STL Trustees is a success story in Nigeria’s fast evolving trustee industry. In this interview, Funmi Ekundayo the MD/CEO of the company provides valuable insight on the industry’s offerings and an evaluation of the sector in Nigeria. Excerpt.
What significant contribution does trusteeship industry make in national development?
Trustees play critical roles in business transactions. What every investor requires is peace of mind. Anyone that is parting with value – whether you are a bank that wants to lend to a corporate entity for any reason whatsoever – wants to be sure that the money will be repaid with interest and as agreed. So, I would say that we are the gate watchers. We protect investors. We create comfort to all parties on a commercial transaction.
Most credit transactions with banks are not complete without a trustee, because the trustee provides the requisite comfort to both the bank which is lending the money and the borrower that the terms of their agreement will be fully complied with. And who monitors the terms? It is the trustee. So with that, a financial provider in a transaction feels secured with the fact that a trustee will monitor all the obligations and ensure that all the terms of the obligations are complied with from the beginning to the end of the transaction and everybody is happy. So it is a win-win situation. And what makes an economy grow? Trade; ability to invest; and conducive environment. So if you want to look at it that perspective, trustees help to facilitate that.
This leads to bond trusteeship, which is also a very significant part of the role we play as a trustee. Nigeria is a frontier economy, which means that we still have a lot of infrastructural gap. Whether you look at it from the federal or state government perspective, there is a wide deficit gap to be filled. Now, what do most states do? They come into the capital market to raise capital. We call it debt capital or the bond. For them to raise those bonds, investors will have to part with their own money so that the states can have instant cash to carry out long-term infrastructural projects. When they carry out those projects, the country is better for it. The populace are happy. Even, the states can also increase their internally generated revenue (IGR) through that process. However, don’t forget that some people parted with their own capital ab initio and these people need to be paid back. So all of the interest of the investors is put in one person and that is the trustee. The trustee ensures that the mode of repayment is secured. For states mostly, they have their FACTS. A lot of the securities for the repayment of the investors come from states sinking funds. Irrevocable Standing Payment Order (ISPO) is put in place after necessary checks have been run by the ministry of finance and the debt management office to ensure that that the state does not go above the threshold that is provided by regulators. Once we go through all those processes, the trustee is the receiver of the sinking fund that will be used to repay both the principal and the interest payments to all the investors from the beginning of the transaction up unto maturity. So again, you can see the roles that trustee are playing in national development.
Tell us the roles that trustees play in modern wealth and asset management?
Trustees help people to plan the future of their generations because when you have a trust in place you will be able to easily and seamlessly transfer wealth from one generation to another. And then the issue of having family friction, bickering here and there is significantly reduced.
If you have a trustee, you would have given a very clear instruction on how your estate should be managed or transferred. It is a wealth transfer process that helps to avoid your assets going into the wrong hands or mismanaged or misused.
You can even create a living trust for yourself, which begins to run even while you are around and you look at it to run.
You are the immediate past president of Association of Corporate Trustees (ACT), the trade group and professional body for corporate trustees in Nigeria. What are the challenges facing the industry?
One of the challenges facing the industry is that of awareness. The Association of Corporate Trustees of Nigeria is however working hard to ensure that a layman on the street understands what the concept of trusteeship is all about and how it can be beneficial to them.
Also, in the area of regulations, we would want to see a complete overhaul of the key laws that guide the practices of trusteeship business in Nigeria, basically the Trustees Act and the Trustees Investment Act. These laws are more than 50 years old and some of them still rely on the practices of common law and we think it’s about time that the National Assembly came up with some needful amendments to these statutes. The ACT will be happy to engage the Legislature in this regard and contribute our quota to the proposed amendments.
In the area of private trusts, which involves Wills and Living Trusts, our social-cultural belief is another challenge as a lot of people continue to view it with superstition. No matter how religious some people may be, the need to have an estate plan in place frightens them and they keep procrastinating and postponing until it is too late to set up a plan.
STL Trustees has grown over time from a company which started business in 1996 to become one of the leading corporate trust companies in Nigeria. What are the differential factors that make STL Trustees stand out from others in the market place?
At STL Trustees our core values are integrity, professionalism, commitment and innovation. These values are encapsulated in our vision, which is ‘to be the Trust Company most recognised for its competence, reach and client focus’. Our values ensure that in dealing with clients, whether individual or corporate, we strive to always deliver trust solutions which are guaranteed to meet the needs of our clients on a continuously satisfactory basis. Essentially, our ability to anticipate and meet the needs of our clients while at the same surpassing our client’s expectations is what stands us out from the rest.
We would like to know more about your products and services.
Let me start with our services. Like I have explained, we play a significant and critical role in bond trusteeship and bond trusteeship is not limited to only the state government. We also have situations where the federal government backs up certain bond issuances and we act as a trustee.
Corporate entities also come to the capital market to also raise corporate bonds and all of these are areas in which our roles as trustees are critical, to ensure transparency, credibility and to give comfort to the investors and pay their money; both the principal and the interest as at when due. For debenture, we also act as trustee to that.
Also, STL Trustee is an active player in the real estate trustee sphere. We were trustee to Maryland Mall right from its inception and quite a number of other real estate projects.
Also in unit trust scheme – mutual fund transactions, we play a very significant role. When funds are approved by the security and exchange commission, you need a trustee to monitor the activities of the fund manager. We need to monitor them in terms of investments that are permitted under that particular offer. We need to monitor them to ensure that they are rendering the regulatory report that they ought to. Generally, we need to monitor them to ensure that everything runs smoothly because investors’ funds are involved. The Security and Exchange commission is trying to encourage retail investors. I as Funmi now can go and subscribe to a mutual fund.
Now, coming down to our products and services, STL Trustees has designed some products which are structured to ensure that even nominal income earners are able to create trusts for themselves, their children, and different personal reasons.
We have what we call STL CRV that is controlling your retirement voluntarily. What does STL CRV enable you to achieve? Long-term goals. This is a savings product which has been designed for income earners who are mindful of preparing ahead for post-retirement from paid employment. If you are an employee who has a pension plan being done already by your company, then you have the STL CRV to also complement that.
We also have the children education trust which, of course, like the name signifies, is towards educational trust. Do you want to have a plan ahead for your children? You can do that with our children education trust.
We also have the STL target event. Target event is for those who would wish to set aside some funds to meet a particular need at some determinate time in the future. The advantage of this product is that it simplifies savings for events by the client and ensures that the funds are available for the required purpose.
