Small businesses hold the ace in growing Nigeria’s GDP, says Dozie

Uzoma Dozie took over as the Group Managing Director and Chief Executive Officer of Diamond Bank on November 1, last year, after Dr. Alex Otti resigned from the post to pursue his political ambition. 46-year old Dozie began his banking career 21 years ago, spanning various roles and functions related to credit and marketing; planning and financial control; and business process re-engineering. He graduated in 1991 with a Bachelor of Science degree in Chemistry from the University of Reading, Berkshire England and later obtained a Master of Science degree in Chemical Research from University College, London in 1992. As he progressed in his professional career, he enrolled at the Imperial College Management School, London, where he obtained an MBA with specialisation in Finance (MBA finance) in 1998. He started his banking career from Guaranty Trust Bank Plc in 1993 where he worked in the Commercial Banking Unit and later moved to Citizens International Bank Limited, working in the Oil and Gas Division. In 1998, he joined Diamond Bank Plc as an Assistant Manager and Head of the bank’s oil and gas group, where he expanded the financial institution’s hydrocarbon business portfolio. Having acquired years of experience in business development, Dozie moved to the Financial Control Group of the Bank in 2000 and rose through the ranks to become the bank’s Financial Controller. As the Financial Controller, he was charged with the responsibility of managing the bank’s balance sheet, developing various MIS reports and reporting the Bank’s financial records to regulatory authorities. In 2010, his responsibilities were expanded to include acting as the bank’s Chief Financial Officer (CFO). In February 2011, following the appointment of a new CFO, his responsibility was modified to cover Corporate Banking and all Businesses in Lagos and West regions. In January 2014, he was re-assigned to the Retail Banking Directorate and appointed Deputy Managing Director in April 2014, until his appointment to the present position. In this interview with Business Editor, ADE OGIDAN, he explains strategies employed to steer the ship of the company through the difficult era of elections and plummeting oil prices. Essentially, he discusses the strategic option for the country to diversify the economic base, currently dominated by crude oil.

When you took over as the bank’s helmsman over a year ago, what were the initial challenges you had to contend with in the financial institution’s operations?

Well, the challenges came mostly come from the micro economic environment. Then, we were in the middle of the electioneering processes. The oil price had come down to about $50 a barrel. We were, as a nation, still enmeshed with micro economic challenges. So, the major challenge to bank was how do you do business in this kind of environment. At the time when I took over, we had customers across all the sectors of the economy, but our main strength was in the retail segment of operations, which necessitated a restrategising process to compete effectively, in order to successfully do business in this space. In the last one year, what has happened in Diamond Bank is the execution of our retail strategy, because we believe retail is the future of banking business in the country. We believe so because with over 90 million adult population in the country, we have only a small per cent that were bank customers, based on the last BVN exercise conducted by banks. We realised that although, there many accounts, about 60 million people do not use the financial institution to transact businesses. So, as an organisation, we decided to take advantage of the opportunities within the economy , by channeling a good percentage of our resources to that retail space, without compromising other services in the different segments that we operate.

Which value addition have your customers enjoyed since then?

Essentially, our approach has been holistic, and that strategy has enabled us to ensure that our services appeal to the various interests of all our customers. We have actually been going beyond rendering normal banking services to our customers. For example, in respect of the blue chip companies, we go beyond providing loans as we also give advices to them in the management of their respective businesses, which also include their value chains. For a manufacturing company, for instance, we help their suppliers and distributors to facilitate payments for their respective transactions. We have also been doing very successfully on the retail side as we have come out with products that will bring people into the financial sector, one of which is DiamondYello, which allows people to open their accounts through their mobile phones very cheaply. In the last one year, we have seen 5.4 million people opening accounts through it. We also have the better proposition in collaboration with women, especially those engaged in financial services through their local means, like ajo. So, what we did was to create a new banking solution for them where we have agents that go out to meet them to open accounts, through their mobile phones and they can now do their transactions in the 18 months. We now have 250,000 customers in the 145 locations that we have opened and the average balances are actually higher than most of our savings accounts.

In summary, we have been providing solutions that people want. We are optimising our products and services to reach more people. On the processing side, one of the things we have done successfully is the digitalization of our processes, because we believe that to be a bank of the future, we have to be digital. We are trying to remove all the manual processes and put a digital platform to allow us to provide services in a cost effective manner and reach more markets.
But you need to build a strong workforce to meet your corporate expectations. What have you been doing about this?

On the people side, we are building a team that can cope with the rising challenges in the industry in particular and the economy in general. We are creating a team that knows where we are going to and putting that support system in the business that allows you to provide these services in a very cost effective manner. Our team has been equipped , through a strategic process of training and development programme, to cope with the requirement of modern banking. If you look at our branches today, you will feel the impact of the several initiatives put together to ensure effective service delivery to all our customers

How have these initiatives impacted on your balance sheet?

We have to take everything in context because the core value of a bank is the number of customers that they actually serve It is never the balance sheet but who are my customers, what are my customers doing with me and how many customers are coming to Diamond Bank every day and that determines what the balance sheet is going to look like and like I told you, I have acquired new customers in the financial inclusion space and through the product and services we are coming out with, we are creating a new set of customers who are interested in the services we are providing that will bring in a new set of incomes. From a balance sheet or operationally perspective this year, despite the challenges in the economy, our cost of doing business is flattening out, since as we get new customers, our cost are not going up in that same vein which is very key, especially in a time the economy is flat. So, you must ensure that you manage your cost well and we can do that by changing the way we do business.

But to which extent is the Treasury Single Account (TSA) impacting on your business?

The immediate impact is that the balance sheet may drop, but for us, what is important is not the size of the balance sheet but the efficiency of the balance sheet in terms of the ratio we look at, which are indicators of how sustainable the bank will be in the nearest future. So, our net interest margin is very key to us because that is the indication of the quality of the management of the resources. Your return on equity is always important to us which is imported from the stakeholders’ perspective and also from a perspective to raise more fund in the future if there is a need to do so.
I must however stress that the mopping up of the system, through the TSA, means that people are going to focus on other areas of the economy. That will mean that as a bank, if those big ticket transactions that you get are no more there, you may need to channel your resource to other areas, to effectively secure more deposits. It means that as bankers, we need to stimulate other areas of the economy and indirectly create opportunities for job creation aside the bank itself.
So, the TSA would require diversification of revenue streams in all aspects of the economy. At the Federal level, we need to reduce our reliance on oil and look at other areas such as agriculture, mining, tourism, goods and services so government needs to create an enabling environment and legislation that will bring more foreign direct investment more interest in Nigeria which is done in smaller countries in Africa.

In your operational activities, which sectors are you focusing on to achieve improved balance sheet?

Micro,Small and Medium size Enterprises (MSME) is one area where Diamond Bank’s strength is and that is where we think the future of banking is. We have over 17 million small businesses that are under-banked. MSMEs, in order of priority, would require capital, access to the market and then advisory services, from feedbacks that we received. Diamond Bank launched a MSME product in 2006 and this was a proposition we worked with IMC. With MSME, we have people that have capital and it grows to a certain point and falls because they have not built that management capacity to sustain their growth and success. Secondly, you have a lot of capital in Nigeria for MSMEs. The problem is that you must be in a state of readiness to access that fund. We have over N600 billion worth of capital, so, the capital for MSMEs is not an issue. The issue is if I walk in as a small business to a bank that I want to access the fund from, do I meet up with the minimal criteria. That is where advisory services come. You must first of all have a bank account, you must show that you are financial disciplined and it means that you get payment for your goods, you put it through your accounts and you make your payments through your accounts so when you come to a bank and say you want to borrow N500,000, they can see that you are doing N500,000 worth of business and show the capacity.

For Diamond Bank, our solution for MSMEs is targeted at enabling them to access capital, through advisory services, because we have over 30 conferences every year where we have entrepreneurs who come to speak with MSMEs and who want to come and get advice and each conference cater for 300 people and we always get 400 people. What that tells us is that people want advise on how to grow their businesses. We also create access to market because the problem is that somebody might have a business here and is serving his locality, how then does he create access to other areas or create an avenue for other people to have his goods? Because the more people patronise you, the higher the probability that you are going to be successful. So, we have done that quite well and we know that it is an area of growth.

What is the level of achievement your bank has attained in servicing MSMEs so far?

We have over 200,000 MSME customers and we have lent to more MSMEs than most banks over the years. MSMEs are the engine of growth for Diamond Bank and Nigeria. In developed countries, 70 per cent of the GDP is actually driven by small businesses, and for us to diversify the nation’s economic base, we must mobilise, facilitate and empower MSMEs to succeed.