|
Getting your Trinity Audio player ready...
|
VFD Group is a financial services holding company that is strategically reinventing its multi-sectoral platforms to include a digital bank to suit the present and next generation customers. In this interview, NIYI ADENUBI, vice-chairman, VFD Group, explains the strategic thinking behind this, importance of corporate governance and the plans of the group for future businesses. He speaks with KELECHI EWUZIE. Excerpt:
What is your assessment of the level of Corporate Governance in the industry you play in?
Most financial service companies are regulated either by the Central Bank of Nigeria (CBN) or the Security and Exchange Commission (SEC). Across board, the financial sector is one of the sectors that uphold corporate governance status.
At VFD Group, we are very strong on corporate governance, but we know that sometimes when you push it too far, it can impede business and growth and make it too expensive for most businesses.
What are the obstacles to complying to the Corporate Governance Code and how do you think this can be overcome?
There are many things than can be done to fix the issues in the Corporate Governance Code. The first would be a gradual mind-set change in the way people in the business community see corporate governance.
Some of the ways to do this is to have role models within the business community who people look up to, who will become champions of corporate governance. The truth is that the single most important element for a business to be successful is corporate governance.
A company can do well over five years or more, but if it does not have corporate governance policies in place, it would not be a sustainable company.
As a company that has an investment arm, and also looks to doing third-party deals, we noticed that in non- financial sector companies, there is not a lot of strong corporate governance.
Typically, when companies are owner managed or family managed, there tends to not be a lot of corporate governance especially in the appointment of an Independent Director.
How would you assess the performance of the financial sector in the last four months?
The last four months for the financial sector has been good compared to where we are coming from. In 2016, Nigeria experienced four consecutive quarterly negative GDP growths in and was declared to have been in a technical recession at that point.
However, in 2017, we have seen improvements because most of the earnings as reported by the companies listed in the Nigerian Stock Exchange suggests that things are improving. Also, some of the policies around the foreign exchange are now market friendly and we in the business community are happy about this. For example, the new FX policy has had a positive impact in the capital market.
What is the current asset base of VFD Group and what is the expectation for the Nigeria market for the rest of 2017?
We are still a very small company, but it is our history that makes us very interesting. When we started as a business about seven years ago, we were looking to raise about N100 million, but we were only able to raise about N2.5 million in 2009. Since then, we have organically grown the company and now we are worth nearly 10 billion naira in terms of asset base.
Your company wants to launch a digital bank in Nigeria. What informed this decision?
Currently, we successfully run a Microfinance Bank-VFD Microfinance Bank- and two things informed our decision to set up a digital bank. One is the rise in the use of technology in the world over. Technology has become pivotal in almost, if not all, businesses. Businesses have to incorporate technology in their model, or they might be irrelevant in the future.
The second reason is the demography of sub-Saharan Africa. A majority of the African population are young people. Data suggests that in Nigeria, about 60 percent of the population is under 35 years old and about 50 percent under 25 years old. This demography is tech savvy, they don’t go into the bank for many transactions like the older generation did.
So we believe that with a good platform, we can reach a sizeable number of this people and bank them for life.
As a new entrant into the digital bank space in Nigeria, how do you hope to deal with challenges that may occur in the process of adoption?
It’s still the early days. The whole sector is transitory. For example, a big bank announced the launch of a digital bank. Recently, another big bank, one of the biggest in the West African region announced that it is reducing its branch network and is going to focus on digital platforms.
So everybody is playing in that space, but the question is who is going to have a platform that is really going to excite customers and have a good adoption rate? I think we would be one of the best in this group.
As a sector, the biggest challenge we would have is broadband penetration which I think the government and private sector are working to address. Nigeria has less than 5 percent broadband penetration. My understanding is that the government and business sector are working together to enhance this to about 30 percent by year 2020. I believe this is feasible and doable. We are hoping to launch the digital bank in the first quarter of 2018.
What is your take on the issue of talent management in organisations?
My personal take and the take of the company is that it is a major challenge for businesses in this country. We have come up with a philosophy around the issue of talent management. This is one of the most important issues for us asides corporate governance in terms of how we manage our people. Based on this, we have created a Management Trainee Program which runs a rigorous training schedule for a 12- week period where we select people from all over the country that will work in different departments in the organisation and find out which suits their particular skill sets better.
We have completed our first successful scheme and we were able to recruit some really talented people who are now working in different departments in the organisation. They are on the fast track to mid-level leadership.
Aside from the management trainee programme, we also have a mentorship program which allows all our young employees to have a senior executive that mentors them and show them a career path that they can pursue within a very conducive and supportive environment. In addition, we do send our people on requisite trainings from time to time.
The issue of human capacity remains critical in Nigeria. What strategic plans need to be put in place to address this?
The issue of developing human capital in required workforce skills represents a challenge for even the Western world, but they are tackling it. So much has changed in terms of the skill sets that are relevant for the workplace of the future.
There needs to be a lot of research and engagement between public sector and the private sector, so as to find out things that need to be incorporated into the education system in order to modernize it in Nigeria.
The trend that we have seen around the world is that we are transitioning from the Industrial into the Information age. The way the trend is going, companies are run a lot more efficiently and need even less people. The focus needs to be on re-educating and re-orienting our people so they have the right skill set for the jobs of the future.
The education system in Nigeria is now obsolete. My understanding is that our curriculum has not been updated to suit modern reality. Most of the graduates that are being produced are not ready for the jobs that are available today. We live in a digital and information age. Everything is changing quickly so we need people with the right skill set to take up the jobs that are available.
Government has a significant role to play in terms of the educational infrastructure and I would like to see a large percentage of our budget expenditure used in the educational sector to build more schools and improve teacher training and introduce technology into schools. The good thing is that Nigeria still needs to industrialise so we can still make use of those jobs.
Where do you see VFD Group in the next five years?
In our portfolio of companies, we would like to have a consumer bank significantly powered by digital platforms. We would like to be in the insurance business, we are already in the asset management and microfinance business.
We are also in the real estate business; financing real estate development, but we would also like to finance the acquisition of real estate i.e. mortgages for our buyers. We are also open to investing in new age businesses.
We hope to be a business that will be instrumental to the transformation of the Nigerian economy while we also sustain the traditional part of the business.
