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‘Sun Trust is the Bank for Small and Medium Enterprises’

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SunTrust Bank Limited

Muhammad Jibril, founding CEO of Sun Trust Bank was in New York shortly after he secured the licence for the commercial bank. Nduka Nwosu reports that his emphasis is on financial technology banking, with the small and medium scale enterprises as his main focus

The invisible hand of destiny like in all things that produce good works, led him along the way. The same destiny provided a guardian angel who guided him as he walked down the path of progression. Today Muhammad Jibril’s dream of remaining a key player in the banking sector has become a dream come true. He first hinted this reporter in Abuja that his Sun Trust Savings & Loans Limited later a mortgage bank, was only a step in actualising that dream.

So by September 15 last year when the licence arrived, Jibril 45 knew the die was cast to launch out. However, Jibril’s mother may have to take a large chunk of the credit that has brought her son to the doorstep of his dream. Only recently corporate Nigeria led by one of the world’s richest men Aliyu Dangote applauded him for taking the right step in the right direction, the launching of Sun Trust Bank whose cutting edge is to grow the small and medium scale industry sector.

Back in Gombe as a primary school pupil, Jibril spent his time while on holidays giving a helping hand to his mother in the farmland, doing commodities, buying and selling farm gate products-cotton, groundnuts, et al transported to different parts of the country-Kano, the east and Lagos where they were often shipped for export.

Jibril’s mother who even today transacts business with her phone, had grown to be a prosperous businesswoman, expanding her network by employing the ‘idle’ funds into some investment outlet, a financial intermediation that helped those who needed quick loans to pay for school fees, keep the family going until when the next monthly salary arrived. or for some other reason that called for a sense of urgency. All this became her son’s early learning curve, what Donald Trump would have called the art of the deal.

It was not by accident therefore that Jibril who took a degree in Economics from the University of Abuja found himself in the banking strong room of Union Bank Aba, employed in what he describes as the lowest form of banking, counting money and dealing with the Aba market traders as a youth corper. That was the real initiation that has taken him in a long journey and embrace of different financial institutions round the world. That grooming positioned him for his job at Citibank where he was employed as a cashier

On his unique selling point, Jibril contends for any people to grow or develop, you need to have access to finance and the engine room to the growth of each and every economy is the small and medium enterprises, yet they are without access to finance. “I have seen it, I have lived among them all through my life,” Jibril says with a footnote, “we must find an institution that will clearly provide the funding and support of small and medium enterprises. That has always been my passion and this would propel the economic growth of this country, there is no doubt about it.”

Thus come the next 12 months, Jibril is confident he would have met his target of growing the bank’s revenue by one billion naira and N30 billion in five years. He projects a customer base of 10 million using other banking agents and network providers such as Airtel to get to those areas where Sun Trust may be physically restricted to operate as a regional bank, to expand its customer base. “We hope that in the next five years, we would be able to achieve a target of ten million customers which is one-third of the current banking industry number,” he asserts with confidence

He will still be involved in regular banking business accepting deposits, explaining it would be the bank’s major focus while growing its liability base with the much needed liquidity expected to provide funding for those in need of it.

Indeed Jibril has a pedigree that reinforces his high expectations of success. A beneficiary of one of the federal government’s unity colleges, Jibril was determined to make himself a global citizen through academic exposure and professionalism.

In between his career, he took time off to study. He went to the Imperial College London for his MBA programme and Harvard University for a one year post-graduate management program and subsequently at the New York University where he obtained an M.Sc. in Risk Management.

With Citibank, the sky became the limit growing at various levels, moving to trade finance, foreign exchange, and treasury and as an analyst before rising to a managerial position. Overseas, he worked with Barclays Bank in the UK after his MBA programme, and then moved to Switzerland before returning home.

The 1990s offered a platform for the emergence of new banks one of which was Bond Bank. On his return home, Jibril got a job with the new bank as the regional manager in-charge of Abuja and its northern operations. Bond Bank was eventually merged with some other banks to form Skye Bank under the heat of consolidation. Jibril took time off for one year and later took a job with Abuja based Aso Savings and Loans, a mortgage bank owned by the FCT, where he was executive director after which he left for the Postgraduate Management Program at Harvard. On his return, he founded the SunTrust Savings and Loans Ltd, later known as SunTrust Mortgage Bank and now SunTrust Bank.

The sector Jibril has ventured into has over the years remained a debatable conversation that has defied attainment of the high expectation of becoming the engine room or hub of positive change for the industrial sector. When the National Economic Reconstruction Fund (NERFUND) was initiated under military president Ibrahim Babangida’s government, the mandate was to provide funds for the SMEs as one of the crucial steps at economic diversification, away from the sole dependence on oil.

It received critical acclaim. Over the years however, NERFUND became passive as the alternative driver against a mono-oil economy and not much has been said about its achievements that would have helped to turn around the industrial sector. So the question is why Jibril believes his bank would make a difference given the game plan it has set for itself. What form of audacity is this?

Jibril defines it as the courage to take that bold move and say we would do what nobody has done. “This is what we are doing. Believe me, it is not rhetoric; someone has to start somewhere and this is what we are doing.”

JIbril attributes NERFUND’s failure or lack of proactive sustenance to the absence of the quantum of funding needed to drive the dream. “What NERFUND needs is adequate funding to deliver on its own mandate; that is not there; we need to provide that, we need an institution that would understand that segment of the economy, the retail and the small and medium enterprises and actually provide it with the right financial intermediation; that is what we are doing here.”

Jibril is an advocate of strong and enduring institutions in the polity. That is his direction, to leave his footprints in the sands of time, insisting he is not the type cut for a fading act. The creative spark hit him like a thunderbolt in 2008 following the completion of his programme at Harvard. It happened during a walk down the street at Becker Street in London. According to him, “it just occurred to me to do this thing. I was passing by a printing and publishing company. I went inside and sat down and this was how I started thinking of how to put together a name and that was how the name SunTrust came about.

The name SunTrust, Jibril explains, is appealing because it is a reminder that our daily chores begin with the morning and end at sunset; so as the sun is rising, you can be rest assured that you have an institution that you can go to, that would provide you with the necessary support and as the sun is setting you can trust that your savings are safe in that same institution; you can trust it as a partner.

You wll not find Jibril playing polo or golf to keep fit, but he jogs and plays football with his Sun Trust team. When he is in New York, he shops for books though these days he prefers his electronic purchases. Sitting beside his reading table in the guest room at Ritz Carlton, Jibril points to two books, one by the Australian banker Brett King, his Harvard professor, CEO and co-founder of Moven, a New York based mobile banking start up. King is the author of several books including ‘Bank 2.0’ and ‘Bank 3.0’ as well as ‘How Customers’ Behaviour and Technology Will Change the Future of Financial Services’. Jibril is proud to tell you this is where Sun Trust is coming from.

The second book on the table is a joint publication by John Cutter, who runs a leadership institution in Boston, and Holger Rathgeber with the title ‘That’s Not How We Do It Here, A Story of How Organisations Rise and Fall, and Can Rise Again’. That tells you where the man is coming from and how his mind functions.

Where does Sun Trust fit into the banking sector by category? The CEO explains: “We are part of the tectonic movement in banking, a financial technology based bank with minimum branches. According to Jibril, “Sun Trust is a regional financial technology based bank with a capital requirement of N10 billion, now in excess of one billon, we are operating with minimum staff with branches in Lagos, Abuja and Port-Harcourt covering the South south and South west and of course Abuja where by our license, we are limited to operate physically. Our strategy is very clear, we don’t see us increasing our capital, and there is no need for us to have a big capital that cannot give returns. By implication, we will remain a regional bank for now and what that means is that we cannot physically be in the other regions; we will be everywhere because we are not limited by barriers or by physical location; technology is not limited physically and therefore whether you are in the South-East or in the North, we can easily service you.”

How did Jibril come about having this financial product as a cutting edge for Sun Trust? In a universe of 180 million people, he educates you, there are only 30 million of such people with bank accounts leaving behind 150 million. If you decide to play with a third of that number you will have an additional 50 million who can be persuaded to have bank accounts. That is the number, he explains, that Sun Trust is targeting and he is bringing them into its fold through the concept of financial technology or electronic banking.

This, Jibril adds, has become a global phenomenon subscribed to by 90 percent of bank customers leaving just 10 percent dependent on the old tradition of manual banking not only in Nigeria but worldwide. “We were very clear from day one that any institution that thinks the branch banking is at the core of the brand, is not ready for the customer of tomorrow. The customer of today is executing 90 percent of his transactions electronically, talk less of the customer of tomorrow.”

Will physical branches totally disappear? He does not think so, instead he argues, there will be physical presence of banks and scanty behind the counter activities since nobody wants to deal exclusively with robots, but with constant education of the customer on the science and art of electronic banking, banking will become real fun in the future.

Sun Trust is very clear on this matter, the CEO that its business would be driven on technology. According to Jibril, a staggering ninety percent of transactions today are executed electronically. “We do not have counter or teller, cashier cubicles in this bank because there is no need for it. Any institution that believes that physical branches are at the core of its brand is not prepared for the customer of tomorrow who neither wants to go to the physical branch nor wants to go and carry out a transaction over the counter either in cash or cheque, most customers today would rather execute their transactions electronically, at the minimum if they need cash they will go to an ATM.

“At the heart of our strategy therefore, we agreed that this bank would be known as a financial technology bank, we are going to drive and deliver banking services using technology, and this is the future of banking.

“So our target market would continue to be the small and medium enterprises and the retail ones but more importantly we shall focus on them, on those that are in the South and those that are excluded from financial services.

Reason: “If you look at it, after the bidding exercise that was conducted by the CBN in conjunction with the commercial banks, you would agree with me that the total number of bank accounts in the system that we have seen is not more than thirty million; Nigeria’s population is about 180 million, it is growing at an annual growth rate of about three percent, that compounded over the next ten years Nigeria would not be less than 220 to 230 million people.

“Now more than 70 percent of that population largely made up of young people, is excluded from financial services and looking at it today our youth population would be more than double by 2020 and when that is double, that is the population that is technologically savvy and agile.

“However, they are excluded from financial services, what you and I take for granted: carry out a transaction, pay our bills, save money for a rainy day and even borrow on very reasonable terms from banks; the youths don’t have that access and the CBN is trying to ensure that there is financial inclusion, so given all these things together and looking at where the economy is going, where the growth is, we believe that we should target the youths as tomorrow’s beneficiaries of the larger network of electronic banking technology.

With the emphasis on small and medium scale enterprises, Jibril is asked if the emphasis on collaterals would be minimised. He answers in the affirmative. “Our target market is the retail customer, who is a very difficult customer but in these very small and medium enterprises you can clearly see an engine room for growth and development and you can put them in clusters, in cooperatives and in groups and therefore be able to provide them with credit.

Jibril is optimistic the country is moving in the right direction, the recession it is currently experiencing notwithstanding, advising that the way out is for government to invest heavily in capital projects, like it is done elsewhere, to be able to walk out of the recession. Happily the first and second quarter releases to power, housing and works ministries, he says, are moves in getting the economy back on track.

“For the first time thirty percent of our budget is on capital projects expenditure and if you look at allocations on the first and second quarters, a large chunk of the releases is for capital for Works, Housing, Power and Transport. And the most critical thing government must spend on is Power. Once these things are started, then the small and medium enterprises the will now become the engine oil for the growth of the economy, “ he said.

A devout Muslim who subscribes to the tenets of Prophet Muhammed and believes like family, religion should be personal, Jibril says his parents had always been his role models who taught him to be fair and uncompromising in his basic principles. ”I have always admired people who are very hardworking and principled and who have the highest level of integrity.”

So, when the history of banking in the country is written, how would he want to be remembered? “I have led my own path. All I ever wanted to do was to build an institution that would leave its own footprints in the sands of history, that would be able to provide the critical assistance of financing required but more importantly with a tectonic shift in the industry, a completely different way of doing business, that is driving serious banking by the use of technology.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Crude Oil: Nigerian Government Set to Reopen 180,000bpd Trans Niger Pipeline

The Federal Government is set to re-open the Trans Niger Pipeline which has a production capacity of 180,000 barrels of crude oil per day. 

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Six months after the Trans Niger Pipeline (TNP) was shut down due to vandalism and oil theft, the Federal Government is set to re-open the pipeline which has a production capacity of 180,000 barrels of crude oil per day. 

Investors King learnt that Trans Niger Pipeline (TNP) serves as part of Nigeria’s gas liquids evacuation infrastructure, which is vital for domestic power generation and the export of liquefied gas.

According to a statement released by the General Manager of National Petroleum Investment Management Services (NAPIMS), Mr Bala Bunti on his official Twitter handle, the Trans Niger Pipeline will enhance Nigeria’s oil production capacity. 

The General Manager noted that NAPIMS has been in talks with the host communities along the pipeline to bolster security for the crucial oil infrastructure. 

“The NAPIMS leadership delegation under the  General Manager of Joint Venture operations, Engr Zakariya Budawara, had spent the last one week with the Bodo community in Gokana LGA of Rivers State where the pipeline is situated and runs through”. He said. 

Bunti further stated that the people of Bodo have pledged their commitment to ensure the security of the oil infrastructure in exchange for improved quality of life, job creation and capacity building. 

It will be recalled that the Trans Niger Pipeline was shut down by Shell Petroleum Development Company because of vandalization and oil theft. It has been moribund ever since because no crude has flown through it.

Investors King had earlier reported that Nigeria’s oil production has been characterised by theft, vandalism and sabotage which has led to a massive drop in production. 

Some major oil companies had announced a cease of operation because of vandalism and insecurity. 

In July 2022, the Managing Director and Country Chair for Shell Petroleum Development Company of Nigeria Limited, Osagie Okunbor said oil theft was one of the reasons that Nigeria could not meet its OPEC quota of 1.8 million barrels a day.

Similarly, in August 2022, for the first time in five years, Nigeria lost its crown as Africa’s largest oil producer to Angola.

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Energy

Clean Energy: Over 70,000 People to Benefit from Africa Mini-grids Program

Over 70,000 Nigerians will benefit from its recently launched Africa Mini-grids Program (AMP) instituted to enable access to clean energy

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Solar energy - Investors King

The federal government of Nigeria has said over 70,000 Nigerians will benefit from its recently launched Africa Mini-grids Program (AMP) instituted to enable access to clean energy by increasing the financial viability, and promoting scaled-up commercial investment, in renewable energy mini-grids.

Africa Minigrids Program (AMP) is a project that connects investors with mini-grids stakeholders to help create access to clean energy for the 548 million people in sub-Saharan Africa who currently don’t have access to electricity, which is currently active in 18 African countries.

The Africa Mini-grids Program (AMP) was launched by the federal government through the Rural Electricfication Agency (REA), as the four-year project is funded by the Global Environment Facility (GEF) and supported by the United Nations Development Programme (UNDP) in Nigeria.

Speaking on the launch of the program, the Rural Electrification agency (REA) said, “The Africa Minigrids Program in Nigeria is designed as an enabler project of the REA’s Energising Agriculture Programme (EAP) which aims to advance one of REA’s strategic priorities of focusing on the unserved and underserved to increase economic opportunities through agriculture and productive sectors in rural communities across the country.”

Also commenting on the launch of the program, the UNDP Resident Representative in Nigeria Mr. Mohamed Yahya said: “access to reliable, sustainable, affordable energy is a catalyst to socio-economic development, and in achieving the Sustainable Development Goals (SDGs).

“By scaling up solutions such as renewable energy mini-grids, we will be able to close the energy access gap and unlock opportunities for people in Nigeria and across the region.”

While commending the collaborative spirit of the Agency’s partners and stakeholders that enabled the activation of the program, the Managing Director/CEO of the Rural Electrification Agency (REA), Engr Ahmad Salihijo Ahmad, disclosed that the Africa Minigrids Program will serve as another catalyst for improved access to sustainable energy and equitable and inclusive impact on livelihoods by unlocking agricultural value addition opportunities from electrification.

He added “this sectoral approach is in line with the Agency’s focus on programs to advance the electrification targets and broader social and economic development objectives of the Federal Government of Nigeria.”

In Africa, mini-grids have been identified as a key platform to address critical electrification shortages. Creating successful mini-grid ecosystems beyond pilot projects is now the focus of African governments facing severe shortages, especially for their off-grid populations.

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Markets

A Busy End to the Week

Stock markets are bouncing back on Friday, although I don’t think anyone is getting excited by the moves which pale in comparison to the losses that preceded them.

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Traders Wall Street

By Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA

Stock markets are bouncing back on Friday, although I don’t think anyone is getting excited by the moves which pale in comparison to the losses that preceded them.

This looks like nothing more than a dead cat bounce after a steep decline over the last couple of weeks as investors have been forced to once again accept that interest rates are going to rise further and faster than hoped.

Double-digit eurozone inflation

Inflation in the eurozone hit 10% in September ahead of schedule, with markets expecting a jump to 9.7% from 9.1% in August. In normal circumstances that may have triggered a reaction but these are anything but normal. Markets are still pricing in a more than 70% chance of a 75 basis point rate hike from the ECB next month with an outside chance of 1%. The euro is slightly lower following the release which also showed core inflation rising a little higher than expected to 4.8%.

Sterling recovers as the UK is revised out of a potential recession

We’re seeing the third day of gains for the pound which has now recovered the bulk of the losses sustained after the “mini-budget” a week ago. This is not a sign of investors coming around the new Chancellor’s unfunded tax-cutting, but rather a reflection of the work done since to calm the market reaction. That includes the emergency intervention from the BoE, talk of measures to balance the cost of the tax cuts, reported discussions with the OBR and rumoured unrest within the Tory party. We’ll have to see what that amounts to and sterling could certainly react negatively again to inaction or the wrong action.

GDP data this morning brought some good news, although as far as positive updates go, this is surely towards the more insignificant end. The UK is not in recession after the second quarter GDP was revised up from -0.1% to +0.2%. While all positive revisions are welcome, the technical recession wasn’t really significant in the first place. The important thing was that the UK is struggling to grow and facing a probable deeper recession down the road and today’s revision doesn’t change that. ​

Disappointing Chinese surveys

China’s PMIs highlighted the widening gulf between the performance of state-owned firms versus their private competition. It goes without saying that being backed by the state in uncertain times like this carries certain advantages and that has been evident for some time.

Private firms have been more sensitive to Covid restrictions and have therefore been heavily hampered this year. Still, even with those state-backed benefits, the headline PMI was far from encouraging rising to 50.1 and barely in growth territory. With the non-manufacturing PMI also slipping from 52.6 to 50.6, it’s clear that the economy still faces enormous headwinds and the global economy stalling around it will only add to them.

BoJ ramps up bond purchases amid higher yields

The Bank of Japan ramped up bond purchases overnight as it continues to defend its yield curve control thresholds in volatile market conditions. Rising global yields have forced the central bank to repeatedly purchase JGBs in order to maintain its target. There has been a growing expectation that the BoJ could tweak its 0% target or widen the band it allows fluctuations between in order to ease the pressure on the currency but that’s not been forthcoming, with the MoF instead intervening in the markets for the first time since 1998. The intervention doom loop continues.

RBI rate hike and credit line

The Reserve Bank of India hiked the repo rate by 50bps to 5.9% on Friday, in what will likely be one of its final tightening measures in the fight against inflation. The decision was widely expected and followed shortly after by guidance to state-run refiners to reduce dollar buying in spot markets through the use of a $9 billion credit line. The strength of the dollar is posing a risk to countries around the world, as we’ve seen very clearly in recent weeks as mentioned above, and measures like this will seek to alleviate those pressures. Much more will be needed to make any significant difference though.

Oil edges higher into the weekend

Oil prices are rising again as we head into the weekend, with the focus now on the OPEC+ next week. There’s been plenty of rumours about how the alliance will respond to the deteriorating economic outlook and lower prices. A sizeable cut now looks on the cards, the question is whether it will be large enough to offset the demand destruction caused by the impending economic downturn. Not to mention how any cut would work considering the shortfall in output targets throughout this year.

Brent continues to trade around the March to August lows having traded below here over the last week amid recession fear in the markets. We’re now seeing some resistance around $88, perhaps a sign that traders don’t believe OPEC+ will deliver a large enough cut to make a significant difference.

Encouraging but maybe not sustainable

Gold is making gains for a fourth consecutive day after a difficult start to the week. While the recovery has been encouraging, it’s hard to imagine it building on it in any significant way as that would probably require rate expectations to have peaked and inflation perhaps to have as well. While that may be the case, it’s hard to imagine pressure easing from here which may maintain pressure on the yellow metal for a little longer yet.

Key resistance to the upside lies around $1,680 and $1,700, with $1,620 and $1,600 below being of interest.

A period of stability is what bitcoin needs

It’s been a very choppy week in bitcoin which has failed to make a sustainable run in either direction despite attempts at both. Perhaps we are seeing a floor forming a little shy of the early summer lows around $17,500, although that will very much depend on risk appetite not plummeting once more which it very much has the potential to do. I keep using the word resilience when discussing bitcoin and that has very much remained the case. It did also struggle to build on the rally earlier this week, even hold it into the end of the day, so perhaps a period of stability is what it needs.

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