Tony Elumelu: the new face of Africa

OKEY ONYENWEAKU |

When a young bolshie banker at All States Trust bank decided to turn his back on the institution in the mid 1990’s and beat a path of uncertainty (and some thought recklessness) to take over a failing Crystal Bank much more was at stake than ego, the careers of a tribe of starry-eyed bank executives were being laid on the line. With time running out and acquisition payment deadline fast approaching there was a general sense of fear and impending catastrophe.

Unwilling to stare defeat in the face and eat humble pie, Tony Elumelu pulled out all the stops; he lobbied, pleaded, cajoled and convinced investors and regulators alike that Crystal Bank could be revived and could be managed profitability.

  His passion and bewildering courage more than anything else balled regulators and investors over. Elumelu’s stubborn persistence paid off in spades when he was eventually given approval to take over Crystal Bank and operate it as a new commercial banking franchise, he quickly dumped the old name Crystal Bank and rechristened it Standard Trust Bank (STB). One of the early investors in the new bank (who was also an investor in the by now defunct Crystal Bank) was erstwhile governor of Oyo State, and self-made billionaire Rashidi Ladoja. His investment in the new bank was well before he became governor, but when he took charge of the sleepy agricultural State of Oyo, STB was in pole position to take advantage of its early investor’s new status, the Federation Account Allocation Committee (FAAC) monthly disbursements to the state was well in hand.

But beyond the Ladoja factor was the incredible zeal and relentless drive of Elumelu himself. Like a Sumo-wrestler on steroids he hugged the political landscape in the early 2000’s and picked no bones about being one of the most aggressive bankers in town. Indeed the marquee motto in the fresh days of STB was DOD (deliver or die). The bank’s marketing staffers were set targets that stretched their creativity and tested their ingenuity, their monthly remunerations (job security) and yearend bonuses were closely tied to deposit mobilization performance. STB was easily one of the toughest banks to work for at the time because performance pressure was similar to that of the United States of America’s Navy Seal training; it was harsh, hard and brutish. But it got results.

With the span of five years between 2000 and 2015 the Elumelu-led bank had cornered the national assembly accounts and built a robust public sector deposit base taking on the likes of Oceanic Bank, First Bank and Union Bank. In the early 2000’s STB was essentially strategically focused on the corporate banking end of the business with a gradual ingress into the more uncertain retail part of the market where banks such as Zenith Bank and United Bank for Africa (UBA) had already become significant economic agents and market share leaders.

Along the line Elumelu delivered the ultimate coup d’ grace by snagging the corporate account of the National Assembly (NASS) and became the only bank to have a branch within the NASS premises. This gave STB strategic access to power and influence at the federal level that competitors of the same age did not have and propelled the bank to being the principal or at worst second line money manager to several federal agencies and institutions. At this stage Elumelu had arrived into a ‘zone’ where he was bold, hungry and unashamedly aggressive. He fought for every business around as long as it had a sizeable pay off. At a side discussion at a lecture sometime in 2004 Elumelu noted that, ‘the days of big and powerful are over, speed and strategy will soon trump size’, he noted. He was right.

By 2005, Central Bank of Nigeria (CBN) governor, Charles Soludo, in a deliberate effort at forging bigger and stronger banking institutions that could fund mega transactions Soludo increased the mandatory minimum share capital of banks from the existing N2billion to a whopping N25 billion or almost fifteen times.  The action sent the industry into a chaotic round of mergers, acquisitions and in some instances liquidation. Smaller banks got eaten up by bigger banks and the survivors soon began to show the power of large capital bases as they took on massive business transactions that hitherto required syndicated loans. So how was Elumelu’s theory that speed beats size correct?

Well Elumelu’s argument made sense within the context that relatively small but well run banks like Access Bank and STB were able to keep their corporate shingles shiny and bright despite the race for bigger capital. They defied gravity by rising to forefront of banks that had quickly made up their new share capital and had subsequently gone on to expand corporate market share. The nifty moves of the likes of STB and Access Bank stunned their larger competitors who had secretly waited to see if they could cherry pick the carcasses of some of the better run but smaller rivals. Indeed immediately after the early baptism of fire of raising fresh capital Elumelu went ahead to take over one of the largest brand names in the banking business, UBA. Realizing that the UBA brand had a more resonant and less cavalier reputation Elumelu adopted the name for the bigger bank but tweaked its logo to reflect the STB relation. Fortunately the corporate colours of both institutions were red and white so the problem of adopting a new corporate colour and its attendant ‘menu’ costs did not arise. Nevertheless, the takeover (which some still euphemistically refer to as a ‘merger’) did come with costs. The laid back and genteel culture of the old UBA took a knock as the swifter more market-sensitive approach of STB took immediate ascendancy. This also led to gale of resignations and termination as the new managers came with a mindset and work ethic that was unfamiliar and almost incomprehensible to the old UBA hands. Within a few months a swathe of UBA grandees had been shown the door and the new boys on the bloc wasted no time in asserting control as they started the task of driving the bank to efficiency and profitability.

The pioneer managing director of the STB-UBA combine took over in 2005 and left the bank in 2010 but not before leaving a massive change in corporate culture, a drive towards pan-African growth and a major review of deposit- to- asset ratio as well as a sizable slash in the cost-to-income ratio. Elumelu reestablished UBA as a formidable local banking franchise with undisguised continental ambitions. By the time he left the bank and passed the leadership mantle to his successor, Philips Oduoza, the bank was already well on its way into becoming a continental spider. The Oduoza era saw the bank by 2015 achieve the feat of earning over 30 per cent of its income from operations in other parts of Africa. Indeed this served as a formidable backstop to the recessionary headwinds that were already adversely affecting the bottom lines of other banks in the local money market.

Consolidating the performance of Elumelu who grew the bank’s total assets by 456 per cent from N251.6 billion in 2005 to N1.400 trillion in 2010, Oduoza grew profit by a mammoth 2,518 per cent to N47.9 billion in 2014 from a negative N1.944billion reported in 2010. UBA’s balance sheet grew by 73 per cent from 1.5trillion in 2010 to N2.7 trillion in 2014. The unrelenting growth culture appears to have continued under the recently appointed, Managing Director, Kennedy Uzoka. Re-enforcing corporate stability, analysts have noted that bank assets grew by an impressive 27 per cent year- on- year from N2.752 trillion in 2015 to N3.504 trillion in 2016.

Elumelu has since returned to UBA but as its Chairman. Under his board direction it is expected that the bank’s pan –African foray will take on fresh momentum and its operating figures will be hammered to squeeze greater value for equity holders.

Notwithstanding this, however, Tony Elumelu, the banking wunderkind of 2000 has decided to fry bigger fish than banking. Since leaving UBA as its Managing Director, Elumelu has spent tremendous time and resources building up two pet passions, HEIRS Foundation, an investment vehicle that identifies and promotes enterprises across the continent and the Tony Elumelu Foundation, that intervenes in the promotion of enterprise in Africa through entrepreneurial training and angel financing.

As part of his entrepreneurial initiative Elumelu has been a vibrant voice for what he has conceived and  called ‘Africapitalism’ which is the spirit of the new entrepreneurship of emergent young and creative business minds on the continent. Elumelu has taken the charge with the same hardnosed rigour that he turned the defunct Crytal Bank into the industry leading STB and then UBA. The Africapitalism initiative has seen Elumelu support young enterprise initiatives in various African countries with thousands of young entrepreneurs benefitting from his money and his business experience. According to Bismark Rewane, one of Nigeria’s leading investment analysts and Chief Executive Office Financial Derivatives Company (FDC) and an unapologetic Elumelu admirer, ”I think that Tony Elumelu’s entrepreneurship project is not only unique but it is visionary. It touches the delicate essence of the drive for a reinvented Africa with a thriving entrepreneurial class and culture’ notes Rewane. According to him, ‘the Nigerian business class has been known to be selfish, monopolistic and opportunistic but this makes a clean break from the common mould. This is totally different from the narrow-minded and short-sighted entrepreneurial character familiar to these climes. One can only give Tony credit. And coming from a minority Nigerian background with its attendant baggage and disadvantage this is truly a gift of love demonstrating confidence and commitment in Africa and in its common humanity. One thing about Tony is that whatever he thinks about and decides on, he implements. He is a sucker for execution”.