Aigboje Aig-Imoukhuede, founder of Africa Initiative for Governance (AIG) and Coronation Capital in this interview at the Oxford Business Forum on Saturday speaks on fixing Nigeria’s broken civil service and why private sector should get involved. BusinessDay's Frank Eleanya captured the interview.
Tell us about your journey in the banking sector?
People describe me as a banker, entrepreneur, I think that the history of individuals has a profound effect on what they become. The reality of your growing up and your circumstances influences you in one way or the other. I am an Africa. All my schooling was donel in Nigeria, I studied law. At the time of my birth and schooling we were trained as Nigerians to think that the Nigerian could be as productive, as effective and as important as any individual from any other part of the world in any chosen field of endeavour. There is a lot of evidence of that; I was born to civil servants as parents. Growing up, the best in Nigeria went to the civil service. As a child, that was what I understood as the talent pool in Nigeria. For reasons best known to the military, they decided to stop investing in the civil service. I saw the effect on great men and women who have done great things and this near decimation of their relevance and contribution; I decided I was not going to work for government. I was in primary school by the time I made the decision. I looked at the private sector, I said to myself “I will lead a multinational.” That is what led me to study law. The multinationals that were doing well in Nigeria at the time were either oil companies or fast moving commercial goods (FMCG) companies and most of them picked lawyers as their CEOs. I left school quite early and I went to law school. While there, I had friends who’ve gone into banking. They told me about what it was like to work in a multinational merchant bank in Nigeria at the time. That got me thinking of working in the banking industry at least for the Youth Corps period.
I got into what was Chase where my life changed. Youth Corpers were not meant to do the kind of things I found myself doing at Chase. There was some talent spotting mechanism which got a Youth Corp member in places like the board room and deals. From that point till now, my life has been one where people look at my talent and basically put me at things. I was doing things at the age of 22 that most people did when they were 35 to 40. As a result, no employer could allow me to go back to graduate school. I could go for training inasmuch as it was not longer than one month. I did not have the opportunity to sit in a classroom like this. But certainly my talent and capital were developed.
It was particularly honed in a bank called GTBank. I joined it as a startup, pioneer staff and the bank has gone from about $1 million or less to about $3 billion in value today. I was part of the team that built the bank.
I became very unhappy at the age of about 30-32. I did not know why but I remember telling my mother “Look I am very unhappy.” Her response was, “You are completely mad!” They allowed me go for three months to Harvard for an executive program. At the time my brother-in-law who has passed away had just finished his MBA and was organising a conference. He looked at me and kind of understood where I was. He gave me a book titled ‘Buy Out’ and it changed my life.
The book speaks to two types of entrepreneurs; people who will do great things as part of teams in salaried employment and those who will do great things as owner-managers or owners of teams. It might be for profit or non-profit, it does not matter. I wanted to be an owner after I finished the book in 2 hours. I said I was coming back to Nigeria to buy my own bank. I was 32 at the time.
I saw a tag team of two-owner managers in Guarantee Trust Bank, so I knew the power of it. But what was important to me was that this bank was the beginning of something. It was not the end. I was going to buy my own bank, but it was not about building my life around that bank. So I knew I needed to search for the right partner who will together with me and a larger team basically change the way the financial services industry in Africa worked. We will start with this bank and it will go on and on. I also felt that this was not about me and I wanted it to continue when I am not here. That notion of sustainability runs through everything I do.
We started trying to buy banks like GTBank, it was the best, but maybe banks just one-rung below. We found that it was a bridge too far; it was either too expensive or something else. We were both worth $2.5 million at the time. We went to the opposite side of the ranking spectrum, bottom of the barrel. The bank we eventually bought – Access Bank - was even below the rung. The best way to describe the bank was our $2 million plus $8 million of leverage bought us 52 per cent of the bank. The bank had a foreign balance sheet that was less than - at the time - Aliko Dangote’s credit card limit.
I ran the bank till 2013. We have grown in organic and inorganic fashion. With the last deal that we are just closing, the bank will rank the largest bank in Africa in terms of customer base, it would have about $20 billion in assets and $2 billion in capital.
How do you turn a bottom performer into one that Access Bank has become?
First it is about talent. You can have the right strategies and the right resources but if you do not have the right talent, forget it. You can also have the right talent and nothing, but every other thing will fall into place. So it is about the talent. Fortunately, this was an area where we had both domain expertise and local knowledge. We asked ourselves “What is the Access Bank person?” We said “It wasn’t a GTBank person.” We wanted to grow faster than GTBank. It had to be a mix of a GTBank person and a Citi Bank person. We felt that the Citi Bank back office was the gold standard. We also wanted a mixture of top four McKinsey type.
What is great is that those people; the Access person, can be sent to any task you can think of in their area of expertise and they will excel in it. Access UK for instance which we started ten years ago is the most successful challenger bank in the UK.
Explain the Black Rock project?
This was never a story about a bank. This is a story about really changing the way the financial services operate across Africa. The one thing that is not done enough in Africa is understanding the customer and the pain they feel and providing solutions to that pain; whether from a private sector perspective or from a government perspective. I think that is what is going to trigger the African potential and how to realise that potential. At the short end of life, if you look at the development of the human being and what Maxlow told us, he said at the very base level the human being’s needs is around shelter, clothing and food. Until those things are satisfied, the human being’s thought process does not go beyond that. When you say you want to change Africa or vote based on philosophy, the person has not eaten.
For Africa to pup, for the private sector to truly enjoy Africa, you have got to lift the human beings. When you look at the 1.2 billion and maybe in 2040 it is going to be a 2 billion market, will it be a 2 billion that is still thinking about how to eat or one that has been lifted being that point and are making choices around real value. I know what type of Africa I want. We realise that in terms of solutions we provided as commercial retail bankers which is around savings and the notion of transfer of funds and loans, it is interesting but it is not going to lift us. Until we start getting Africans to invest and provide a real return on that investment, we will move but not very far.
One of the big reasons Africans are not investing is that the financial services market has developed in the short end. Great things like MPesa have happened, but that is not going to develop Kenya. To get Kenya developed, the capital market has to develop and you have to mobilize savings into investment, not keep money on an MPesa phone wallet. To do that, you need public sector institutions and intermediaries that have the capacity and the clout. Mobilizing private capital makes a lot of sense.
In building Access Bank, I never once had a conversation with a private equity player. Yet, we have mobilized more capital as Access Bank than probably the entirety of private equity industry did at the time. If you think about people like Aliko Dangote, private equity is actually not relevant to the true growth of stories of Africa in the way it is offered. But I love the idea and the talent and skill that goes into private equity. It is relevant if we do it the African way.
Hence, we want to create a platform that takes all the domain expertise of private equity, venture capital, insurance, asset management and put it into a project, Africa’s Black Rock. We have been working on it for a while with McKinsey. The notion is that over the next ten years, we create this model that allows investment management in Africa to work. We do not want to be the only players. We want others to follow that model. We will love to have it replicated across Africa.
How do you think about the asset management business going forward in Africa, bearing in mind that the metaphor of Africa’s Black Rock is great but it may look very different from Black Rock?
Why Black Rock? Simple, technology. Technology in Africa is a transformational force that is much more relevant than it is in Asia and elsewhere because the infrastructural constraints in Africa are huge. The costs to overcome those constraints are beyond capacity of the capital available within the country and the capital outside the country that is ready to come. What we find is that the most viable means of overcoming or leapfrogging those challenges has been in technology.
The journey from a typical African asset manager to a world class asset manager operation today can be cut short from ten years to 18 months using technology. I can create for you a world class asset manager anywhere in Africa simply by having the technology infrastructure and having people to operate the technology. This includes all side of the asset management business. It is one thing to have the firm and another thing to have the people to operate the firm. The technology bit was not easy to overcome at first. But we are well on solving it.
The challenge is talent.
When you are building out an enterprise, there are two types of people you need, both must be smart. You need people who have such a complete mastery of the subject matter that their contributions are going to be striking. But there are certain roles where those contributions are not enough. So you need people who have strong local knowledge, domain command and control. Their intuition and innovation in a local knowledge is amazing. Our first 18 months we are looking at 250 people. A 100 are in the first category which means recruit from outside Nigeria while 150 are local. If we are successful over the next five to seven years we are going to need a total of 1,000 people, the same ratio. One of the things we would have to do is for instance, those who we are recruiting locally, we probably have to send like 20 people to schools like this every year. I am not doing this only to make money; there is a larger goal which is providing transformational solutions to Africa’s very unique challenges.
What is the African Initiative for Government about? How does governance impact the private sector?
I have known Africa when it worked. Chinua Achebe is the most publicised author in the world. Did you know that he wrote five of those books as a civil servant in the Nigerian Broadcasting Corporation (NBC)? He was doing his job as a broadcaster and writing books that will change the world at the same time. That is the quality of talent. It is no surprise that the University of Ibadan, the first university and NBC in the early 60s hosted people from all over the world including Lee Kuan Yew to understand what standards of running a country was about. The schools were good, the policies around forming a country made sense, and then there were interruptions.
What is obvious is that the correlation between economic development and the quality of government is perfect. Even from a selfish standpoint, as a businessman, I have seen what has happened when you have the right policy context. Every example of a great economic opportunity that you can point to anywhere in the world, has behind it the right policy context and behind that right policy context is a public servant elected or bureaucrat who has done a great thing. The MPesa, contrary to what many think about it, is not a private sector story, it is a story of a Central Banker who had a vision of life beyond traditional banking and who was ready to take risks to recreate and re-architect the way Kenya worked. You then had a private sector that embraced it.
The story of telecoms in Nigeria, a country with 60 – 70 million people 400,000 phone lines which operated that way for 30-40 years. Then you have a president who says, "I have gone across the world and I see this device called a mobile phone, why don’t we have it in the millions that you have across the world?" He appoints a public servant and the rest is history.
My investment thesis is that in Africa, if you can meet a well-developed public servant who knows how to traverse the issues of reform, you are going to make a lot of money. In my personal life, I have had challenges and in my business life I have had challenges that almost took my life.
To change Africa, the private sector alone cannot do it. We need public sector partners and we need capacity in the public sector - of a level that is actually stronger and higher than we have in the private sector. Hence, scholarships, fellowships, can become vehicles for us. Part of the reason I try to make money is to make investments in places where countries are not investing. African countries are not investing in public servants, it is not enough but I think it is a start. It is significant enough to have gotten the Nigerian government to embark on a public sector reform process which was signed off about a year and half ago. But in implementing that process there are challenges. That is what it is all about.
We want to put up in Nigerian an institute of the quality of Brooklyn’s where civil servants in Nigeria will be trained out of their brains. I think that as we do this, others will begin to do the same. If we don’t fix the human capital deficits in the public sector, we will be limiting Africa’s opportunities.