Thursday, 28 February 2008

At The Mercy Of Nigerian Traders

Absence of vibrant consumer protection organisations in the country exposes consumers to exploitation by retail outlets. In this interview, Olusegun Adeoye of Tell magazine speaks with Uche Nworah, senior lecturer in marketing communications at the London Metropolitan Business School on the worrying exploitation of consumers by some retail outlets in Nigeria.

Q. Many Nigerians have been complaining about the poor after sales services rendered by some sales personnel especially that of electronic products. They say most of them refuse to honour agreement on the warranty leaflets, mostly in the area of repair and refund in case of damage. What do you think is responsible for this? Is it because of the economic situation, or ignorance on the part of the customers?

A. Consumers should be careful in selecting the outlets where they buy their electronic products. If you are going to spend tens or even hundreds of thousands of naira on a product, it is better to choose either a known dealer or big importer where at least you know that they may honour the manufacturer’s warranty. Big dealers are expected to honour such guarantees as part of their exclusive distribution deals with the manufacturers although many of them choose not to. Unlike some of the small time dealers in Alaba and other electronics goods markets, it may be unfair to expect a refund or exchange from them because the goods may have passed through the hands of several middle men before getting into their shop, and so they are not in a position to honour such warranties because those higher up in the distribution chain would not do the same if they returned such goods. The onus is therefore on the customer, to ensure that he buys from big importers such as Tino Electronics or from any of the dealers in the various shopping malls springing up, their prices may be higher than market prices but at least their customer service guarantee will give the customer a peace of mind.

Q. What can be done to put an end to this?

A. You have to understand the nature of the Nigerian economy, at the moment the seller is still king. Because we do not have direct presence of the big electronics brand manufacturers in Nigeria, the local representatives do not care so much about the damage they are doing to their brand reputations by not honouring such warranties. The customer should for now choose carefully, rather than paying for a cheap brand that will pack up after one week, it is better to pay slightly higher for a brand that has been around for years, of which quality and durability have formed part of their brand equity.

A street vendor in Lagos. Photo by Vincent Nwanma

The Consumer Protection Council should also look into this by working directly with the electronics goods retailers association if there was such an organisation to prevail on their members to at least introduce an exchange policy for defect electronics products. Asking for a full refund may not be feasible but still because we still have a caveat emptor situation in the Nigerian market system, the buyer should always beware.

Q. How important is after sales services?

A. After sales service is very important in the sales function but we should also not forget the other components of good quality customer service such as giving customers good information and advice, providing in-store conveniences i.e. parking, toilets etc. There is no doubt that a satisfied customer would always come back and will also serve as an unofficial brand ambassador helping to spread the good virtues of the brand or firm through referrals and word-of-mouth.

Q. Your advice to the consumers, does it matter where they buy their goods?

A. The place you buy your electronics goods is very important, consumers who prefer the fly-by-night cowboys that hawk their electronic products on the expressway should really not complain about the quality of such products. I have noticed some people buying mobile phone handsets, pressing iron, fans etc from street vendors, how sure are such consumers that the sellers will still be at the same spot the next day should something go wrong with the products? This is why the big Cash and Carry shops are still preferable to some of these market store traders. Unless the item in question is not so much of high value or importance.

Q. How do we improve after sales services in Nigeria?

A. There is no universal formula to achieving this objective; it will vary from market sector to another. Several key stakeholders in the transaction process are important in this process; most importantly the customer should know his rights and demand same individually or collectively through the consumer council. The government should pass and enforce consumer protection legislations which guarantee the customer after sales and other customer services. The media should help highlight the unscrupulous acts of sellers just like the BBC consumer protection programme – BBC Watchdog. Of course we can not exonerate the sellers or manufacturers themselves, they should know that their actions and inactions directly impacts on the perceptions the customers have about their brand, therefore if they treat the customers right, the customers will come back, remain loyal and attract family and friends too through word of mouth.

Excepts from this interview were published in the Tell magazine of January 21 2008
Segun Adeosun (

Tuesday, 26 February 2008

Lagos State Acquires World's First Boat Hotel

In its determination to create a new tourism destination proposition for Lagos State and a unique hospitality experience for local and international tourists, the Babatunde Fashola administration of Lagos State, on Wednesday 20, February 2008, made history when it officially finalised the process of acquiring the world's first boat hotel - the Sunborn Yacht Hotel. The cost of acquisition, transportation and up-grade of the spectacular hospitality facility has been put at about _25 million when delivered by the third quarter of this year.

The deal, initiated by the Fashola administration through the state's Ministry of Tourism and Inter-governmental Relations, was bank-rolled by Diamond Capital Ltd, the investment banking arm of Diamond Bank Plc and facilitated by MIDC Ltd and Westcom Ltd, two Nigerian venture capital advisory firms. When delivered, the facility will bring Lagos State into the league of major cities of the World such as New York, Paris, Barcelona, among others, with prestigious yacht hotels, signaling the high points of their tourism earning efforts.

Speaking at the brief occasion of the final sales contract signing ceremony for the acquisition which has a Lagos-based firm, Planet Project Ltd as Project Managers and Consultants, at the Eko Hotel and Suites, Victoria Island, Lagos State Commissioner for Tourism and Inter-governmental Relations, Senator Tokunbo Afikuyomi, who represented the governor at the event, described the dream of the present administration to acquire a heritage hotel such as the Sunborn Yacht Hotel as indicative of the administration's desire to transform the tourism landscape in Nigeria and assume sector leadership in Africa and beyond.

He said: "The Hotel we have just acquired for Lagos with the support of Diamond Capital Ltd will be the first of its kind in Africa and indeed the Middle East and put us in the league of the first five major cities of the world with similar hospitality facilities and tourism earnings capabilities. This hospitality facility is the first that was custom-built. So it is a piece of heritage that we are buying into."

According to Afikuyomi, the success of the Lagos State government bid is a proof of the correctness of the often expressed belief of Fashola, that, what will move Lagos forward is, "a combination of the talents, assets, resources and potentials of the public sector and the private sector. Hence, this project is driven as Public Private Partnership (PPP) initiative."

Afikuyomi ascribed the success of the acquisition bid, which saw Lagos beating the cities of Doha and Dubai respectively, two renowned tourism destinations in the world, to the inspiring leadership of Fashola (SAN), his colleagues at the Water Front, Physical Planning, Justice, Environment, Works and Infrastructure Ministries respectively as well as the encouraging efforts of the Special Adviser on Taxation and indeed the entire members of the Lagos State Cabinet who bought into the bold vision.

He said that "but for their support, Lagos would not have been able to make this history, as the quest by Dubai to acquire a QE2 Boat Hotel would have meant that the first Boat Hotel in the African continent and the Middle East would have gone first to Dubai. But today, we have positioned Lagos on the world tourism map and the results would be self-evident for all to see."
In his remarks, Hans Niemi, Executive Director, Sunborn International, commended the Lagos State government for the warm African hospitality his visiting team had been treated to. He described the move by the Lagos State Ministry of Tourism and Inter-governmental Relations to acquire the Sunborn Yacht Hotel for the City of Lagos as "a demonstration of uncommon bravery and courage on the part of those at the helm of affairs in the State."

According to him, "since we arrived in Lagos, we have seen what the term 'African hospitality' means. It's been truly wonderful to see the work you are doing in Lagos. It seems true that this is the right time, a very exciting time to be part of this industry in Lagos."

Hans further explained the vision of Sunborn International. "As a company, we are a very innovative company. We like to do things in creative and innovative ways. These are the kind of partners that we like to do business with and will do business with. Thanks for sharing the vision of Sunborn International. It means so much to us."
Speaking in the same vein, Lasse Heikkinen, the architect who designed the floating spectacle, described the experience of having the Sunborn Yacht Hotel in Lagos as very exciting, given the peculiar warmth and character of the people.

Mr. Tony Onwu, the Managing Director, Diamond Capital Ltd, praised the professional brinksmanship displayed by the Lagos State government team led by Senator Tokunbo Afikuyomi, describing the conduct of the government team "as promising that the administration is a trust worthy partner the organised private sector can do business with."
Onwu expressed the determination of his banking institution to continue to work with public sector players as the Lagos State government in the transformation of the key sectors of the state. He said: "We have absolutely no doubt in our minds that the vision of multiple tourist destinations in Lagos was achievable and achievable within a short time frame. We have absolutely no doubt that the asset we are jointly acquiring today as fast track executable transaction was something that was financiable and bankable from our perspective."
He expressed confidence in the Fashola administration saying, "this administration and its team are going to lead Lagos to the horizons we are thinking about."

The final sales contract signing ceremony, which followed two days of inspection of the proposed Marina waterfront site for the floating hotel facility by the team, was attended by key officials of the Lagos State Ministry of Tourism and Inter-governmental Relations, Diamond Capital Ltd, MIDC Ltd, Planet Project Ltd and legal Consultant, Mr. Ovie Ukiri of Ajumogobia & Okeke.
The 105 luxury suites floating hotel is fitted with such breathtaking facilities as two exquisite royal suites with private sauna, separate bedroom and a living room, terrace balcony overlooking the water in 58 rooms, a central air-conditioning system for all the rooms and public places, fully equipped 5th deck restaurant with kitchen and cocktail bar for 100 people, a yacht club lobby bar for about 70 people, another upper deck banquet hall capable of seating over 200 people, and two inter-connected conference rooms, amongst others features.

Monday, 18 February 2008

Advertising agencies in search of new business model

By Kabir Alabi Garba

THEY abandoned the comfort of their offices in Lagos and headed to Ijebu-Ode in Ogun State where they spent two days strategising on how to re-position advertising practice in line with trend in the contemporary world.

They called it Business Retreat and in attendance were 76 delegates from member-agencies of the Association of Advertising Agencies of Nigeria (AAAN). Held at the newly built conference hotel, Ijebu-Ode between February 7 and 8, 2008, participants dispersed from the meeting with a resolve to herald a strong re-branding campaign for AAAN.

Such exercise, they argued, is long over due. Their belief was that it would not only enhance professionalism, but also engender better appreciation of the profession, especially by the users of the advertising services.

Another resolution is the need for a virile training academy for the industry to grow talent and capabilities. This is in addition to setting up business support services unit within the AAAN to member-agencies to upscale the practice.

Government was specifically called upon to stimulate growth and development of the advertising industry through the creation of an enabling environment that will protect local agencies and other businesses as a way of staving off foreign competitors. They also agreed to encourage protocol for clients desiring to change agencies including a well defined pitching process.

The business, they submitted, require huge capital base, the association would therefore, set up criteria to be redefined to match what is obtainable in most developed countries. Henceforth, strict enforcement of AAAN Code of Conduct would be pursued. The association is also planning to recommend a fee structure as the preferred mode of agency remuneration by clients.

Above all, part of the new thinking is to foster viable relationship between AAAN and other sectoral bodies such as the Newspaper Proprietors Association of Nigeria (NPAN); Broadcasting Organisation of Nigeria (BON); and Outdoor Advertising Association of Nigeria (OAAN). Others are the Advertisers Association of Nigeria (ADVAN); and the Media Independent Practitioners' Association of Nigeria (MIPAN).

In his opening address, the AAAN President, Lolu Akinwumi, described the retreat as a "follow-up to the various formal and informal discussions we have all had in the last few months and the solemn promise I made during the last presidential campaign on the necessary and very urgent need to take a look at the practice and the association."

According to Akinwumi, "even the most disinterested practitioner has come to the conclusion that our association is not what it used to be and is clearly not what we want it to be. For us to move ahead and make meaningful progress, we need to go through a major review process like this." Also dubbed as extraordinary general meeting, the retreat, he asserted, was the "Executive Board's response to the necessary need to spend time together to review the affairs of the AAAN and advertising in Nigeria."

What pained the AAAN boss who is also Chief Executive Officer, Prima Garnet, was the fact that most of the challenges facing the association, nay the industry had been predicted few years ago, yet nothing seemed to have been done to confront those challenges.

In retrospect, he said, "During the AAAN's 30th anniversary in this same town in 2003, I had in the keynote lecture taken a future position on what I envisaged would be our major challenges within the next few years. I feel unhappy today to admit that prophetically, nearly all those things have either happened or are about to happen. To be sure, some of our challenges are being externally driven, while others can be traced to clear cases of self immolation, relapse and neglect.

"While the ad spend for example appears to have tripled in the last five years, the portion coming to our members in real terms is actually restricted to a few, and some will argue, on the decline, if you consider the activities of our cousins, the media independents, direct marketing companies, client contractors and agencies and the cost of doing this business. Add to this the issues of our relationships. Media contractors have become so hostile, unfairly utilising their ownership of the media to cast this association and profession in the poorest light. Clients have become our strongest competitors ensuring that as little as possible of the ad revenue gets to the agencies. Even prospects are flexing their muscles; they don't want to pay pitch fees!"

Expectedly, the current decision by the leadership of the NPAN to reduce commission rate to 15 per cent did not escape the attention of Akinwumi. He began, "permit me to use this opportunity to speak on the issue of NPAN and its decision to reduce the agency commission from 20 per cent to 15 per cent from January this year."

The unilateral decision, he noted "has been considered unprofessional and against the spirit of mutual cooperation which has guided our relationship over the years." Continuing, he said, "while the NPAN continues to talk about a global practice of 15 per cent commission to agencies, it was silent on the fact that we arrived at the 20 per cent years ago to compensate for the finance charges that agencies have to bear as a result of the introduction of the prepayment regime.

"While NPAN is also quick to quote global 15 per cent agency commission, it has remained silent on the fact that in those same communities, agencies don't prepay; neither has it come up with any appreciable reason, apart from increasing cost, why we continue to pay more when circulation remains on the decline. It is indeed shameful that as at today no Nigerian newspaper circulates 80,000 regularly."

He disclosed that at a meeting with the NPAN executives on February 5, 2008, the matter was raised, but nothing came out of it as the NPAN stood their ground insisting that the new commission rate has come to stay.

Akinwumi however acknowledged the promise of the print media owners to put structures in place to enforce the need to restore discriminatory commission to AAAN members. But the adamant position of the NPAN with respect to reduced commission rate notwithstanding, the issue, Akinwumi promised, would be further examined at the association's AGM as "the exco will advise on the next step to take to protect our members' interest."

He mentioned under capitalization as another challenge confronting the body. "We are grossly undercapitalized," he lamented. "Our business models," he noted, "are outdated and weak; we don't make enough margins; we are not able to compete for good staff with our richer partners and are sometimes not in a strong position to adequately fund good training programmes."

The issue of AAAN relationship within the Advertising Practitioners' Council of Nigeria (APCON) is another matter. He explained, "the unfortunate impression that has been created is that forces within APCON are working very hard to subvert the AAAN and weaken our influence within the body by the sponsorship of clearly anti-AAAN amendments to the APCON Decree.
"While a few portions of the proposed amendment are pragmatic, clearly others are hard to explain within the overall AAAN context. During our business session, the house will debate the proposed amendment and be updated on what our representatives on the council are doing on the matter."

He expressed optimism that the forum would be germane to "address the issue of corporate governance and how best to protect the interests of our members and show in concrete terms the benefits of belonging to this association as well as looking attractive to those who are reluctant to join, well beyond the benefits of cheaper airline tickets and hotel rooms!
"I am also hopeful that sometime and somewhere within the presentations, we will discuss the issue of our presence and influence within government and how we can strengthen this. We also will not leave out the issue of our esprit de corp. While we admit we are competitors, how can we continue to do this without devouring each other?"

In summary, Akinwumi envisaged that the retreat would not only afford "us the opportunity of re-examining ourselves as individual practitioners, our businesses as advertising agencies and our association as a professional body, but will also enable us articulate new and credible positions on the ever-increasing challenges that have been plaguing the advertising practice in particular and our association at large."

He however underscored the limitation of the duration of the retreat as "the two days cannot adequately give us the opportunity to solve and resolve all AAAN and advertising issues.
"I am however confident that we will go a long way in determining the future of the profession during the period as we set new milestones. The sessions offer us an opportunity to receive well-researched papers and even a longer time to discuss the issues associated with each paper. And because this meeting has the status of an AGM, we can also take decisions and if necessary make binding agreements."

He therefore implored members to put behind "all misgivings of the past, the lack of trust and confidence, both at individual and corporate levels, which sadly have sometimes characterised the practice, producing bitterness, unhealthy rivalry, the schism between the so-called big and small agencies and the needless fears of the systematic annihilation of some agencies by others."

Culled from the Guardian, Monday, February 18, 2008

Thursday, 14 February 2008

Virgin Nigeria entrusts its frequent flyer programme to Mercator and Skywards Consultancy Services

Virgin Nigeria, the flag carrier of Nigeria, has become the latest airline to opt for the CRIS frequent flyer and customer relationship management solution from Mercator, the IT division of Dubai-based Emirates Group.

Skywards Consultancy Services worked alongside Mercator during the design and implementation phases, revolutionising Virgin Nigeria's frequent flyer programme, 'eagleflier', bringing in a broad range of innovative, appealing and user-friendly new features. Virgin Nigeria's more regular travellers will be transformed into their most loyal customers. CRIS' powerful customer relationship functionality also means that Virgin Nigeria management will benefit from a continual stream of quality customer information, helping them to better understand their passengers and create services to match their needs.
Yemi Osindero, Chief Operating Officer, Virgin Nigeria, said: 'We're passionate about our customers and we always try our best to give them a quality travel experience whenever they fly with us. We make it our top priority to recognise and appreciate the support of these most loyal customers.'

'Mercator's CRIS will give us everything we need to make 'eagleflier' a truly unique loyalty reward programme. Our customers will enjoy a wide range of benefits, never seen before in this region, and we look forward to building a strong Virgin Nigeria customer family.'

Mercator will host CRIS for Virgin Nigeria at its state-of-the-art twin data centre facilities in Dubai. Patrick Naef, Head of Mercator and Divisional Senior Vice President IT Emirates Group, said: 'Virgin Nigeria is already a customer for our outsourced RAPID revenue accounting solution, and this latest deal for CRIS further cements our relationship. We look forward to working hand in hand with our friends in Nigeria on future projects and to contributing to the airline's continued success.'
Virgin Nigeria is 49% owned by Virgin Atlantic Airways, with the majority 51% being held by 20 Nigerian institutional investors. Its hub is in Lagos, with services running from Lagos to London and to destinations within Nigeria and West Africa. The network will rapidly expand to cover Europe, the US, Africa, the Middle East and Asia.
Mercator's smart and cost effective solutions in passenger experience, air cargo management, finance and revenue accounting are used by more than 100 airlines and airports all around the world. Customers for its CRIS frequent flyer and customer relationship management solutions include Air Astana, Emirates Airline, Jet Airways, Philippine Airlines and SriLankan Airlines.

Tuesday, 12 February 2008

The Seven Deadly Sins Of Advertising

By Paul Ashby

Sin No. 1: And in many ways this is the biggest sin of them all! The total lack of genuine accountability and effectiveness. More and more evidence is emerging that there is ample justification for questioning a major advertising pretension that it does, indeed, work at all!The repetitious cry and certain belief that “creativity” is the answer to all marketing problems – it isn’t and frankly never really has been.It’s a given that all human knowledge is provisional but it is also incremental, the sum of what we know to day is far greater than thirty years ago – with, possibly, the sole exception of marketing/advertising.

Nothing new has been added to the armoury of advertising…no debate is taking place as to where to go next! Perhaps that is because there is no place else to go! However to day it is still an article of faith among advertising people that advertising will not change because "it works"!Facing the painful truth is the first essential step in devising a sensible strategy for the perpetuation of advertising. And the painful truth is “Advertising no longer works”!

Sin No 2: Is it because that, for financial reasons, you do not want to address the problem of clutter…because it is a huge and growing problem which contributes to the declining effectiveness of all advertising.

The poor old customer, or in advertising speak, Consumer, does not want to take delivery of even more messages, after all they do not appear to be taking much notice of the messages that exist already!The advertising world has dehumanised and depersonalised the process of communication and very little evidence of consideration of the consumer exists.

Sin No.3: You just don’t listen, whenever some well meaning person dares to question the “Advertising Works” article of faith, down comes a torrent of abuse, and the fact is it can only be a torrent of abuse because you do not have a solid fact to support your spurious claims.

Listen to your Clients:As one large Client recently explained: "In to day's marketing landscape, building a brand is about a whole lot more than advertising. An advertising agency alone cannot deliver everything we need – even though agencies may claim to deliver this, it's a myth".Or even listen to people closer to home:Derek Morris, Chairman and chief executive of ZenithOptimedia attended "Media 360 Conference" in Wales.

In a long letter in MediaWeek, he said, among other things, "But what are the lessons to bring home from South Wales? What should we actually do? And there, in the final session, reality caught up when the Client told us to "Change before you are dead".

Sin No.4: If you don’t want to listen then for Heavens sake forget the glorious past.Your current model of advertising was developed in the Sixties when product choice was much more limited and people were easier to stereotype into categories like income, sex and class. It was much easier for advertisers to target people and bombard them with sales messages.

Today’s marketplace is different and all the old certainties are gone. To be effective in your communications it is sound advice to start with the premise that you know nothing about the people that you believe your product is aimed at. You all have become too parochial, too introspective, too convinced by your on hyperbole.

Sin No.5: Stop this insane rush onto Web 2.0 it is not a medium intended for mass advertising, and, as has been recently established, “Users became more or less desensitised to the Advertising”That was recently said of advertising on social networking sites.

Clients are experiencing fast diminishing returns on their social networking ad investments.Clients are expressing disillusionment.Web marketers, ranging from Google at the apex of the ad triangle to the mass of small companies are showering social-networking sites with ad dollars without getting their hoped-for returns.The question is not "Has the advertising model broken"?

The question now is "What are we going to replace it with"?The complacency of the IPA is overwhelming, they appear not to be doing anything to answer the increasingly strident complaints.Complaints such as, clutter, and here the irony is that advertising agencies appear to think that placing more advertisements is the way to solve clutter!Complaints such as lack of accountability, to day, and after fifty years of extensive advertising, there are no reliable figures available on audience measurements.

And most certainly there are no effective studies as to the effectiveness of advertising…on sales…. As a return on ROI…and much more.To day it is more important that a close investigation as to the suitability of advertising on Web 2.0 be undertaken instead of rushing onto the Net and ignoring all the signs. These are that it is a highly unsuitable medium for advertising.After all it is "The Wild West" where anything goes!

Sin No.6: Your inability to move very rapidly into the post-advertising mindset is caused by you being unable to recognise Sins 1 through 5 above.Astonishingly, a sizeable percentage of marketers and marketing-service leaders seem mired in the advertising mind-set.The Cannes Lions Festival still celebrates ads-a position, one suspects, roughly equivalent to the Cannes Film Festival honouring silents. The One Show held two concurrent programmes this year-one for conventional ads, another for online. (One wonders who in this mix felt like a second-class citizen). In a transparent world, the power of an “ad campaign” to change minds is strictly limited, and getting more so every day. It’s way past time for the industry’s leaders to get naked and reinvent advertising…it they can!

Sin No.7: Your complete and utter lack of understanding of the word “communication” together with a lack of appreciation as to what can, and does, stifle effective communication. All advertising is a form of learning whereby the advertiser is asking people to change their behaviour after learning the benefits of the products or services on offer. However, we all tend to filter out information, which we do not want to hear.

This clearly alters the effectiveness of conventional advertising in quite a dramatic way.The final purchase decision is invariably a compromise and this leads to a certain amount of anxiety; the worry that perhaps the decision was not the best or the right one. In order to minimise this anxiety the purchaser seeks to reinforce their choice and begins to take more notice of their chosen product’s marketing communications.

So what are you going to do about this?Due to a lack of understanding of the communication process we have created a media society during the past 40 or 50 years, where the whole process has been de-humanised. There is now an extraordinary reduction in interaction because conventional advertising and marketing have become a one-way practice whereby information is disseminated in a passive form.

culled from

Friday, 8 February 2008

UBA Launches Europe Affiliate, UBA Capital

UBA Capital (Europe), the London-based investment banking and asset management affiliate of UBA Plc – West Africa's largest financial services institution – has formally commenced business following its official launch on Wednesday in London.

The impressive ceremony witnessed by UK and African business leaders, representatives of leading investment banking firms, clients in Europe and key players in the London and African financial markets, took place at the historic Duke of Wellington Arch, Hyde Park, London. The birth of UBA Capital was the result of the substantial equity investment by UBA in Afrinvest Ltd, a privately owned investment banking firm in London specialising in African securities.

L-R: ED UBA Plc,Mr. Chika Mordi, CBN Gov,Prof. Chukwuma Soludo, CEO UBA Capital(Europe),Mr. Phillip Iheanacho, Director UBA Capital(Europe),Mrs. Rose Okwechme and Chairman UBA Capital(Europe),Mr. Tony Elumelu during the launch of UBA Capital in London
This transaction resulted in a name change to UBA Capital (Europe) Ltd, providing UBA (and its subsidiary UBA Global Markets, one of the most innovative local investment banks and leading debt capital market originators and distributors) with a strategic presence in London from which it will be able to distribute primary and secondary securities of African issuers into Europe. In addition, London will act as an important addition to UBA's Pan African asset management business, providing international investors with access to investment opportunities across the African continent. As Africa's global bank, UBA has been expanding from Nigeria where it has attained dominant status, to other parts of West, East and Central Africa. The London affiliate will further extend the Bank's presence outside Africa in addition to its operations in New York and the Cayman Islands.

Leveraging the group's footprints in Africa, UBA Capital (Europe) has extended its range of products and enhanced the liquidity of its existing trade capabilities. Based on competencies built over the years as a London-based independent investment banking firm, UBA Capital is continuing the tradition, providing specialised research and investment advice for London-based institutions interested in the African markets as well as executing services for international institutional clients seeking to deal in African securities. In line with UBA's aspiration to be Africa's global bank providing comprehensive financial services, the mission for UBA Capital is to become the investment bank of choice for African issuers and international institutional investors.

"We are most delighted at the launch of UBA Capital. It marks a significant milestone for us as we leverage this platform for all transactions involving Africa and Africa-related businesses," Mr. Tony Elumelu, the Group Managing Director/CEO, UBA Plc, said.

UBA Plc is the largest banking group in West Africa with a balance sheet of approximately US$15bn and more than 6 million customers across the region. It is a full service financial services institution, offering retail banking, corporate and investment banking, private equity, asset management, stock-broking and custodian services. UBA has an expanding footprint across the African continent, and its local investment banking subsidiary, UBA Global Markets, has rapidly gained a reputation as an innovative originator and leading distributor of securities, having transacted over US$8bn in local securities in the past 18 months. UBA is rated as follows: Fitch A+, GCR AA+ long term and Agusto & Co AA+.

The Group is listed on the Nigerian Stock Exchange and also has an unlisted GDR programme currently administered by the Bank of New York. Managed by a dynamic team of change-drivers led by its Group Managing Director/CEO, Mr. Tony Elumelu, the bank has won many awards over the years, most recently "Africa's Emerging Global Bank" as adjudged by a panel organised by the acclaimed African Banker Magazine.
Culled from This Day online (Friday February 8, 2008)

Wednesday, 6 February 2008

Skills Gap In The Financial Services Sector

By Tunde Dabiri

THE banking consolidation marked the birth of a new era in banking services in Nigeria and formed a cardinal point in the financial services reforms being embarked upon by the government of Nigeria.

The process led to the transformation of 80 weak and struggling banks to 25 consolidated banks. The country has also witnessed reforms in the pension administration system, insurance sector and capital market. Beyond any doubt, more reforms and recapitalisations are still on the way.
In a bid to transform the newly consolidated banks to more virile, capitalised, stable and internationally competitive mega entities, the onus is on stakeholders to address the various deficiencies and shortcomings that led to the non-performance, weakened and liquidated status of the pre-consolidation era. The increasing spate of global competition in the banking and financial sector calls for adequate human resource realignment, technology integration, stakeholders concern and monitoring and supervision.

There is therefore the need to address the issues of skill gap in Nigeria's financial services sector and propose solutions and various mitigation processes. For the consolidated banks and other players in the financial services sector to render higher value and for the economy to benefit from the pre-conceived opportunities of consolidation, adequate and required skills have to available.

The need for adequate skills in the handling of financial services operations cannot be over-emphasised. The virtue of a professional banker is the possession of systematic knowledge and proficiency in a given field. This systematic knowledge constitutes the soft and hard skills that professionals trade for their placement and positioning. Skill shortages exist when employers have difficulty filling job vacancies or specialised skill needs at current levels of remuneration and conditions of employment.

Global competition and new technology have changed the type of skills demanded by businesses and its impact on skill formation. Training is no doubt the key tool in solving skill shortage problems. It is difficult for businesses to train workers quickly enough to meet new skill requirements at the expected proficiency level. Other interventions can be used to address these shortcomings include:
  1. Skill training programmes continually developed and adapted to meet rapidly changing skill requirements
  2. Upgrade and renewal of existing workers' skills
  3. Recognised pre-qualifications for new entrants to job markets
  4. Mentoring and coaching
  5. Job rotation initiatives to drive on-the-job training
  6. The provision of required skills by the financial institutions, regulatory bodies, professional bodies and educational institutions.

These skills are diverse. However, they can be narrowed down to a few which are critical and have been observed to be in short supply within the Nigerian financial services sector:

  • Credit risk management
  • Product sales and marketing capacity
  • Information and communication technology skills
  • Structured finance, and Real estate project evaluation skills.

Credit Risk Management (CRM) is the process of identifying, analysing and managing risk in an investment to aid profitable investment decisions. According to the Chief Risk Officer of Royal Bank of Canada, "risk itself is not bad. What is bad is risk that is mismanaged, misunderstood, mis-priced, or unintended."

Prior to the consolidation of Nigerian banks, most banks did not give adequate attention to CRM due to lack of competence and inadequate controls by the board and regulatory agencies. On the other hand, some executives intentionally undertook unmitigated risk investments in order to perpetuate fraud.

These unwise decisions led to so many bad credits that eventually crystalised a systemic distress of many banks. For example, the non-performing credits of Nigerian banks increased from N316 billion in 2004 to N356 billion in 2005. The asset quality of the banking sector actually deteriorated in 2005. Provision for bad and doubtful debts increased from N94.2 billion in 2001 to N138.8 billion in 2002, N227 billion in 2003, N256 billion in 2004 and N282 billion in September 2005. Availability of competent and proficient skills will no doubt mitigate some or all of these problems.

The Nigerian financial supermarket comprises few ranges of product portfolios, which are often replicated by all other institutions with different brand names. The industry currently lacks the required number of marketers and sales technocrats that can adapt to the continually changing and highly stimulating area of sales. The financial services industry requires marketers that can identify quality clients and discern the inherent needs of their targets, with a bid to working with the back office (research analysts, investment bankers and others) to satisfy the clientele need.
The new recapitalised status of Nigerian banks has engendered the need for the introduction of innovative products that will attract various segments of the population. There is the need to design and deepen the products suit as opposed to the current replication and plagiarising of products going on in the market.

Nigeria's un-banked population is still high as about 90 per cent of the populace transact businesses in cash. The 90 per cent are the people that the marketers need to seek out and stimulate their interest in the banking sector. To drive the above stated initiatives, Nigeria's financial institutions require proactive sales and marketing teams with the following guidelines:

  • Develop a marketing strategy, execute marketing and sales programmes to increase banking penetration (deposits, loans, mortgages and credit cards) with new wealth management clients.
  • Innovate product development
  • Benchmark and evaluate the effectiveness of marketing programs and return on investment, and
  • Leverage all client communication channels, both offline and online, to support marketing and sales.

The global financial services industry has emerged to become a village, square with constantly changing medium of communication and closing transactions. In Nigeria, electronic banking and payments services methods are still at the teething stage. For the country to be globally competitive and tap from the inherent opportunities that exist in Internet banking and other related services, there is the need for all financial services organisations to develop a robust Information and Communication Technology (lCT) platform.

Currently, the deployment of ICT in the local organizations is plagued with "no Internet access," "server is down," "financial institution not available," and "services currently not available," among other responses from the systems. Sending money to family members and business allies in the hinterland through branch network Internet banking is another nightmare. A few characteristics of efficient deployment of ICT in the financial services industry will:

  • Enable banks to reach a wider clientele within short periods of time
  • Decongest banking halls, resulting in bankers seeing to the needs of customers more quickly and effectively
  • Lead to good and efficient management
  • Give competitive edge over other non-ICI banks
  • Ensure time effectiveness - saving both customer and bank enough time
  • Enhance opportunity to bank at any time of the day, and
    Minimize human error.

Services that could be delivered with the aid of functional ICT include:

  • Internet banking - where customers make transactions outside the banking hall with the help of a computer with Internet access. SMS banking - making banking transaction with the support of a cell phone
  • Telephone banking
  • Receiving statement of account via e-mail, and
  • Slip-free transactions - customers making deposits and withdrawals without filling any forms.

In order to offer the stated opportunities, skill upgrade of ICT staff in financial services industry is inevitable.

Most Nigerian banks are well exposed to retail and consumer banking products and other generic banking products. This is because of the short-term life span of these products and the fact that the banks have funds that could only be invested on a short-term/medium-term basis.
However, structured finance and its other appendages (investment banking, infrastructural finance, among others) is an evolving field that requires multi-disciplinary approach and in-depth understanding of financial modeling. Presently, few banks, and in rare cases smaller firms, have competence in this field that is easily dominated by offshore financial services company or their subsidiaries in Nigeria.

Structured finance and investment banking products are typically big transactions that have a long gestation, delivery and returns period but could have a tremendous impact on the society and are profitable. There is the need to train and expose financial services staff to the intricacies of this tailor-made finance tool which transverses the collateral debacle and opens win-win opportunity vistas for the lender and borrower.

Real estates have the potential of continuous appreciation and yielding of good returns to holders. It is typically large-scale transaction with a long delivery period and seldom goes wrong. There is a gradual awakening towards the opportunity in this sector, especially with the on-going land use reform acts being undertaken by the current government. Players in the financial services market need to beam their searchlight to tap the juicy opportunities that exist in the sector.

Dabiri is the former MD/CEO of Sterling Bank Plc.