It is 1:30PM in Winterveld, north west of Pretoria. Arbitrarily, winter has given way to summer in June and laid a lavish ceremony of color in the sky. Just what climate activists need to spark a global warming debate.
Sam Motsuenyane lives here, in a community where everyone seems to fit in well. Winterveld is not a community built on the strength of one character. If you can get off the divan of your middle class comfort of a Houghton or a Sandton community, it is possible to fit in.
In his house, Motsuenyane’s presence transfixes and dominates the room. Like a bishop about to dispense his sacramental powers, a magnificent cane twirling gently in his hand—he is able to put you at ease. His patented seTswana inflection certainly enriches his guests. The house is consistent with his personality—simple, smart, immaculate and sparse with some classic utilitarian furniture. A statement if any, that says he was not in the struggle against apartheid for monetary recompense.
On the corner next to the sitting room door is a black leather recliner sofa, donated to him by New African Investment Limited (NAIL), former owners of the Sowetan newspaper and former part owners of Sunday World newspaper with 50% shares. The seat came with the friendly instruction that he must use it.
“Now that you are here I should make use of it,” he chuckles.
Motsuenyane still works, at the age of 87, on his small citrus farm in his yard. He checks the books, gives advice and attends to the farming project with body, soul and mind. He is viscerally attached to the people.
“Yes, you are right,” he says when asked if he was the founding chairman of the African Bank.
“I have been the chairman for 20 years. But prior to its establishment, as president of the National African Chamber of Commerce and Industry (NAFCOC), I pioneered the bank’s establishment.”
For a period of 10 years he had to raise capital from black people who did not have money.
“We eventually raised the necessary $100,000 (R1 million),” he says.
The background of the bank is a narrative arc of agony and ecstasy.
The idea of the African Bank was discussed at great length at the inaugural conference of NAFCOC in 1964.
“This conference was called with a view to uniting black business people throughout the country, who at that time had small business organizations in various places but then did not have unified movement to speak to government with one voice.”
“We had laws at that time that were oppressive and we felt the need to come together and talk about those laws and how to work against them.”
The Johannesburg African Chambers of Commerce took the initiative to call all the small business organizations throughout the country. At that time the chamber was headed by Richard Maponya. It took the decision to bring together all of the various small businesses to the conference where they could discuss issues relating to their development.
The conference was a success but their biggest stumbling block was the lack of access to funding.
“We could not get sufficient support from the banks at that time.”
Encouraged by black people running their own banks in the United States, NAFCOC asked themselves why black people couldn’t start their own bank in South Africa.
“White banks were reluctant to fund us.”
That strengthened their resolve to form their own bank.
“A voluntary donation was made. We just took money out of our pockets and said let’s see how serious we are. And an amount of $7 (R70) was collected from the members and this money was banked under the name The National Fund,” he says.
An idea to get $0,1 (R1) from each of the 18 million black people in the country was proposed. The people, however, were filled with doubt and suspicion.
One of the things that helped dispel their doubt was when Motsuenyane  went to London in 1972 with a group of business people.
Motsuenyane requested a meeting with Anthony Keith, then chairman of Barclays bank.
“We discussed how they could  assist us in setting up the African Bank.”
In order to set up the bank, they needed to train their employees, build trust and build capital.
Barclays helped organize training and then invested in the bank.
People back in South Africa were encouraged by the support shown by Barclays.
“After that we saw enthusiasm on the part of the people. They contributed money and between 1972 and 1974 we raised the outstanding amount.”
“The African Bank encountered problems towards the end of Motsuenyane’s term.
“This related to raising sufficient equity, basically people buying shares. The bank’s development was based on limited capital from people who did not have sufficient resources. Our shares started on $10 (R100) and so on. As the bank grows, according to the requirements of the banking law, when you take money from people or deposits, you must also increase your capital.”
“Ultimately the Reserve Bank had to impose the legal requirements which said we must find somebody with big money to invest in the bank,” he says.
Unable to raise capital overseas, eventually African Bank was able to raise $10 million (R100 million) from the Natal Building Society (NBS) and NAIL.
“We increased the equity and when that happened at the time the control of the bank moved into the hands of those who had contributed more money. Control moved out of the hands of the NAFCOC members who were small equity holders to those who had put more money into the bank,” he says.
Motsuenyane had to step down as chairman as control went more and more into the hands of white capitalists.
“They believed that the African Bank had potential. They did not even change its name. They built on our foundations but then changed the character of the bank,” he says bitterly.
“We had built the bank as a savings and loan company. This was to encourage people to save and at the same time give loans to people. But these guys  removed the savings aspect and retained the lending aspect. Today the bank is a lending organization and that was not in line with our original planning.”
Just when it was time to wrap up, he remembers another point.
“A certain group of white guys from Finansies Bank came to the board and said that we are required to have a foreign exchange arm of the bank.”
African Bank CEO, Moses Maubane  spoke to them about the offer by Finansies Bank.
“They wanted to set up a foreign exchange arm of the bank in order to attract foreign investors. We trusted that our CEO would monitor the activities of these people,” he says.
“Before long he gave the board a report that these people were keeping a certain commission and that they paid themselves lots of money.”
“We asked him to investigate how they managed to make money using our bank but they co-opted him and he became the shareholder in that arm. He did not disclose this to the bank. Before long we found that these men had violated foreign exchange regulations to the extent that the bank was stopped from operating.”
“At that time I became accused No.1 on behalf of the bank,” he says.
Motsuenyane was absolved of any blame but the guys from Finansies Bank were sentenced to seven years each.
He turns to look at his watch. It’s 2:45PM. “I think I have given you the story.”

The African Banker

On March 1, 2001, a small bank opened in South Africa with the aim of providing easy and affordable banking services to its customers. Attracted by this alluring promise, in no time people were queuing up to open a Capitec account. Today, the bank has more than four million customers; clearly CEO Riaan Stassen’s move from the liquor industry to banking has been a fortuitous one.
Born in Cape Town, Stassen earned a Bachelor in Commerce Honors degree from the University of Stellenbosch. He then did his articles and CA qualification at PricewaterhouseCoopers (PwC) before spending 14 years in the liquor industry.
The course of his career changed in 1995, when Stassen was asked to reengineer Boland Bank, a conservative regional bank established in 1900. After South African retail billionaire Christo Wiese bought Boland, it merged with Natal Building Society (NBS) and Board of Executors (BoE).
Stassen spent five years at BoE Bank, during which time he came up with a different banking concept: a retail bank for mid-to-lower income people. According to Stassen, the incumbent banks were failing in four areas: accessibility, affordability, simplicity and personal service. He left BoE with his management team and a goal to succeed where others had failed.
Stassen says that South Africa’s existing banks had never transformed to align with the cultural diversity of the country.
“So we saw that as quite a key opportunity for us to create that cement with our customer base,” he says.
Stassen and his team were approached by PSG Holdings, a company owned by South African millionaire investor Jannie Mouton, to manage PSG Specialized Lending, its micro-lending company focused on low-income customers. The name was changed to Capitec and the bank listed on the Johannesburg Stock Exchange in 2002.
It was no easy road for Capitec. The start-up capital was R250 million ($28 million), it listed with net assets of just under R400 million ($45 million), at R2 (around 2 US cents) a share. Within three months its market capitalization dropped to just under R50 million ($5.6 million).
The first few years of Capitec’s life were dedicated to developing an application platform that could handle high-volume, low-value transactions, efficiently and at a lower cost.
The system is run from Bellville—a small town just outside of Cape Town. From there the bank runs the administration that usually takes place at branch level, shifting the branch focus to its customers. The last fundamental of the technology component is the ability to conduct all processes in real time.
The bank uses fingerprint biometrics to counter fraud and is currently testing new ATMs fitted with the system. Capitec is also the first bank in South Africa to allow coin deposits at ATMs, further evidence of its focus on low-income customers.
Stassen says other South African banks are rife with high costs, lack of transparency and confusing jargon.
“We believe what a person needs from a bank is to move money, to park money and to get money,” he says.
Capitec’s solution to this is its Global One account—a single account that can be used for transactions, including online purchases, as a savings vehicle and as a way to apply for credit. Customers can get up to R230,000 ($25,700) in cash within minutes of applying for a loan. This amount is determined by an affordability assessment based on their monthly cash flow and is repayable over one to 84 months, also based on personal ability. The interest paid, 17% to 28%, also depends on the individual’s credit profile.
A big bone of contention in South Africa has been unsecured lending. In the past, borrowers were required to secure a loan with collateral. With unsecured lending, clients do not need this security, “In South Africa nowadays unsecured lending has become a swearword, and that’s absolute nonsense,” says Stassen.
He points out that as far as Capitec is concerned, it’s not about the assets a person has, but their cash flow.
“There are 20 million active credit clients in South Africa. There are 1.8 million credit clients who have any form of home finance, a mortgage grant. Only 1.8 [million]. So what are the other 18 million people doing to improve their standard of living?” asks Charl Nel, the head of strategic communications at Capitec.
Few deny the fact that South Africa, like most of the world, is a consumption-driven society as opposed to a saving one, or that defaults are part of the territory, but as it currently stands, over 95% of Capitec’s book is current. Despite citizens’ household debt often being greater than disposable income, according to Capitec’s interim results from September, its number of arrears had decreased to 4.4%.
“The profile of our credit client is definitely changing as we are seeing new credit clients with higher income levels attracted to our offer,” the interim report says.
According to a report by South Africa’s National Credit Regulator, unsecured credit in the first quarter of 2012 grew by 49.4% year-on-year. This is a rate far higher than any of the other types of credit.
Capitec has millions of customers, and Stassen attributes the bank’s success to widespread discontent with the big four banks among their customer base, as well as its strong proposition to customers. His is the first bank in South Africa to be open on Sundays, a move that persuaded one of its large competitors, Nedbank, to follow suit.
“We had to think a lot on our feet. We change things a lot. What we thought was going to work had to be changed slightly. And often in a very old, stale, established organization you get resistance and that’s dangerous because people kind of trip up the process,” says Nel.
How does the bank manage to make money and a success out of low-cost banking, especially when they have kept their prices unchanged for the past three years? As most business minds know, you can only undercut your competitors for so long before it becomes costly. Stassen says Capitec could only be priced significantly lower than their opponents if they took smaller margins or lowered their cost structure. Their solution appears to be running the bank like a production line.
“Stassen is an exceptional CEO. One of the best that I’ve come across because since he joined Capitec we’re really focused. They developed a great computer system and it’s a great success,” says Mouton.
Stassen admits that they were initially ignored by the bigger banks because they started off as a micro lending organization. When they began to look beyond this; their competitors believed their primary focus would be on the unbanked and the lower income market. Then around two years ago the more established banks started to take notice.
Capitec now has around 9% of South Africa’s banking market share and their most important objective is to attract primary banking accounts, those into which salaries are directly deposited. The bank also plans to launch a credit card at the end of this year.
The interim results stated that Capitec’s transaction fee income for the first six months of the financial year grew by 61% to R583 million ($65 million) year-on-year. Headline earnings per share grew by 35% to R7.02 ($0.80). Income from credit was R3.6 million ($403,000), which the bank says is due to growth in the unsecured credit market.
The management team at Capitec had been part of a share incentive scheme, allowing them to buy into the company. Last year, there were numerous reports and speculation as to Capitec’s health and suggestions that its captain, Stassen, was abandoning ship, and that other executives were offloading their shares too. When asked about it Stassen says: “It was very bad reporting”.
The truth of the matter is that Stassen sold most of the shares in his own name but that 95% of his investment in the bank is held by a company in his family trust. The private investment company owns more than R400 million ($44.8 million) worth of shares.
“I believe it’s extremely dangerous for executives to be over-extended to the company they run,” says Stassen.
He says this is because, when executives become over-exposed, they start making short-term decisions and manipulate numbers to protect the share price.
Last year, Capitec sought to raise funds through a rights issue, which increased the bank’s capital base by R2.25 billion ($252 million). The funds were for the extension of the branch network, with 55 to 75 new branches proposed for this year, and to increase lending.
Earlier this year PSG sold off some off its stake in Capitec to repay debt incurred in the purchasing of approximately R724 million ($81 million) from the rights issue last year. PSG’s stake in Capitec has dropped from 32.2% to 28.5%, and the company says it will not be selling off any more of its shares.
Then in February, the South African Public Prosecutor confirmed that it will launch a formal investigation into a black economic empowerment deal, from 2011, resulting in a consortium with ties to the country’s ruling party acquiring nearly R1 billion ($122 million) worth of Capitec shares. Nel says they will cooperate fully with the investigation.
Capitec is currently focusing on South Africa but will start identifying opportunities in other countries on the continent. Its long-term goal has always been to internationalize its banking model. Infrastructure is however a concern as the bank is highly reliant on technology. As the fastest growing retail bank in South Africa for individuals, winner of Africa’s Top 100 JSE Companies for the second time, forging into an under-tapped market and making the big dogs follow suit, could mean Capitec will lose its underdog title.
Goliath may not be down and out yet, but he is certainly taking notes on David.

A Plucky David Banking  On Beating Goliaths

It proved a hellish journey to see Pascal Dozie at his Lagos office on a Tuesday afternoon. The nightmare ride across the city, through dense traffic, bumped along to the parp of angry horns and the lurch of battered vehicles. Everyone seemed to veer towards each other in the fight for inches. It is hot and everyone is bothered.
To make matters worse, the pink-shirted traffic police stepped in to slow the lumbering vehicles even more by pulling over cars—including ours—with what looks like trumped-up charges. At one point, the traffic cop and our driver are hurling rapid fire insults at each other inches from my nose. Bizarrely, the traffic cop—who was far from pretty in pink—kept walking away, as if the fight was over, before turning on his heel to launch another finger-jabbing tirade. I felt like a monk in Gomorrah.
“They just want money,” our driver scowled as we drove off.
Then we arrived at the gate of Dozie’s business to find the rain had left a puddle wide enough to breed fish in. The wet welcome ended a torrid hour on the road with a metaphor of which writers dream. The failings of Nigeria, that Dozie wants to put right, lead right up to his door.
“Lagos is the only place in the world where you can utilize all the faculties God gave to man,” chuckles Dozie as we stand in his plush, air-conditioned office.
This is the office from which Dozie commands his investment and finance empire, which has made him one of the richest men in Nigeria. He is a gentleman, in the literal sense of the world, who loves Mozart and Bach, a man who is close to his roots and his family of five sons and 10 grandchildren.
“We didn’t see my father that often when we were growing up but when he came home to see us it was really quality time. We would sit outside for hours while he told us stories and sang us the songs of his ancestors,” says Uzoma Dozie, one of his sons, with a smile.
The polished office contrasts starkly with the dog-eat-dog poverty and chaos a stone’s throw away in the streets of Lagos. After half a century of business, as his own boss, Dozie could be forgiven for shutting out the problems of Nigeria behind his tall gates and high walls—but he says he can’t. He believes crumbling infrastructure and corruption are Nigeria’s heaviest shackles and hopes entrepreneurs will help shrug them off.
“Many people see Nigeria as an entrepreneur’s gold mine—the opportunities abound. Every single disadvantage you see—the traffic and the infrastructure—is an opportunity, but you can only change once the government goes hands-off,” he says.
I counter this with the words I heard Ugandan President Yoweri Museveni utter a few years back, in Kigali, that it was easier for a camel to pass through the eye of a needle than it is to keep government out of business. Of course, Dozie disagrees.
“In Nigeria, we have been moving towards this for a long time. If the government had not been hands-off they would not have a number of major cellphone companies in the country. Some of them got their operating licences on the same day. This hands-off approach has helped us leapfrog communications technology,” says Dozie.
“We won’t get anywhere until we, in Nigeria, can say anything can be done in 24 hours.”
The other big concern for Dozie is corruption. The multi-millionaire says he has been campaigning against it since the dark days of military dictatorship under Sani Abacha.
“This is the only country in the world where people ask what business are you in and you say politics.”
“The clock is ticking, as massive strikes in January showed Nigerians,” says Dozie.
“Nigerians are waking up and the civil society in the country is coming alive. Nigeria is a country that is skewed towards the youth.
The Blackberry generation is using their Twitter and Facebook and you should see the things they are writing. In January, this country was besieged by angry youth when the government removed the fuel subsidy. Nobody could go to work. It is no longer business as usual and things are changing. Look at the number of probes into corruption, before it would have been covered up, but now it is no longer easy to cover corruption.”
Outspoken and salty, Dozie has reaped a fortune through his work and wits on a long and difficult journey from Owerri in Imo State. This is where he was born, the son of a country court interpreter, on April 9, 1939.
“We did not have many modern facilities, but we had the village set up. If you were hungry someone would feed you. If your neighbor caught you doing something wrong they would punish you. When your parents found out they would talk to the neighbor to make sure they had given you a proper spanking. Modernity has changed all of this.”
Along with a generation of idealistic Africans, from newly independent nations, Dozie headed for Europe to drink from the fountain of knowledge.
Dozie went to the London School of Economics where he rubbed shoulders with Mick Jagger, the louche singer who was soon to drop out of college to form the Rolling Stones. Legend has it that Jagger stood up during an economics lecture and shouted: “Eureka!” before walking out to a life of rock and roll.
In reality, it was less dramatic. Jagger studied Economics, British Government, Economic History and Political History, earning mediocre grades. He hedged his bets, by studying in the library, before leaving in 1963 when the Rolling Stones cut their first record.
“We thought he was different. We were very conservative and he had long hair. Me, as an African, coming from Nigeria, I couldn’t believe he was leaving what he was doing to go off and play music, it was against the grain to me,” says Dozie.
Dozie wasn’t the only one to wonder.
“My father was furious with me,” Jagger told a journalist decades later.
“But I really didn’t like being at college. It wasn’t like it was Oxford and it had been the most wonderful time of my life. It was really a dull, boring course I was stuck on.”
Unlike Jagger, Dozie earned his degree in economics and followed it up with a Masters in administration from City University in London in 1963. He went to work in London and consulted in Croydon where he worked at the National Economic Development Office.
Dozie wanted to go home, but his people, including his two brothers in the army, were fighting the Biafran War against Nigerian forces in the cause of secession for the Igbo people. It was a bloody war waged between 1967 and 1970 that cost 30,000 Igbo lives and those of an estimated one million civilians.
“It was a very traumatic period for us. Bombs were going off everywhere and you didn’t know what was the truth. People were being shunted from one place to another and at times I didn’t even know where my own mother was,” he says.
It meant Dozie had to take a job in Uganda until the war was over. When peace came, he moved home in September 1971, at the request of his mother, who was by then in poor health.
In Lagos, Dozie set up his own consultancy, the African Development Consulting Group. He never worked for anyone else again. In the early years, he was fortunate enough to gather consultancies for the big guns like Nestlé and Pfizer. In his spare time, he wrote about economics for the respected publication Business International.
In the 1980s, the road to real riches opened up thanks to a simple idea. Dozie had noticed traders from the remote villages in the east of the country, where he grew up, faced the problem of carrying huge bundles of cash when they trekked to Lagos on business.
“Sometimes they would be waylaid by rogues on the road,” he says.
Dozie pioneered electronic transfers in Nigeria so traders could transfer their cash to Lagos instead of having to carry it. It saw the creation of Diamond Bank, which opened its doors in 1991.
“The first customer was my wife,” laughs Dozie.
The bank started from a third floor office in Victoria Island with 20 people and $5 million.
“The assumption was we were going to come by money easily—it wasn’t easy.”
The problem was most companies, at that time, would not deal with a bank less than three years old. So the small staff at Diamond Bank went out to persuade everyone, from traders to car dealers, to part with their money to generate cash through deposits.
“In my view he is brilliant, driven and a great manager of talent—qualities which helped him in establishing Diamond Bank, especially through the 5 year period, from 1985 to 1990, when nothing was happening, and the early years from 1990 when he says they had it really tough,” says Akintola Akinbamidele of Renaissance Capital in Lagos.
The bank blossomed into a $240 million concern, but this was merely one step on a difficult path. In 2005, disaster struck when a new law that said all banks had to hold a minimum of 25 billion naira ($158.3 million) in share capital. Diamond Bank had a mere 6.4 billion naira ($ 40.5 million) in share capital—so it had to list to raise more, which led to a severe dilution of the family stake.
In the years leading up to this, Dozie had been busy with a deal that was to make his name and a large chunk of his fortune.
A South African cellphone company, MTN, approached Dozie with the idea of setting up a cellphone network in the vast Nigerian market. The South Africans wanted to pump millions into a 60% stake in MTN Nigeria, with Nigerians owning 40%. Dozie set off with high hopes to London and the United States to raise capital among the big money men and Nigerian expatriates. When he got there, it was as if he was trying to sell sand in the desert. Many people saw the struggles of the government telecoms company, NITEL, with its wobbly and sparse landlines. Investors said that if the state couldn’t set up a cellphone network in Nigeria, no one could.
“It was very disappointing. You have a good project and you are turned down. You start to question yourself and start to question your head,” he says.
Dozie could raise merely enough for a 20% stake in the new company. Through debt funding, MTN poured in millions to make up the difference. It was a huge risk, at the time, but MTN prospered and the rest is history. To this day, Dozie is chairman of a solid MTN Nigeria.
“Most of the people I asked to invest now regret not investing—I even regret it myself. They would have enjoyed returns of 20 times their money.”
More than a decade on, Dozie sits atop a family-owned investment company, Kunoch, worth $50 million, which pours money into everything from power generation to gas processing, oil exploration, real estate and banking. One of its investments is in a pilot project that could revolutionize the way power is provided in Nigeria—a country that needs electricity like a thirsty man needs water. The country’s economic progress is slowed by the fact that it produces a few thousand MW for tens of millions of Nigerians—around a tenth of what South Africa produces for a third of Nigeria’s population. Not for nothing do Nigerians call the state power company, PHCN, Please Hold Candles Near.
Dozie is investing in a pioneering independent power project, the Aba Power Project, in the south east of the country near Port Harcourt and not too far from the border with Cameroon. It will generate a minimum of 188 MW, from gas turbines, with plans to expand. In a region which has 20% of the power it needs, it will be like manna from heaven. The company running the project was founded by the former Nigerian minister of power, Bart Nnaji, who resigned in August over a conflict of interest. He was meant to sell his six power generating companies and 11 distribution companies.
It is part of the infrastructure that Dozie believes could be the salvation of his country. Travelers to Nigeria will be cheered to hear that this grand old man of Nigerian business has the crumbling Murtala Muhammed Airport in Lagos on his agenda.
“It erodes the image of the country. When you come through our airport you say, ‘Is this the Nigeria I have flown to see?’” he says.
Dozie reckons the government will concession the airport to private business in a bid to spruce it up. Others, close to the aviation industry in Lagos, believe the government will be loath to relinquish any control over the airport as it is the only one in the country that brings revenue into state coffers.
“I will give it a long shot… it will happen in the next five years,” says Dozie.
What about corruption? Even the pink-shirted traffic police on the way were a heavy hint that it permeates Nigerian life right down to the streets.
“It is very solvable. When we start seeing politics as a sacrifice, when it is a self-sacrificing exercise from those who want to serve… We need strong institutions with integrity and political parties with a well-known ideology.”
A stable political environment could clear the way for the virile entrepreneurs of Africa.
“I think they are counting on the political will of African leaders to smooth logistics, the factors of production and the movement of people. There are a lot of bottlenecks that need to be removed. People like Aliko Dangote have done us well and created a lot of employment. For me, what is lacking here is that we don’t have that critical mass in the genuine middle class, which is the bulwark of democracy. Once this happens we could start absorbing more young people into employment and our creative forces will be unleashed,” says Dozie.
“We all worry about food, shelter and health and until those things are made accessible to all people we will never change… Be patient don’t expect miracles to happen.”
In this yearning for a new Nigeria, Dozie draws on one of the entrepreneurs he admired, the late Steve Jobs.
“I loved his never quit spirit, he lost his position in the company, but did not despair,” he says.
A new Nigeria may have been a tall order, even for Steve Jobs. It is an ideal worth cherishing, but it does help if you believe in the sound of generators disappearing from Lagos forever, taking 15 minutes from the city to the airport, or fairies.

The Rolling Stone That’s Never At A Loss

&nbsp;
<h3>SANUSI LAMIDO SANUSI</h3>
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<h3>Governor of the Central Bank  of Nigeria</h3>
In a country plagued by corruption, fraud and money laundering, no-one had expected such a radical, and by his own admission, “sudden” and “very risky” move. A mere two months into the job of Nigeria’s Central Bank Governor, Sanusi Lamido Sanusi fired, in one fell swoop, five CEOs of the country’s leading banks for mismanagement and corruption.
In a place where those who end the careers of others get theirs abruptly ended too, Sanusi, as some of his critics retorted at the time, had gone too far; he had overplayed his hand. His answer: “Well they should tell me exactly where I should have stopped. People have stolen money and run banks to the ground. Was I supposed to leave them?”
Considering the fact that he knew some of the executives personally, and the initial five institutions that were affected by his action accounted for a big chunk of the country’s bank deposits—his move was to be a litmus test for the resilience of Nigeria’s financial services industry, to say nothing of his own character and principles. But when further investigations revealed that at least a third of the country’s banks were being toyed with, he was given more reason to put public interest before his and “stand for those who couldn’t stand for themselves”—even if that meant “taking difficult decisions that were painful” to him personally.
Sanusi would later tell pan-African television network, CNBC Africa, that although the three weeks he spent arduously contemplating the axing of the bank executives was “the most difficult part of my life”, he was “pleasantly surprised” at the amount of support he subsequently got from the people of Nigeria, across the board and including the country’s politicians, many of whom are known to be weak-willed and dependent on business people to bankroll their lives.
But if politicians and Bretton Woods thought that because they had supported Sanusi, he was in their pockets, they were so wrong. In Sanusi’s book, it soon became apparent, there are no permanent friends.
The legislators discovered this some months ago when Sanusi told a public gathering that 25.4% of the nation’s overhead cost was spent on Parliament, something many surmised as a veiled criticism of the way the country’s budget was allocated. Furious with him for “deliberately inciting” the populace, the lawmakers summoned him to Parliament and after a lot of tongue-lashing asked him to apologize.  Sanusi stuck to his guns. He told the politicians: “If I do not believe that I am wrong, I do not apologize.”
A month later Sanusi butted heads, again. This time with the International Monetary Fund (IMF) for a suggestion that Nigeria should devalue its currency. He slated them for advice that was “simply not based on sound economic logic”.
When the FORBES AFRICA team informed Sanusi that he had been short listed for the Person of the Year, we asked him whether, after having stepped on so many toes in such a short space of time, there was ever a time he considered, well… er…taking it easy?
“No, I never did,” he said pointedly, “on the contrary—I sometimes thought I didn’t step on enough toes. I think that part of my responsibility as a Nigerian is to ask what are the things wrong in our society and that need to be changed and what can I do in my position to change it.”
Change has indeed come to Africa’s most populous nation—thanks, in no small measure, to Sanusi among others.
“His quick and firm actions likely prevented a systemic banking crisis,” the IMF notes in its latest report on Nigeria.
“The core function of a central bank is to provide financial system stability, exchange rate stability, and price stability. Therefore, to have been able to provide stability in the last two years when the rest of the global economy has been in turmoil has been the principal achievement,” Sanusi says.
“Everything we’ve done in terms of the recapitalization of the banks, mergers and acquisitions, governance reforms etc are all aimed at financial stability. We’ve been able to do that while achieving stability in the exchange rate and keeping inflation relatively under control. Obviously, we’ve had volatility in interest rates and exchange rates because you can’t have price, exchange rate and interest rate control at the same time. But I think we’ve achieved our core mandate.”
Business confidence has surged and Africa’s third-largest economy is expected to grow above trend, with favorable medium-term prospects. A 7% real GDP growth is relatively high, even though it is below the double-digit levels the country requires if it is to become one of the world’s top 20 economies.
“It’s just an arithmetic fact that at current growth rates we’ll take over from South Africa in terms of share size. But this is a country of 167 million people and growing and 7% growth at the moment does not improve the welfare of the people of Nigeria and we need a higher rate of growth than we have at the moment,” Sanusi says: “The focus should not be on GDP, but GDP per capita, human development indicators and the quality of life of the population. Inclusive growth is the challenge.
Double-digit growth will be a function of the right policies, he says: “We already have 7% growth without power and infrastructure. Growth that has come largely from telecoms, wholesale and retail trade and the good fortune of rainfall for agriculture. It’s a no brainer that if we begin to move, for instance, agriculture production towards global averages we can probably double growth in that sector and build manufacturing by fixing power and infrastructure, moving from 7% to 12 or 13%.”
Born on July 31, 1961, of a public servant father who headed the Nigerian Ministry of Foreign Affairs in the 1960s, Sanusi has BSc and MSc degrees.
Between 1983 and 1985 he taught economics at his alma mater, Ahmadu Bello University, before joining the private sector.
He was the CEO of First Bank when, some day in late February 2009, he received a call from the then Nigerian President, Umaru Yar’Adua.
“We spent about 15 minutes chatting about family,” Sanusi recalls. But it wasn’t until May 8 of the same year that Sanusi got another call, this time the head of state informing him of his wish to make him the Governor of the Central Bank of Nigeria. It came as a big shock to Sanusi, who had never met his president before and thought you had to lobby to get such jobs.
Little did he know that two years on, he would have behind him such accolades as World Central Bank Governor of the Year 2011, Sub-Saharan Central Bank Governor of The Year 2011, African Central Bank Governor of The Year 2010 and People’s Person of The Year 2010.
He is most likely to arrive at the Forbes Africa Person of the Year awards ceremony in Lagos wearing a bow tie, for he refuses to wear a conventional tie. A bow tie, he says, is “cute” and speaks to his “instinctive sense of being different”. What else would you expect from a banker who never runs with the herd.

“I sometimes thought I didn’t step on enough toes”

According to the landlords, contemporaries, teachers and neighbors who have lined up in front of the media in recent weeks, Kweku Adoboli was a sociable, intelligent and overwhelmingly ‘nice guy’.
The financial community in London remains awash with speculation about how that nice guy from the industrial coastal town of Tema, in Ghana, came to be in a position to lose the Swiss bank, UBS, more than $2 billion as well as its CEO.
Adoboli’s background speaks of privilege, but is unremarkable amongst his peers in the City. The 31-year-old son of a UN staffer was schooled at the fee-paying, Quaker-run Ackworth School in West Yorkshire, where he was deputy head boy.
<div id="attachment_193" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-193" class="size-large wp-image-193" src="/wp-content/uploads/2017/04/125271682-692x1024.jpg" alt="" width="474" height="701" />UBS Trader in court</div>
He studied computer science and business at the University of Nottingham before joining UBS, where he worked until 3:30 in the morning on September 15, when the City of London police arrested him at the offices of UBS in Finsbury Avenue. Later that morning, UBS announced that it had made a loss of $2 billion due to “unauthorised trading”. It later revised the figure upwards to $2.3 billion.
Adoboli remains in custody in London on two charges of fraud—for the periods October 2008 to December 2010, and from January to September 2011; plus two charges of false accounting—from October 2008 to December 2009, and January 2010 to September 2011.
Facing charges, Adoboli told a court that he was “sorry beyond words” and called his vast trading losses “disastrous miscalculations”.
Those miscalculations have called into question the survival of investment banking at UBS, as the bank decides whether to cut off a division battered by poor performance and scandal. Oswald Gruebel, the bank’s CEO, resigned over the affair on September 25.
As Adoboli’s LinkedIn profile shows, he worked on the investment bank’s European equity desk in London, trading “Delta One” strategies.
“Delta One” refers to the ‘delta’—or marginal difference—between closely correlated asset classes. By buying equities and hedging using derivative products or baskets of other assets, these computer-driven strategies mop up money through the inefficiencies in the market. It is highly complex, but is also supposed to work within tightly controlled risk limits. For every position the trader takes, he or she is expected to take a counter position—or hedge—of almost equal size.
The Swiss and British authorities are now investigating how Adoboli was able to evade the systems that monitor these limits to place directional bets. The results of those probes are likely to be months away, but the investigators will no doubt have seized on Adoboli’s CV and its startling similarity to that of the last headline-grabbing rogue, the French trader, Jerome Kerviel. Kerviel cost Société Générale, the French bank, $6.6 billion in 2008.
Starting in the bank’s “middle office”—the risk management IT department—in 2000, Kerviel made the jump up to trading in 2005, also on a Delta One desk. The bank’s comprehensive “Mission Green” report into the incident charts his activity from that point. He began to take directional bets that same year, probably to cover up the fact that he had been consistently losing using conventional strategies, the report said.
Kerviel used his knowledge of the bank’s risk systems to hide the fact that his positions were not hedged, creating fictitious counter trades by buying securities with deferred start dates or with counterparties that did not require immediate confirmation. Using passwords from other SocGen employees, he was able to go back into the system and remove the trades, fooling the risk monitoring tools. It worked for more than two years and reaped a fortune.
In January 2008, though, Kerviel was found out. He had amassed directional positions in European stock indices totalling almost €50 billion ($6.6 billion). The day that the bank began to unwind these positions was “Black Monday”, January 21, when UK, European and Asian markets fell dramatically.
That he was found out in a period of acute market stress is not a coincidence. The hedge fund, Long Term Capital Management, collapsed after the Russian sovereign debt crisis in 1998. The world’s most famous rogue, Nick Leeson, whose limit-busting trades out of Asia brought down Barings Bank, was shaken out in the aftermath of the 1995 Kobe Earthquake. Both events saw highly volatile markets with large price movements.
Like Kerviel at SocGen, Adoboli began his career at UBS in the bank’s IT department, maintaining and managing those same risk systems that were supposed to keep traders in check. Whether he used that knowledge will likely be a thrust of the investigation against him.
While systems and practices differ between banks, traders often admit that limits really are flexible. There are often subtle ways for traders, with good reputations, to go around the risk management practices that, while they reduce the potential for losses, also constrain a trader’s ability to take educated punts when they have a strong conviction.
This, cynical traders say, is why rogues can get away with deceit for long periods: no-one gets fired for winning. It is only when they lose that they have to “go write the book”—that is, be escorted out of the building by security at best, or the police.
Kerviel was, according to SocGen, at it for years. Leeson began his rogue activity in 1992, initially winning big before his fortunes turned and he began to hide his losses in the now infamous account number 88888. Adoboli’s charges—for which he has not entered a plea—cover almost four years.
Traders are understandably reluctant to go on the record about their peers who ‘go rogue’, but as more than one hinted, if you are considered good enough, hard boundaries get softer. If you break the rules and lose, though, you are on your own.

Tag: Banking

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