Towards sustainable finance By Dr Adesola Adeduntan, CEO of First Bank of Nigeria,

I meet Dr Adesola Adeduntan in Edinburgh where 

he has been invited to give a keynote address at 

the Edinburgh School of Business to speak about 

the role of financial institutions to drive financial 

inclusion. As one lands in Edinburgh, you are greeted 

by billboards from different investment funds under-

lining their credentials in investing in a responsible 

and sustainable manner and how environmental, 

social and governance (ESG) considerations underpin 

their activities. 

With economists and politicians questioning cap-

italism and the Western liberal model, today the 

emphasis is very much on stakeholder capitalism 

whereby the growth and prosperity is more equally 

attributed. Sustainable investment has become de 

rigueur in the corporate jargon of 2019.

Dr Adeduntan, a veteran in the Nigerian bank-

ing and corporate world, is at ease with whatever 

is thrown at him. In his answers, both during our 

meeting and also during the various talks he gives 

that day – at the Business School but also at a law 

firm talking about the Nigerian opportunity and the 

future of banking on the continent – his main mes-

sage is the importance of doing good if you are to 

succeed in Nigeria.

First Bank is the oldest bank in the country, not 

to say the continent. Last year it celebrated its 125th 

anniversary and, for Adeduntan, longevity is a tell-

ing sign: not only does it prove the Bank’s resilience 

but it shows that it has the right structures, in terms 

of governance, and right model, with the country’s 

development at its core. 

Although it lags behind some of its competitors 

when it comes to profitability, First Bank is the big-

gest bank in Nigeria in terms of assets and branch 

network, and the second biggest in terms of tier 

one capital. However, like investment trends prior 

success is never a guarantee of future glory. And 

it is the future that Adeduntan wants to focus on: 

how do you seize the opportunity that the country’s 

unbanked population presents – financial inclusion 

has increased from the low 20s to approximately 40% 

in Nigeria over the past seven years and is expected 

to double to the mid-80s within the next five years

Is he worried that non-financial companies will 

be entering the banking sector following a change in 

regulation by the Central Bank? He is confident that 

his bank has one of the best defined strategies when 

it comes to financial inclusion and that they have the 

largest digital banking network in Nigeria. Much of 

this has been developed through what they call First 

Money agents, with over 40,000 agents representing 

the bank across the country, and 8.5m customers 

Interview

transacting on their USSD platform (mobile phones, 

both smart and analogue ones) in addition to 3 million 

customers transacting on the FirstMobile platform.

The agent network, the biggest of its kind in the 

country, enables the bank to provide banking services 

to the most rural communities, and because they don’t 

need to have an extensive branch network it means 

that they can supply these services at a fraction of 

the cost of a “legacy” banking model.

Adenduntan, in his talk and our conversation, uses 

the word financial deepening when talking about the 

unbanked and the real opportunity this presents. For 

him financial deepening is when financial inclusion 

starts playing an important role in economic develop-

ment. It’s about layering additional products on the 

current agency banking network, services such as 

micro-credit, micro-insurance and micro-pension, 

providing value-added services whilst at the same 

time increasing the savings rate, critical to drive 

investment rates and one factor behind Asia’s rapid 

growth.

Last year saw a boom in venture capital investment 

into Nigeria with $400m being invested in a number 

of fintechs during the month of November alone. Is 

he worried that these fintech players are going to take 

the majority share of the pie when it comes to ser-

vicing the unbanked? He says that’ll only be the case 

if the banks do not manage to reinvent themselves. 

In Edinburgh, he actually spent a number of hours 

visiting tech hubs around the university in the city 

and speaking to fintech companies. 

The bank, according to Adeduntan has a number 

of partnerships with fintech as well as its own Digital 

Laboratory, developing new solutions for the bank. 

Like many senior bankers, he firmly believes that 

the “legacy banks” will still continue to play a very 

central role, especially in this part of the world where 

banks are quite dominant and they have significant 

buying power. And given the role that banks play, in 

terms of settlement and deposits, he sees many of 

these new players as partners they can work with, 

even if in some cases they will be competitors. 

Scope for growth

Adeduntan sees massive scope for growth for the 

banking sector in Nigeria. He points out that none of 

the country’s top banks make it in the Top 10 Banks 

in Africa despite Nigeria being the continent’s larg-

est economy. Coupled with the signing of the African 

Continental Free Trade Agreement, he feels we are 

entering a very interesting period for the banking 

sector, not only in Nigeria but Africa in general. 

Does he expect further consolidation? “Within

certain thresholds,” he answers. “Anything that would 

allow the strengthening of the entire banking sector, 

knowing how the Central Bank Governor thinks, I am 

sure he would be positive about it.” 

We move on to the regulator and the role of the 

Central Bank. Does he find that it is too intervention

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ist, dictating how much banks should lend, where it 

should place its assets. As you would expect, he won’t 

be drawn into criticising his regulator, with whom 

he says he, and other bank CEOs, have a strong re

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lationship. But he will say that the role of a central 

bank in the development of an emerging economy is 

clearly different from the role of a central bank in a 

developed economy. 

“It is not unusual that the central bank intervenes 

in critical sectors allied to the loan to deposit ratio. 

It’s about economic growth; it’s about development; 

it’s about channelling credit in sectors that are very 

important for the national economy. Let us take agri

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culture - again, we are one of the biggest lenders into 

that sector. We found the Central Bank intervention in 

some of those critical sectors extremely useful and not 

just for us as a bank, but for the country as a whole. 

“Again, when you look at intervention in agricul

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ture, you have to put it in the context of the size of the 

population. Nigeria as a country, we are 200m people 

today. Like I’ve always said to many people, the business of feeding 200m people is a strategic business. 

Everything that is being done to ensure that at least 

we are self-sufficient in food production is strategi

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cally important. We find Central Bank intervention in 

those areas quite useful and of national importance.”

Like most Nigerian businessmen investing in the 

country, he is quite optimistic about the future. He 

appeared excited with the economic advisory council 

the president has put in place, credible business lead

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ers and economists he says. And despite reports that 

the government is not economy-minded he thinks 

that it is a pro-business government. 

Contributing to development

It is nearly 10 in the evening when we finish our 

talk, his day having started at 7.30am with a prese entationat law firm Shepherd and Wedderburn. 

We go back to sustainability and the role of fi

nancial services to make sure they are lending to 

institutions that are ethical about their business 

and operating in a sustainable manner. He says 

that the journey has started even if it is still 

early days. 

“But ultimately,” he says, “this is where we 

are headed. The Nigerian Sustainable Banking 

Principle speaks to this particular question. It 

is something that we are working on and it is a 

requirement of the Central Bank that we are all 

working towards. I think it’s evident from the 

points that I’ve made today, you can say that First 

Bank is a bank that is happy to forego a few basis 

points in terms of its net margins if that means it 

is contributing to development in a more ethical and sustainable way. We’ve always made a point that profitability is very important for us at FirstBank 

but economic growth and national development is 

equally very important and speaks to the sustainability question.”