was a relative stability in the Foreign Exchange Market however the policies in of the Central banks became very inconsistent and the markets then became highly speculative and extremely volatile.
In retrospect, they was perhaps pressure from outside to make new policies, perhaps the IMF were putting pressure on the Government that is not clear. Bankers became worried with these inconsistent policies that changed from one day to the next. Also in June 1989 more policies were introduced which again undermined the development of the financial sub sector. The Merchant Banks became the major victims of this new policy. Having had their policies controlled for years, particularly where to lend etc the Government then withdrew financial support and consequently the Banks collapsed. The Commercial banks faired a little better as they were able to generate deposits and had a wider network (in most cases) to be able to do that. The interest rates went up. No one could understand these policies and wide scale confusion was created. The Banking industry is not yet out of this particular trough however it is improving.
Industrial position of the country.
Flour milling is a typical example of the difficulties faced by industries operating in nigeria. It operates at approximately 20-30% below cost. Huge plants have been set up for milling which at the same time incur huge overheads that unless the raw materials are imported it makes the plant unable to run at capacity and therefore take advantages of the economies of scale.
Another problem for nigeria is the enabling conditions for industry. The massive bureaucracy and red tape create problems of their own. Also the security issue, it is hard to attract long term investors to a country where they do not fell secure or the Government is not stable.
Operating costs in nigeria are very high as generators are required for most business, private telephone lines etc as the local services cannot be assured. In line with this the transactions cost are huge, nigeria is basically a cash orientated society.
The problems are enormous, however attempts are being made to talk to the relevant parties and find solutions. A dialogue between the banks and the industrialists is already in motion.
What are the policies of African International Bank in order to face domestic and international competition?
We have to look first at the nature of the nigerian economy, 80-90% of people use cash, 10% of the country use some form of technology, in 5 years most of the banking industry will be computerized in order to face the competition. We need to train people. A slim and elite labor force is required that is articulate and well educated. Secondly we need to grow mid level investment opportunities. We need to set our target market at professionals setting up their own businesses. This is happening a lot particularly ex-government officials, people who "speak the same language". Most of the people with money in nigeria are not well educated and those that are not particularly wealthy but they are becoming so.
Thirdly we need to continue and develop business with the Government. Opportunities exist within the nigerian economy. Through doing business with the Government other opportunities present themselves within the private sector.
What is your opinion of the New nigeria?
Firstly he has some experience. Secondly he is perceived by the public to be relatively honest and they are depending on him to charter a good course. His international connections will serve to improve the global image of nigeria. However the President is only one man, the Government as a whole needs to be influenced.
Before the election I met with the now President and asked how he was going to set about repelling the administrations in order to cater for his programs, most of the institutions have been bastardized. He says that he wants to fight corruption. That is wonderful we agree with him, but how will he do that when the military is still corrupt and the community leadership is all broken up? In my opinion he first needs to rebuild the very institutions that administer the public. Reform cannot proceed without these institutions being reevaluated.
Secondly the question of education needs to be addressed. The public education system has virtually collapsed, the government needs to rationalize its education program even if it only touches 5% of the population to make a start.
However in all of this we must remember that it is not possible to do all these things at the same time. The economy is very complicated and also very resourceful, it is divided into 3 main areas, agriculture, agro-allied industry and oil and gas. We need to look at the industries where the maximum impact can be created and give emphasis to that area.
We need to create a sustainable democracy. Design policies to create a large middle class in order for us to do that we need a good education system. Education and development of a middle class is paramount to the future of nigeria. Mr. Blair and Mr. Clinton have based many political campaigns on their education program and given the situation of both countries in comparison to nigeria one can see how important it is.
The local politicians are very difficult to talk to as they are localized in the North and the South and do not necessarily speak the
"same language " as us. The long term solutions are what we need to look at not the short term ones that nigeria has emphasized for too long.
Information is also very important. For example at the moment a lot of people talk of deregulation and privatization, however no national framework has been established to achieve this. No targets have been set. Also very little information as to how it will affect the general public. There are many anomalies in the nigerian way of life, what happens in other countries do not necessarily repeat themselves here even when the same set of circumstances apply. For example, when the foreign exchange market virtually collapsed and the Naira was deregulated by 1000%, there was very little poverty, why? Well, essentially we are an agricultural country. A loaf of bread in 1986 cost about 3N and now in 1999 it costs 50N however unlike Zimbabwe in and Tunisia we do not have bread riots. Similarly we are able to produce rice everywhere, yet we remain one of the largest importers of rice! In conclusion, the opportunities for the investor in nigeria are there and the difficulties are great also. The economy is improving and any business here makes money. However major restructuring is required on behalf of the Government. Most business here have reached optimum output and without large scale restructure they will cease to grow. The
needs to look at the structure of the country not just at the balance of payments and the devaluing of the Naira.
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© World INvestment NEws, 1999.
This is the electronic edition of the special country report on nigeria published in FORBES Magazine,
October 18 th issue.
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