AfDB Holds Boards of Governors’ Meeting

have seen the reluctance that surrounded it. It took nearly 18 months of constant pressure and today, everybody is talking about its success. The truth is that you cannot make an omelette without breaking eggs. If we are too afraid, we can never do the right things and we would continue operating sub-optimally. When there are 20 things that should be done and if we can’t do all of them at once, why not pick one and do it and later you do the next one. We must set our priorities. Since Independence, we have just been going downhill. We cannot arrest decline of 59 years in one year or in four years. But we must decide to make a bit of progress. Let us agree that government is a continuum and ultimately we get there. So, there is no magic wand, it is just a series of difficult situations that we need to take, one after the other.

You own a pension subsidiary. There appears to be some form of apathy on the part of operators regarding the newly introduced micro-pension scheme. What do you think can be done to increase awareness on this new scheme?

I can say that we are very interested in anything that would develop that sector. If you are noticing any reluctance on the part of the Pension Fund Administrators, I think their concerns right now is that the guidelines have not been fully spelt out and in the past when they moved quickly ahead of their regulators to assume certain things and started on certain basis, later on it cost them a lot of money when the regulator takes a different approach. So, now they are going softly until all the rules are spelt out. So, it is in our collective interest to capture as many people as possible into the net.

Can you take us through your financial performance in 2018?

On 29 April 2019, we held the seventh Annual General Meeting (AGM) of FSDH Merchant Bank. This does not take into account the 20 annual general meetings the company had previously held when it was a discount house.

The AGM provided us with the opportunity to update all shareholders about the financial performance of the bank in the 2018 financial year. During the meeting, we laid our audited accounts for the 2018 financial year (approved by the Central bank) before the shareholders. The Group achieved a profit before tax (PBT) of N6.75 billion for the financial year ended 31 December 2018. This represented an increase of 21.4 per cent from the profit of N5.57 billion for the year ended 31 December 2017. Profit after tax (PAT) attributable to the group increased by 13.2 per cent, to N5.37 billion, from N4.74 billion the previous year. Earnings per share (EPS) for the group was 166 kobo, which is 2 kobo more than the 164 kobo earned in the previous financial year. During the period under review, all our subsidiaries posted profits. FSDH Asset Management (FSDHAM) recorded a PAT of N326.87 million, while the PAT recorded by Pensions Alliance Limited (PAL) and FSDH Securities (FSDH-SEC) were N1.47 billion and N64.16 million respectively. A dividend of N3.07 billion has been declared for the financial year ended 31 December 2018 (2017 dividend: N2.21 billion). The amount translated to N1.10 kobo per share (2017: N0.79kobo per share). So, the year 2018 marked the seventh year of our operations as a Merchant Bank. We remain committed to fostering mutually beneficial relationships with our customers by providing tailored solutions that meet their specific needs. The FSDH Group will continue to work within a robust risk management framework leveraging on technology. We will also continue to collaborate with like-minded partners to develop innovative financing and investment solutions which will enable us to exploit emerging opportunities and create shared prosperity in 2019.

Your results showed that your asset base dropped by 17.4 per cent and customer deposit by 14.8 per cent. And of the five merchant banks, it was only your bank that had this kind of trend. What was responsible for this?

We should understand that the figures that come out of a statement of affairs or a balance sheet, because it is a snapshot. Having said that, for us, there was a significant transaction that we were involved in that was repaid towards the end of the year. So, in terms of asset base, that was the reason for the drop. From the point of customer deposit, it is one of the things we are working on. We engaged Mr. Taiwo Otiti in August last year was hired as Executive Director for Information Technology and Operations. We understand that, IT is a critical part of our operation for any bank, especially for a bank like ours that does not intend to grow by way of bricks and mortar and branches. The way to reach out now is via technology and some of you must be aware that as a merchant bank, there are certain restrictions we have in terms of deposit size, but we can leverage on technology. Some of the distinctions that existed between the merchant banks and commercial banks are disappearing. For instance, as a merchant bank, I can’t issue cheque books to my clients. But the question is who is interested in cheque book today? So, we are leveraging technology. Also, one of the things that resulted in the drop in our deposit is that we are very mindful of how we raise funds and the cost of funds. We were able, in the course of last year, to issue commercial paper. So, the people who we were taking deposits from in the past bought our commercial paper. So, its same funding, but it was not reported in the balance sheet as deposits. And the beauty of going down the commercial paper route is that in Nigeria somebody can make a 90-day deposit and after few days, he or she will come back for it. But when they buy commercial paper, that is an instrument, they can’t come back for the money. They either hold it till it matures or they sell it to somebody else.

In 2018, you did very well in terms of profitability. However, you lagged the merchant banking sub-sector whose total profitability grew by over 40 per cent. What was responsible for that?

I will like you to re-compute that figure and exclude Rand Merchant Bank, and tell me whether you will still get the figure you got. So, I will say there is an outlier in the industry and you need to look at what took Rand Merchant Bank to where it is, from where it was. However, there are some legacy positions that I will say we have had over the years, that we have been working with, in terms of bond holdings and as we go on, you will see that it is being addressed.

The 54th Meeting of the Boards of Governors of the African Development Bank (AfDB) and the 45th Annual Meeting of the African Development Fund, the concessional arm of the Bank Group, will be held in Malabo, Republic of Equatorial Guinea from 11 to 14 June 2019. The Annual Meetings are the Bank’s largest event and would bring together about 3,000 delegates and participants.

The meetings provide a unique forum for representatives of governments, businesses, civil society, think tanks, academia and the media worldwide, to dialogue on key issues concerning Africa’s development.

This year’s calendar of events includes a high-level presidential dialogue on the topic: ‘Boosting Africa’s Economic Integration.’ There would also be a special presentation of the Bank’s flagship African Economic Outlook publication for 2019, released in January.

The theme of this year’s annual meetings is “Regional Integration for Africa’s Economic Prosperity” which is one of the Bank’s five strategic priorities.

“With 1 billion people, Africa has a combined GDP of more than $3.4 trillion. Such a market could create huge opportunities for producers on the continent. But, to make it a reality, African governments and regional economic communities must intensify efforts to facilitate the free movement of goods, services, people and trade across borders.

“The Governors of the African Development Bank are from the 54 African regional member countries and 27 nonregional member countries,”