Kola Ayeye led the group that resuscitated the former National Bank, which later merged with Wema Bank. Thereafter he was appointed by the CBN into the board that restructured Mainstreet Bank, which was bought by Skye Bank. He recently left AMCON where he served as the Executive Director in charge of recoveries and resolutions to become the Group Managing Director/Chief Executive of Growth and Development Limited.
In this interview, Ayeye shares lessons from his over 30 years experience in the financial sector as well as the the mission of GDL to address the collapse of the nation’s social infrastructure and empower the middle class. Excerpts.
What is your assessment of the economy and your outlook for the remaining part of the year?
You know the economy was in recession, technical recession, I think three quarters of negative growth, and we have come out of that. From what we see, that is going to be sustained. I think this year; the economy will probably grow maybe anywhere around 2 percent. So if you look at where we are coming from, that is positive. But it is not what we should celebrate because we are growing the population at over 3 percent. If you are growing the population at over 3 percent, and the economy is growing at 2 percent, it means quality of life is going down, per capital income is going down.
You also need to look at how low we were. We are taking off from a very low point, we have now become the poverty capital of the world, we have the highest number of poor people in the world. And if you look at South East Asian countries like Vietnam who are growing at 6 to 7 percent, we need to get out of this prison, to think that 2 percent growth is growth. If we don’t achieve double digit growth in Africa, Nigeria inclusive, we are not going to get out of poverty. So we are very far away from where we need to be. What we should be celebrating is that growth rate is now 7 percent, 8 percent, or 9 percent. Then we can start to say we are on our way out of poverty.
You recently expressed concerns about the collapse of social infrastructure in the country and challenge of the middle class. You also said your company, will soon roll out initiatives to address these concerns. What progress have you made in this regard?
You know when you want to do new things; it takes a lot of time. What are the concerns that we have? That the middle class in Nigeria is very thin, and painfully, the pressure even on the thin middle class is high. So the few people in the middle class are actually struggling very hard to remain there. The pressure is to go down. There are some other facts about education and health that are not very complimentary.
They said that 10 million school age children are out of school. They said 50 percent of those in school are not really learning. By official statistics maybe 30 million people are either unemployed or under-unemployed. The problems are huge. Now when you want to do a new thing, it’s going to take some time because the model we are evolving and we are working on is not charity.
There are a number of foundations around. We are saying what we want to do is to sponsor funds that are integrated in the core business objectives, not only delivering financial returns but also delivering social returns. There are a number of officers who are dedicated to it. We expect that sometime in 2019, we would be able to launch our first social fund. The areas of intervention we are looking at include education, health and unemployment.
We are particularly interested in the fact that we are a high interest rate environment. Now in a high interest rate environment, perhaps there are some opportunities to use those high interest rates to channel some of those returns into those causes.
You have about 30 years experience in the banking industry. At what time in your career did you develop this mindset and interest that informed the strategic focus of GDL?
For people of my age, we saw a bit of a different Nigeria. I went to public schools. When I finished my first degree, my dad then, though not a rich man, said to me, ‘If you want to do a masters degree abroad, I think I can find the money’. I did not want to so I told him I did not need it. I did a masters degree in University of Lagos. I qualified as a chartered accountant with the Institute of Chartered Accountants of Nigeria. I grew up in a Nigeria where there was very strong hope, we felt that Nigeria will by now be comparable to some of the Asian countries.
So that is the Nigeria where I grew up. Now when you grow up in that kind of context, there is also a seed in you that want to see things better. So I guess it is that part that always felt things can always be better. But I have said, GDL cannot afford to do things exclusively as charity, we are not doing it because those causes are nice or because we are charity. We are looking at it and we are saying there must be a way to integrate the solution of this problem and making money. But I love this country and I think this country does not have to be like this.
Is that what also informed the name of the company, Growth and Development?
It is very apt. It describes what we what to do. For most of my adult life, I have always felt it is important for an African country to make a point that the negro is not inferior to anyone. I think Nigeria has a big opportunity to do that. We are a young growing business; we want to do our own little bit.
The thing is that finance, capital is one of the core pillars of growth and financial institutions as custodian of the capital in the society can play a major role in the direction of that society. So knowing the power inherent in how funds are deployed. What GDL is saying is that, financial institutions in the developing countries have a duty that transcends what the duties are in a developed setting.
Whether it is government money, say for Treasury Single Account, at least in Nigeria, money that belongs to state, local government or to the private sector, it is in the custody of banks, and except banks make a resource allocation decision to a particular sector, that sector will be starved. So let us also see how we can use a little bit of that power for social good. That is the vision of GDL. But we will make money.
You have been involved in the resuscitation of closed banks namely National Bank, Mainstreet Bank, and lastly in recovery and resolutions as Executive Director in AMCON. What are your major lessons from these experiences?
My first experience in this regard is the restructure and turnaround of National Bank. As at the time when the group I worked with was approved by the CBN to take over and restructure National Bank, it had actually been concluded that National Bank was irredeemable. But our group did a very thorough due diligence and when we presented our turnaround plan to CBN, people thought that the biggest assets of National Bank were the real estates, but with the real estates, you still could not even turn National Bank around, but we did a thorough job, there were some unique situations based on the history of National Bank and based on the fact that National Bank was part of the restructuring of Nigeria’s sovereign debt and so had certain innate assets and which have hitherto had not been properly investigated. And by the time we put that on the table, CBN said it is looking doable.
One lesson I learnt from that is that, in the midst of distress, sometimes if you look deeper, there may be opportunities. That was the lesson I learnt from National Bank. We did that bit and we rebranded the bank and in the course of consolidation the owners said it was going to be merged with Wema Bank and we moved on.
National Bank was at my instance, we worked as a group and went after the bank, the second was a national assignment of some sort. CBN appointed me to the board of Mainstreet Bank with my colleagues. Mainstreet Bank used to be Afribank, to also restructure it and sell it. I think it was successfully restructured and a number of banks bided and Skye Bank bought it. And subsequent to that I was appointed to the board of AMCON.
One thing I will say is that, an area of concern to me at AMCON, AMCON is a very big organisation. The balance sheet of AMCON is in excess of N5 trillion but what I found is that we were more successful in recoveries from companies owning like N100 million, maybe a billion. But the people who owed the largest amount were just simply recalcitrant and I think the system needs to evolve a much more structured way for those classes of customers that is beyond the convention. It is very clear that the conventional method of debt recovery is not working with those people.
And if you continue to do the same thing you will continue to get the same result. That is my major take away from AMCON. With this category of debtors, you must think outside the box. Like they say that when birds learn to fly without perching, the hunter learn to shoot without missing. We need to find ways of making it impossible for those kinds of debtors to remain perpetual debtors without paying.
For me there are genuine business problem. Whether a business is small or big, I can live with real business failures. If a business have failed, it has failed but if people have significant assets, local and offshore and they are owing amount of money, we need to find effective ways that people do well by repaying loan in that system.