“Banking was my calling,” Segun Agbaje, the chief executive of Guaranty Trust Bank, tells Euromoney from his office in Lagos, Nigeria. “My father worked for the Bank of British West Africa back in the 1950s. He thrived in the environment. I knew from early on that this was the kind of thing I wanted to do.”
The Bank of British West Africa had its roots in colonial Africa, when the shipping company Elder Dempster Lines decided that it was wanted to develop a bank along the coast of West Africa to facilitate its business.
While his father worked for a colonial bank – it was acquired by Standard Bank in 1965 – Agbaje works in a distinctly Nigerian institution.
“There was a rush of new banking licences being issued in the 1980s in Nigeria and new banks were opening up all over the place,” says Agbaje. “So, I had a choice: I could either stay in the US, where I would end up working for a large corporation and where I would probably have very little impact, or I could move to Nigeria and work for what was basically a startup and be at the centre of creating something new.
“I knew exactly what I was going to choose.”
Agbaje moved from what he saw as a relatively boring job in accounting in San Francisco to Lagos where he joined GTB in 1990. The bank had been founded a couple of years earlier and was still small.
“I think there were around 80 of us working in the bank,” says Agbaje. “I started as an entry level assistant there.”
In the 1980s and 1990s a slew of Nigerian banks – including GTB – was born. By the mid 2000s, Nigeria was home to 89 of them. By 2009 Nigeria was in the midst of a banking crisis following hefty lending to the precarious oil industry.
Five banks were close to failure. Afribank, Finbank, Intercontinental, Oceanic and Union Bank were bailed out by the government. The central bank governor at the time, Sanusi Lamido Sanusi, was on a mission to clean up Nigeria’s banking sector. This included raising capital requirement ratios, as well as bailouts, mergers and the removal of bank chief executives.
I definitely saw more in Nigeria than I would have anywhere else... Because of our size, because of how new the indigenous banking sector in the country was, all of us had a tremendous responsibility to make things work- Segun Agbaje
In the end, 10 banks failed and the Asset Management Corporate of Nigeria was set up to absorb the non-performing loans that emerged.
“I was the COO at Guaranty Trust Bank at the time,” remembers Agbaje. “A few years earlier, we could see that there was a crisis brewing and so we started to exit the riskier oil market. Our loan portfolio was strong then and as we saw other players being engulfed by other banks, we came out strong.
“I definitely saw more in Nigeria than I would have anywhere else,” he says. “Because of our size, because of how new the indigenous banking sector in the country was, all of us had a tremendous responsibility to make things work. We really saw how all areas and businesses in a bank had to work together to succeed.”
Of his time completing the advanced management programme at the Harvard Business School, Agbaje says: “I don’t think other bankers there, even in other emerging markets, had really seen how an entire bank comes together and functions.”
And Agbaje says he has no regrets about his move to Nigeria.
“I could have stayed in the US or gone back to live in the UK [he went to secondary school in Kent] and had a pretty easy life – but I wanted to be part of real development and I saw that opportunity in Nigeria,” he says.
This is a feeling that a lot of the Nigerian diaspora have had over the last decade. The global financial crisis that had crippled developed markets only deepened the idea that Africa was the last bastion of growth in the world.
Many of the diaspora tried their luck back home, with varying degrees of success.
“People fled back to Nigeria when oil prices were high,” says Agbaje. “But as commodity prices began to fall, when things got a little tougher, I think the number of diaspora returning to Africa also fell.
“And banks in Nigeria have short memories,” he adds.
Now, oil prices have recovered and banks have once again extended credit to the sector. But high unemployment, subdued economic growth and the vulnerability to oil prices are still causes for concern. Ten years on, Nigeria’s banking sector is under pressure once more.
“Nigerian banks have been playing by the rules – they are stronger and more risk averse and this is only a good thing. But cracks are emerging,” he warns.