From strength to strength

Since the consolidation of Nigeria’s banking system some of Africa’s largest and most dynamic banks are now based in the country, with a few banks expanding across the region and beyond. While in the past many African financial institutions were vague about their assets and debts, new transparency laws laid out by the Central Bank of Nigeria ensure that details of the country’s economic system as a whole are disclosed and free for all to see. “Nigeria remains one of the best banking systems in sub-Saharan Africa in terms of transparency and corporate governance. Many things that are being spoken about today never used to be out in the open. Banks and companies are now disclosing and opening up their books for people to see what is happening in these institutions. I think that if you compare Nigeria to some other countries in Sub-Saharan Africa, we have come out very strong,” says Godwin Emefiele, Group Managing Director of Zenith Bank.

Over the past few years Zenith Bank has become one of the country’s top financial institutions through a mixture of dynamism, innovation, firm leadership and clear business insight. With its strong brand recognition and strategically distributed branch network, Zenith Bank has maintained a healthy share of the Nigerian market after the recent financial difficulties experienced worldwide. “As you know the world economic recession began in late 2007 through 2008 and 2009. No doubt this had a trickledown effect on the Nigerian economy. Of the lessons we learned during the recession, a core issue was corporate governance and the failure of risk management practices. We learnt from this experience and as a result a stress test was introduced around mid-2009 by the Governor of the Central Bank, Lamido Sanusi. Most of our 24 banks passed this stress test; Zenith was actually one of the ones that came out very strong, thanks to our strong liquidity and capital adequacy ratio as well as a low non-performing loans ratio,” says Mr Emefiele, discussing the effect of the financial crisis on Zenith Bank. “The main lesson is that we saw a failure of corporate governance and risk management practices and, I am sure that Zenith, just like every other bank, has learnt from this experience and put structures in place to ensure that this does not happen again.”

The strength and growth of Nigeria’s financial system is a result of the recapitalisation of the country. Today, banks such as Zenith have capital of almost $3 billion – one of the largest in West Africa and the fifth or sixth largest in the whole continent. Despite a sharp decline in market values all over the world last year, Nigeria experienced just a 16.3 per cent decrease compared to China’s 22.8 per cent, India’s 22.6 per cent and Egypt’s 48.9 per cent. Analysts and market operators are already predicting a growth for 2012 of as much as 14 per cent. This growth will help the likes of Guaranty Trust Bank to continue its work as one of the leading lenders in Nigeria. “We have to continue to work hard. We need to change, re-tool and adapt to continue excelling in our performance,” says Olusegun Agbaje, Managing Director of Guaranty Trust Bank.

Mr Agbaje also predicts further expansion for Nigerian banks in the future. “You must look outside Nigeria as well because, while Nigeria is important and we must continue to fight and maintain market share in the country, we must not allow ourselves to forget that there are countries outside and they will also present opportunities. So, we will look at those – but in whatever dreams and vision we have, we will stay Africa-focused.”

The improvement and growth of all major financial institutions in Nigeria is something that each bank sees as a priority. “A lot has been done in the financial sector and I can say that the Central Bank of Nigeria has put a great deal of effort over the past two years to deal with the problems and challenges of the industry. With these reforms, the banking industry is back on track and moving forward in a very positive direction,” says Kehinde Durosinmi-Etti, Group Managing Director of Skye Bank, who envisions huge growth for Nigeria’s banks over the coming years. “The reforms in the financial sector are geared towards providing financing and enabling opportunities in key sectors of the economy. We believe that the banking sector has the opportunity to grow at about 20%-30% annually.”