Jaiz Bank plc. pioneered Islamic banking concept in Nigeria six years ago. In this interview with ABDULWAHAB ISA, the bank’s Managing Director/CEO Mallam Hassan Usman, said the lender is entering into consolidation, setting stage for value creation by supporting poverty eradication in Nigeria. Excerpt
What has been Jaiz Bank PLC’s experience so far having pioneered Islamic Bank in Nigeria six years ago?
We thank God. So far, we have been able to show that Islamic (non-interest) banking is possible in Nigeria. Before now, it was an issue whether we can do that kind of banking in Nigeria or not. The important thing is that it has become a reality. Secondly and very importantly, we have been able to provide the option that some people were yearning to have for a number of years. Those who felt, because of their background, it is better to go to banks that will not deal in interest, now have an option.
That is the fundamental reason why this bank was established. It was not because we just wanted to be another bank; it was because we wanted to provide options to people who believe interest is not morally justifiable in their upbringing and their religious background.
We commenced operations in 2012 with three branches in Abuja, Kaduna and Kano.
At the end of December 2017, the branches grew to 30 and three branches will added this January. With just a few customers when we commenced operations, we have grown the customer base to over 300,000. Our balance sheet has grown from between N5 and N6 billion in 2012 to between N80 and 90 billion by the end of December.
We could do much better if you ask me. Have we exhausted our potential? I will say we are just scratching the surface of what we want to do; we have a very large ambition. First, we checked on the model and we believe this model is workable. This is just the introduction and we are now entering into consolidation stage, the stage for real value in terms of providing real options to Nigerians.
Looking at the spread of branches, South-south and South-east zones of the country are yet to have Jaiz Bank’s branches. What are your plans for these zones?
Initially, we were licensed as a regional bank and naturally the number of branches that we had in the regions were limited to the Northwest, Northeast and Abuja. Yes, we don’t have many branches in the south, but we have started. As I speak, we have already established three branches that are functional in Lagos.
We have one branch in Ibadan and we have a branch in Port Harcourt. The reality is that you will see us in those other zones now that we now have the license to operate in all parts of Nigeria. More of our branches are going to be seen in the South-west and South-south as well as Southeast.
For 2018, we plan to have a number of branches; we are going to add some branches in Lagos, we will go to Ogun state, we will increase our presence in Oyo and so we will continue to show presence in these areas and I believe this is going to happen this year.
Can you give us an insight into your five-year strategic plans?
One of the bedrocks of our next five-year plan is to consolidate and make sure that we are in all the major commercial centres of Nigeria. Of course, we are going to use technology to ensure that we fill in the gaps in terms of delivery channels so that even if we are not able to meet all locations, which is practically not possible at this stage, our services will be available through alternative channels such as Internet banking, mobile banking, agency banking and off-site Automated Teller Machines (ATMs).
The plan is to spread our reach, grow the balance sheet and becoming very competitive and we intend to be a major player in the market.
Specifically, what is your focus for 2018?
This year, we want to grow both our reach and our products. Also, we will like to enhance our capability in terms of the alternative channels. These are the three basic objectives we intend to pursue this year.
What is your assessment of banking sector’s performance in 2017 and the way forward?
2017 was an upshot of 2016 and everybody knew that 2016 was a very difficult year. By 2017, we were emerging out of recession. It was supposed to be better than 2016, but it was still also a very difficult year. There were a lot of plus; we had the foreign exchange market becoming stabilised for most part of 2017, the power situation was improving be
cause the power is very critical to what we are doing, but government spending was not as envisaged and so, the level of growth was affected. Also, coming out of recession was still quite slow; it wasn’t significant to erase the difficulties that we went through in 2016. We hope that 2018 will be much better. The crude oil market is looking better, more stable and the expectations in terms of the running and value of our export will be better than 2017. These are expectations. We envisage 2018 will continue the stability in the foreign exchange and money markets and, most likely, we will see more stability in interest rate.
The Federal Government recently experimented with the Sukuk and it was over-subscribed by investors dwarfing initial criticisms that greeted its introduction. What are the lessons from the Sukuk experience?
I think the general awareness is getting better; people are beginning to realise that Islamic banking or non-interest banking is not about rituals, it is not just about religion; it is an alternative and so we commend government, especially the Debt Management Office (DMO) and the Ministry of Finance for keeping to their promise to issue it in 2017.
It came later than expected because it was supposed to have come in the first quarter, it came towards the end of the year, but it is better late than never.
We believe it is an opening; another source of funding that can be explored by government and corporate institutions desiring to raise finance for long-term development and long term investment. Sukuk, in particular, is ideal for public finance, it provides a low disciplinary approach because funding raised through Sukuk can’t be diverted; it has to go straight to the projects.
There is high expectation for the projects being completed and on time because the owners of these resources like to be remunerated and it is only when the projects are up and doing that they can receive this remuneration. The structuring of Sukuk ensures a private sector oversight over the funds. It is not like what government does with ordinary bonds or treasury bills. Of course, government still decides what to do with the money, but there is an oversight to ensure that the projects for which these funds were raised in the first place are implemented.
What is your projection for Jaiz Bank in the next 25 years?
Twenty – five years is a long period. Even before then I will like to see Jaiz as one of the very significant financial institutions in Nigeria. I will like to see Jaiz actually supporting the poverty alleviation and poverty eradication in Nigeria through intervention at the lower level. If we achieve that, it will be a significant milestone and also it will be in keeping with the intentions and aspirations of the founders of the bank.
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