• Speaks on new digital app
Azubike Emodi is the Managing Director of Anchoria Asset Management (AAM), a specialist firm that provides active investment on products and services for institutional and individual investors. Emordi has over 15 years’ experience in the financial service sector and has rebranded to meet investment needs of its customers. Prior to his current role, he had worked as the Managing Director of VFD Microfinance Bank. In this interview, the CEO speaks about investment opportunities in the Nigerian economy, debt accumulation, the manufacturing sector and how the African free trade zone agreement could boost the economy.
By Yinka Ajayi
How would you describe your humble beginning and as a child what are the things that influenced your life?
Actually, a lot of factors contributed to my development as a child and prepared my path as I journey through life. I was born and raised in Onitsha, Anambra State. I attended Premier Primary School, DMGS, Onitsha and the University of Nigeria, Enugu campus.
My father was a lawyer and mum a school teacher who taught at Dennis Memorial Grammar School, Onitsha. The early part of my life was spent in Onitsha until I got to JSS3 when my parents relocated to Obosi where I spent three years in school before I moved to Enugu State for my university education.
I had a strict background, growing up with disciplinarians in the village; in those days when a child is raised by a teacher, in the community, people accord such child with respect and is treated as a role model for others to emulate due to the values instilled in such child.
Let’s look at your career path. From the banking sector, you ventured into the corporate world and then investment banking and then asset management. What was the turning point?
As a child, I developed keen interest in financial services, so I had the flair from childhood. I remember back then in the house, I was called a banker by my siblings.
My parents would give me money to keep and anytime they wanted it I will always bring the records and the money. I think that act actually influenced my choice of career, though I read banking and finance in the university. After I graduated from school, I worked with Zenith Bank. And when I traveled briefly to Canada, I worked, with Royal Bank of Canada before returning to run VFD Microfinance Bank which I supervised the affairs for six years.
Today, it is the foremost digital microfinance bank in Nigeria. Basically, it has always been financial service and what I actually do as an asset manager is related to banking activities and services but the difference is that banking involves savings and lending while in this aspect, I take financial decision on clients fund, portfolio and investment. VFD Microfinance and Anchoria Asset Management are affiliated companies.
You had a stint at VFD Microfinance. Compared to Anchoria Asset Management, your job jurisdiction and description, was it same?
It was a confluence, there was a meeting point, but the latter is a bit more specialized. It is similar because both involve getting clients. One gives you good resources to manage while the other you make use of the resources at hand.
More so, in one aspect, you use the resources to create loan but in the other scenario, you make investment decision, whether it’s in fund or some other portfolio you create for your clients. When you do so, you have helped them take an investment decision or decide on their behalf how the cash would be spent. You have to tell them what to do with their money unlike banking where you can create a loan and you don’t need to know who you are giving the loan to.
It’s been seven years of innovative administration. How have you fared and how has the portfolio created affected others? How would you weigh the gains considering inflation?
We have had some very good rewarding returns on our investments; we don’t just work to beat inflation. We work and create value for the client. Within the last seven years, it has been very challenging.
Clients are always asking for more opportunities to help effectively navigate rough terrains now and in the future especially in a situation where devaluation is happening every day, and inflation going up without control. You don’t have investment returns coming up in that same portfolio and there is nothing we can do about it .You can also see the decline that has happened in the equity market in recent times.
While inflation is going up and there is a decline in the price of equity, it affects equity portfolio as well. You would be able to navigate all the challenges if you know where to exit. You should know when to re-enter and that’s what makes you an outstanding asset manager.
As an asset management firm, what are some of the innovative financial products which you launched recently?
Apart from providing the basics of the services which include asset management and portfolio management, innovation prevails during times of adversity. We offer value centered asset management, a business model under financial and social pressure. It involves a more balanced approach that considers all stakeholders, that is, clients, employees, communities, even the environment.
We are dealing with a wide range of clients and it can only be digital because if you want to drive around to meet everyone in Lagos, that makes the job extremely difficult. What we came up with is creating our own app, SEEDS, developed by Anchoria. It’s a digital app that helps you access our products and basically make investments as well as financial decision.
The app also is tailored and designed with clients in mind. This is the kind of asset management product that we offer and, certainly, clients love to have, so we made it democracy. Some investment type is just like before for now. The HNI kind of products like Treasury Bill Eurobond is for a certain class of individuals; that if you don’t have 1 million you can’t buy it. What we did with the app is to make it open. Some of these products can be bought as a firm, then you create a note on the products by breaking it down to smaller units so that retailed client could subscribe.
If you make it open to the public, it would get across to a wider range of persons and it would be good enough for every step taken on the way and we have to work with our regulators. We have got regulatory approval for some of these products and, the way we are regulated, we are expected to get approval for all products.
We have been an intermediary between the regulators and those at the bottom of the pyramid. Today, if you intend to buy Euro bond, you need 200, 000 dollars or if you want to buy Treasury Bill, and you walk into a bank, you need like 250 million naira for a market trading size, but here with 5,000 or 10,000 you can buy a Treasury Bill. In the same vein, with $5, 000 you can buy Eurobond instead of 20, 0000 dollars. We just made it easy and look simple. Now we are using the IT mobile app to disseminate information, anywhere you are, you can just download the app to create your own account and fund it to start enjoying any of the products we offer.
What are your projections for the year? What financial services does your firm have to offer, the regulator’s policies and effects on people’s disposable income?
Inflation is the greatest issue on disposable income of people. People are now spending a lot more on living expenses and, in most cases, there’s barely anything to save. The income level has remained the same but the expenses level keeps increasing; house rents are rising on daily basis while prices of food and commodities skyrocket.
The recent issue we had on petroleum products has also added to price hike. Since there is increase in the price of petrol, it has affected the price of transportation and a lot more people are saving less. But what we are trying to preach to people is that no matter how bad it looks, you must try to save because in savings, it is not how much you save but it’s about the culture to save. If you can’t save on a salary of 100, 000 I bet you can’t save on a salary of 1 million naira; it’s not just the money but the culture to save.
Businesses in Africa go through a lot of challenges in accessing finance especially from commercial banks. How can an asset management firm or a financial institution solve this need to access finance for SMEs?
There’s a great opportunity in that area.
Absolutely, asset management companies can help in financing SMEs. Commercial banks, most of them have grown too big to assist SMEs. Although there is nothing bad in it, growth is meant to happen and sometimes it becomes a distraction to go down and start evaluating every single business.
In my early days in the banking sector, to get a loan, no matter the amount, whether 5 or 10million, it was decided at the head office and we have branches spread across Nigeria. But we have a different view, it’s world apart from what reality is. But when you now have SMEs and there are small units that equally have capacity to evaluate them at a different level, you can offer them some sort of credit; it’s also good for financial development.
Some of these innovative ideas you put across, have they been championed within the financial sector? Is the CBN open to other agencies?
The market is open based on your licence and what the regulations permit. It is one of the reasons you have the microfinance bank which also give some of these SMEs loans. For the finance companies you have opportunity where you invest. And also technically, SMEs get debt financing.
You don’t really need CBN before you can give out loan. You look at the product and access the ones within their circle of your operation that is what you access.
How do you think the African continental free trade agreement will accelerate networking between SMEs in different African countries which will, in turn, boost their revenues?
The free trade deal will boost Africa’s economic development. It is a new agreement created and could generate greater economic benefits than previously estimated. If fully implemented, it could raise incomes by 9 percent by 2035 and lift 50 million people out of extreme poverty. To realize its potential benefits, the agreement must accomplish its most ambitious goals which include harmonizing policies on e-commerce, investment and intellectual property. Actually, it would scale up the economy.
I have a friend we funded during my time in the bank; he processed coconut chips and produced coconut oil, and a few other things; surprisingly today, I learnt that he imports coconut into Nigeria to produce all those things and he is running at a loss. If you check the cost of importing the coconut oil, the processing and transportation costs, you will discover that the expenditure is on the high side.
When the cost of processing is cheaper from a nearby country, you rather import from another country than go through such stress; you could just produce there and still look for the market by either exporting it from there or bring it to Nigeria to export. This is the type of collaboration we need; in some cases, there are products called cross products integration that might need to happen.
That is, you process a product halfway and you come into another country to finish it rather than carrying the whole product yourself trying to manage it yourself. So, with free trade, the borders are really open and we will see the impact, but initially, if a country is not getting it right in terms of agricultural processing, what is needed is partnership. The fear is that they might be on the losing end but it spurs everyone to do more work; everyone now needs to wake up and do what they ought to do. Otherwise, you watch your citizens go into another country where they are doing business a lot better compared to yours. They start doing things because there is free trade and free movement across some of these nations.
What challenges do asset management firms face on illegal financial flow from outside the region?
Well, it is just that regulatory issues make it more difficult to do business if those things are not considered. It borders around regulatory exposure that can happen around it. Also, it could mean attracting fund for a new business which might be a bit difficult.
Anchoria Asset Management, during it’s re-launch, said aims to be one of the leading investment solution providers in Nigeria. How well has the brand penetrated into the Nigerian market?
We have seen a lot of progress in less than five years of operation. We have clients from different walks of life: The HNI, corporate, retail and at different classes. Meanwhile I think there is still a lot of room for growth. The expansion we wish definitely would come major from the use of technology because we can’t be everywhere; we have also talked about collaboration at different levels.
Today, we have people that do agencies, they begin at a different level; so, if we push our products through it, then our products can also gain access and go round the places wherever they are operating from, so, we have made a lot of progress. We did not just focused on rebranding to change the logo, but the brand is in the offering. What the clients get from us, that level of satisfaction is it because they had a business dealing with us that was successful. We want clients that deal with us and tomorrow they are referring more clients to us such as family and friends and we would like the kind of feedback we get, most of the time, where people would say “if not for Anchoria we wouldn’t have this investment deal come true”.
As a financial expert, what is your expectation from the next government in terms of building the economy because recently NBS told us that the nation’s debt has exceeded revenue?
When you discovered that you are in a hole the first thing is to stop digging further. So, you will have a chance to come out. We need to stop accumulating debt, it might be painful in the first place but we need to stop at some point. There is no end in sight if we continue like this. Also, we need to move to production because if you look around every room you enter in Nigeria including this one here where we are having a conversation, 90 to 95% of the things are imported in one way or the other. If you are wearing a traditional wear the one we call senator, the material is imported; the only thing local is that a tailor made it. We need to start producing, so we can export as well.
The way the dollar moves needs to slow down. Invariably that would curb inflation. Our teeming youth population that is unemployed, 33% of a population of about 200 million people and the number of out-of-school children, what we need to do is to encourage production that includes fabric, developing the clothing and textile industry, cosmetics and more importantly food processing and technology in Nigeria.
We export a lot of unprocessed food; so, how do we process our food line of products if what we can get from cassava alone is mind-blowing? Are we processing enough? How do we manage our crops after harvest? We have plantain in large quantities. How do we convert them to chips before selling them? What about cashew, why are we not converting them to nuts before exporting?
When we export cashew and want to import them, we are importing them at six times the cost of export just like our coffee and chocolate, why can’t we process and export them than exporting them in an unprocessed form? When we import, the inflation that comes with it, we have a lot of imported inflation in Nigeria. Abroad, places where they process some of these things, they ask for high wages. The high wages and every other cost of production are fixed into these products.
However, Nigerians who work here do not get their wages increased even for once. They pay a lot of people out of job; even the manufacturing companies that employed some of these people, they are shutting down because they can’t even import spare parts or raw materials since there is shortage of dollars and inflation.
There is also energy crisis, those in charge need to address this, so we need to start processing our agricultural produce to stop our huge dependence on importation of agricultural products.
Although some of the biggest products that we import are petroleum products and diesel. This could be done here if the refineries are functioning properly. Even if it is to give some sort of modular refinery licence for diesel we need to make things work