Omodele Adigun

“It is time to start looking at how financial institutions can focus, not only on personal wealth, but also on creating trans-generational wealth and on helping society to transform,” says Mr Kola Ayeye, the Managing Director of Growth and Development Limited (GDL), a nascent  financial services group with interests in Assets Management, Finance and Stockbroking.

According to him, when progress is slow as we are currently experiencing in the country, we should examine not only the strength of  Nigerian financial institutions, but also consider the structure and relevance of the institutions whether they are best adapted to the strengths and weaknesses of the society.
In this interface, he states that it is not too late to restructure the nation’s financial architecture, saying “it is of no use belabouring what we have done well or that we haven’t done well .It is much better to think on how to re-innovate and re-invent our institutions.”

Excerpts:
Wealth

Our country, Nigeria  is generally punching below its weight. That is something that is obvious that needs no explanation. We have substantial collapse of social infrastructure; the middle class is very thin and it continues to get thinner. From where we stand at Growth and Development Limited (GDL), there are three kinds of wealth. And this is how we define wealth: There is personal wealth, which is what individuals own; the money in their bank accounts, the houses thy own, the shares they have bought. That is one class of wealth. The second category of wealth is transgenerational wealth. That is wealth that is structured in such a way that it is likely to live and transcend generations. And one important category of transgenerational wealth is when a company has become not only stable but it has become institutionalised. And it can move from one generation to the other. That is second category of wealth. The third category of wealth is the commonwealth. The wealth that belongs to everybody; the wealth that is available to everybody. For example, the medical system of a country is part of its commonwealth. The social infrastructure, the school is part of its commonwealth. For there to be a thriving middle class, the last two classes of wealth are very important. In societies where you have a thriving middle class, they have a very robust and large commonwealth. The schools work; the health facilities work, the infrastructural facilities are up to the task. What that does is that, it means that regardless of the quantum of personal wealth that you have, there is a certain minimum standard that you can achieve because those things are commonwealth. There are societies where, even if your child were to go to a public school, he would be getting close to the best in class education.
Trans-generational wealth, on the other hand, makes the wealth created by a generation available to other generations like a company that has succeeded for 50 years, 100 years, 200 years, Essentially in a society where the middle class is thriving and robust, the emphasis is not only on personal wealth but on transgenerational and commonwealth. Unfortunately, the way society in a lot of African is run, what is prominent and what gets visible attention is just personal wealth.

 Middle class
If you go to a conference called by finance institutions or assets management company, which is one of the licences that we  hold, a lot of  what we are going to be talking about is how to grow and magnify personal wealth. That is part of the  focus of GDL.But that is not the only focus of GDL; that is not the primary focus of GDL.. One of the concerns of GDL is how to grow and expand the middle class. So when progress is slow, we need to examine not only the strength of institutions, we must also consider the structure and relevance of institutions, whether such institutions are best adapted to the strengths and weaknesses of that society. We think that custodians of capital are important institutions because custodians of capital decide what gets financed and what does not get financed. So we believe that financial institutions are important pillars of society; there are a major plank of society. So it is not enough to strengthen institutions, sometimes you must rethink how institutions are structured. For example, we must commend the strengthening of capital and consolidation of banks. Nigeria ended up with very strong banks. We now ask two questions. Is the middle class growing at the same rate? Is it getting robust at the same rate?
Sometimes, it is not enough for institutions to be strong, we also need to find out, based on our own peculiar

strength and weaknesses, can we  re-innovate  institutions? So we think it is time to start looking at how financial institutions can focus, not only on personal wealth, but also on creating trans-generational wealth and on helping society to transform by strengthening the commonwealth, that is, social infrastructure. That is the major reason for Growth  & Development Limited. For example, there are countries, where just by the DNA of the institutions, they are very much aligned to what the society is doing. If you look at some countries in Europe, there are financial systems where a typical big institutions will have one or two major global corporations that are very close to and support (the society) through thick and thin. It is of no use belabouring what we have done well or that we haven’t done well .It is much better to think on how to re-innovate and re-invent our institutions. And that is what GDL is about.

To give you an example, the kind of thing we need to think about is how do we redeploy our savings pool to transform society. I think the savings pool in the country is now approaching N4trillion.Our own estimate is that that N4trillion of savings contribute almost N300billion of income annually to banks.
The issue is this: Is there a way to redeploy those savings to improve living standards? Those are the models and the opportunities that GDL wants to concentrate on. We have an Assets Management licence. And one the things we want to do with that licence is to pool savings from both the private and the public sectors under new frameworks, such that with those frameworks, there can be interventions in areas that have so far defy solutions, notably education, health and housing; in such a way that produces not only decent financial returns but strong social dividends. We are not in this business for charity! We are in this business also to make money. But we think we can make money and also deliver significant social impact. That is one of the major things we look to doing with our assets management licence.

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GDL model
The GDL Finance Business will continue to do finance like all other institutions such as ours do .But we will also find medium sized enterprises and eligible small scale enterprises who are stable. And we will help them to institutionalize so that they can become trans-generational; so that we don’t have a repeat of what has happened where some of the big companies we used to hear of in the 60s and 70s are no more. Companies start from the micro level where they are struggling; they get to a level where they are small, then they medium and they are stable.When they don’t move beyond being stable to become institutions, they go down.That has been the recurring decimal in our country. That is one of the things we want to do with our finance and assets management licence. We think it is a contraction for social infrastructure to collapse; for middle class to remain emasculated and for profits of financial institutions to be approaching N1trillion.We think there must be a way to achieve the two.

That is why we think we will make a strong statement. We want to be a leading diversified financial institution creating wealth and transforming the society. We want to provide unique financial solutions which strengthen and expand the middle class.

Over the next few months, specific funds and specific products to actualise this will start being unveiled.
We started business, we are doing the normal things that financial institutions do.But these are the things that will differentiate us. And God willing, we are confident that we will succeed.
Societies evolve. And it is important that as our society evolves, you start to think abou how to do things differently. Doing things differently means that you need to realistically accept what your strengths and weaknesses are. Hopefully over time, you correct those weaknesses. But. While those weaknesses are there, they are starring you in the face. One thing about strengths and weaknesses is that they produce the society as it is. One of the things we want to do differently is this: We believe that financial institutions are an important pillar of society.And in addition to making money, financial institutions can deliver significant social dividend,that is one of things we want to do differently. We are going to make money for our shareholders and our stakeholders, but in addition, we will also make money for our savers and investors in our funds.
But in addition to making money, through the licences that we have, we want to deliver significant social impacts. And for that to happen we need to start to create new kind of frameworks.

 Savings pool

Right now, the total pool of savings in the country, and Iam talking of just one segment of deposits is approaching N4trillion. In most banks, on that N4 trillion, deposits don’t get an interest of more than two or three per cent. Now that means that before the crash in interest rate,annually, those savers, including the retail savers were contributing up to N300billion  in incomes to banks. Of course, they cant give you all the details.

The things that we are working on are the things that will create frameworks so that the savers will get a little more than what they are getting. But part of  that N300billion will start to be invested in the things that are very crucial in society like health, education. Those are the things we will do differently. We are not a charity organization. There are other things that organizations do like normal investments, in our finance licnce, we are doing it.

What we are going to do differently is that we are going to deliver funds and unique frameworks that combine the normal financial returns with stopping some of the significant profits that existed in the financial system, and directing it towards addressing some of the issues in education and in health. It is not only thing we are about, but it is the major thing.

This segment needs  large amount of funds.The need of this segment of the economy is in hundreds of billions.We are not kidding ourselves by saying this can happen overnight.