Africa is late, but that’s opportunity — Mike Nyinaku
Samuel Doe Ablordeppey of the Graphic Business (GB) caught up with the astute business executive and serial entrepreneur, Mr Mike Nyinaku (MN), to share some thoughts about the economy, the banking industry, entrepreneurship and his experiences. Here are excerpts.
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GB: Times are challenging and the general lending by banks to the private sector has slowed. How did your bank manage to post such an impressive half-year results, 86% above the same period last year?
MN: Thanks for noting our results. We’re also happy about the results we churned and we believe that it has come about as a result of a lot of conscious efforts to stabilise our business. We’ve been running for eight years now, have been through very turbulent times, but we’ve also had a lot of experience coming out of mistakes we made in, probably, our second, third and fourth years. So in 2014 we started a programme to gradually consolidate our gains in areas where we’ve made positive strides, and also to stabilise our balance sheet. I guess it’s begun yielding results.
One of the key things that influenced this success is the quality of assets that we decided to create. We also pursued an approach that saw us exposing ourselves only to risk assets that gave us some comfort. In the past, we were quite ambitious and ventured into areas that gave us some challenges. We are born again and are now very confident about the assets that we’ve chosen to establish.
We’ve also, I believe, endeared ourselves to our growing customer base. We currently have a customer base of about 500,000 which shows the kind of confidence that the industry gradually is beginning to have in us. That way, we are able to procure deposits at fairer rates than it used to be in the past. We believe that this trend would be sustained as we move forward. It’s our expectation that by the time BEIGE Capital (BC) is 10 we would have an even more inspiring story to tell.
GB: What has gone into the quality of assets? What are you avoiding?
MN: The good thing is we are manned by a team that has the intellectual capacity to understand the direction of the business, so we are able to respond to whatever the outturn is within the environment.
We’re also lucky to have a board that is very meticulous and the sub committees at the board level ensure that we are always in compliance with our risk management guidelines. Thus whatever recommendations that come from the board, especially in the areas of the kind of assets we should invest in, were things the management had already noticed.
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And of cause, for a business the size of ours, you cannot have a U-turn immediately. The results would be showing in single-digit percentages, but gradually you will be seeing a turn towards perfection and stabilisation.
We are confident because we have the people, the resources, the places as well as a broader product menu for our clients. We’ll do even better in the coming years.
GB: What are some of the menus, do you focus more on the SMEs or you do some big-ticket corporate transactions as well?
MN: We pride ourselves to be a mature savings and loans company that believes in the informal sector. That’s the area where we’ve built capacity and want to continue expanding our footprints.
It has been proven that over 80% of the economically active persons in the country are engaged in the informal sector. This statistic means a lot to us because at BC, we have mastered the art of providing financial intermediation at that space.
We don’t mind doing some high-level corporate business if that opportunity presents itself, but as a default business direction we will always lend ourselves to the service of the underserved and unserved areas first.
GB: What will be your candid assessment of the economic fundamentals of the country and the management plans that have been outlined and their implementation so far?
MN: There are several regulatory bodies whose decisions equally affect the fortunes of this country. Unfortunately for me I can speak only for the one whose affairs I’m conversant with – here I mean the Central Bank.
I think our central bank is smart and the people there have built a lot of pedigree as a result of how long they’ve been managing this economy. Often we are quick to bark at them when internal conditions don’t seem to favour us. However, what we sometimes fail to realise is they not only have to consider internal conditions in determining their actions but also have to balance same against internationally prescribed standards and practices as well. It’s a global environment now, you know, and we cannot pretend to be existing in isolation.
The BoG would normally use monetary policies, including the prime rate to set a benchmark for the price of money on the market. Usually all the banks and other financial institutions thereafter set their rates to be a function of the prime rate. We are also not new to the trend of increased borrowing by the government from the market using the treasury bill instrument. Fact is, one cannot blame the banks because it’s safer to lend to the government than the general market. I believe that the BoG has regulated the industry to ensure fairness, openness and opportunity for growth for all of us.
In spite of the seeming odds, I’m confident about the potential for business success in our climate. The trend that we see is not one that is new. We are going to have a challenge with the depreciation of our currency for a long time, because we simply import more than we export. It’s fundamental!
I believe that for now, we would work with what we’ve and hope that some opportunity presents itself.
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GB: You believe there are still opportunities that exist in Ghana that we can harness to position Ghana as a powerhouse for Africa. What are these opportunities?
MN: Ghana, from my lens is a greenfield. In fact, Africa in itself is a greenfield. We are behind the rest of the world in economic development. This may sound gloomy but from another perspective it’s a big opportunity because what it means is Africa is where capital can find demand. Its common knowledge with the foreign investor community that returns on investments in Africa far exceed the global average.
Watch this. Africa is the continent with the most youthful population, we have possibly the largest mass of undeveloped land; the combined value of mineral resources of Africa surpasses the mineral resources of all other parts of the world combined. In the next quarter of a century we would have the largest population of middle class individuals in the world. That’s a huge market. Besides, the energy needs of Africa in the coming quarter of a century is mind-blowing.
I can easily situate Ghana where Africa is. An example - as elementary as it can be – is the extent to which our landmass is being developed. I schooled at PRESEC, entering at 1987and at that time, the road from the Ako Adjei (then Thomas Sankara Circle) to PRESEC was a small single lane street. At Tetteh Quarshie was a big overgrown roundabout. You will ply that lonely road to Legon. I left PRESEC in 1994. In a space of barely 20 years, look at how much greenfields have been converted to brown.
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Using that simple case as a reference point, you can easily predict that within the next decade, the landmass of Accra could triple in size. What does this mean? Business opportunities! Food, water, basic household and personal needs, education, relaxation and many more. I believe that this country abounds with opportunities.
GB: But is it for foreigners to take advantage of?
MN: That’s where there’s a gap. And from my perspective I can illustrate it using a four legged puzzle. Number 1 is the undeniable fact that opportunities abound. Number 2 is also the undeniable fact that most of our indigenes do not have the technical and material resources to harness these opportunities to their full potential and demanding that the government supports them to take advantage of these opportunities. Three, there are a lot of forces from the international community who have the resources and are seeking to take advantage of the opportunities that exist here. And four, probably the most complex is the fact that our government which is the institution mandated to oversee the administration of these opportunities have their hands somewhat tied because they have to manage the expectations of everyone at the table.
Remember that as part of the international community Ghana has been compelled to endorse protocols that hypocritically frown on protectionism but rather open our market to abuse under the guise of fair competition.
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It would be a difficult situation for any government but there’s certainly a way out. We are not the only country that has been in this situation. The Asian Tigers and even Nigeria was in this situation. But for Nigeria, their sheer size enables them to willfully implement protectionist policies that protect their local industries.
Look out for the continuation in the Daily Graphic on Thursday, September 8, 2016.