Nigeria’s leading digital bank, V bank, has debuted a webinar series to further its #GrowWithV campaign.
Throughout the month of February, V bank, a product of VFD Microfinance Bank, has ran series of free advertising campaigns on Instagram, Twitter and Facebook to promote small businesses under an initiative it calls ‘Grow with V.’ The bank also kicked off a webinar series where the first edition featured celebrity influencer and CEO/Founder of 360 Nobs, Noble Igwe, who spoke to participants on ‘Branding Your Business for Success,’ as a part of the initiative.
“At Vbank, we pride ourselves on knowing our customers and having a good understanding of their needs. And that is why we are focused on creating value in different ways that make life easier, whether indirectly via a feature on the app, or directly like publicizing your business on our social platforms or getting you into the room with experts. It’s simple: we grow when you grow, so why not help you grow,” said Ebere Ahaotu, Senior Product Manager for Vbank.
The #GrowWithV initiative is an avenue to give back to micro, small and medium entrepreneurs, struggling hard to keep afloat in the Nigerian business environment, as well as to invest in the human capital of the country, by facilitating the sharing of relevant local knowledge in areas of interest selected by the webinar attendees. Some of the businesses that have benefitted from the #GrowWithV free digital advertising promotion for entrepreneurs include: Pronino Classics, Regclass clothing and Shades by AYOMIEPAT.
At the debut webinar attended by more than 100 participants, Noble Igwe shared industry secrets that have kept him relevant for more than fifteen years and why it is important to brand your personality away from your business.
“Being a celebrity or influencer gives good mileage to your business, no doubt. But it is important to focus on the business that will sustain the celebrity status. Your number of followers (on social media) is an indication of popularity and not necessarily a measure of your influence. Your branding determines how people perceive you or your business and that guides how they interact with you. So, it’s not just about making a good impression; it’s about letting customers and would-be clients know what to expect from the business. Building a brand’s personality is about focus,” he counselled.
The one-hour conversation was moderated by Deola Aromiwura, Branding and Digital Manager, VFD Tech.
V bank is an end-to-end virtual bank focused on providing simple, quick, convenient, secure, and seamless banking experience with zero transfer and sms notification charges. The app is available on android and iOS stores. It is powered by VFD Microfinance Bank.
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Zenith Bank spends N20 billion on IT in 2020, up 122%
Nigeria’s largest bank by assets, Zenith Bank Plc, spent a whopping N20 billion on Information Technology in 2020, more than double its 2019 spend of N9 billion.
A cursory view of the bank’s expense line for 2020 reveals that it spent N148.1 billion on other expenses compared with N129. 4 billion in the same period of the previous year. Information technology was the major driver of the bank’s expense line, making up about 15.5% of total operating expenses.
Why this matters: Most banks are expected to record higher spend on information technology in 2020 due to forced work-from-home policies triggered by Covid-19. Apps such as Zoom, and Microsoft Teams went mainstream during the pandemic as most businesses increasingly depended on them to function.
- While remote working may have been a major contributor, the bank likely splurged heavily on software applications, cloud computing, SaaS, and investing in technology to drive its FinTech goals.
- Apart from Information Technology, the bank also spent more on AMCON levy during the year, incurring a cost of N30.9 billion.
- A notable reduction in year-on-year expenditure was its spending on Hotels and Travels. The bank spent N1.8 billion in Travel and Hotels.
- Zenith Bank reported a record N230 billion in profit after tax for the year ended December 2020. The bank is now the largest bank by Total Assets, with over N8.4 trillion.
Zenith Bank GMD explains why its difficult for SMEs to get loans from banks
The Group Managing Director of Zenith Bank, Mr. Ebenezer Onyeagwu has discussed the impressive positive returns recorded this year by the bank. He also shared some insights on the relationship between commercial banks in Nigeria and Small/Medium Enterprise business owners.
Onyeagwu gave all these insights while speaking in an interview with Arise TV.
On why Nigerian banks charge high-interest loans, making it difficult for small business owners to get single-digit loans for their business, the Zenith Bank GMD explained that the operational costs and regulatory costs involved in running a bank usually sets the pace for every other thing. He listed examples of operational costs involved in running a single bank branch and how all that adds to the bottom line at the end of the day.
He also highlighted regulatory costs which are not particularly known by people outside the banking sector as one of the costs of doing business banks face. These two factors mainly contribute to the high-interest rates banks charge on loans.
“Our cost profile depicts the operating environment. Within the year we saw an upward review in fuel price, which accounted for the increase in our fuel cost. Again, when you are looking at cost of doing business, you also need to look in total, how businesses are being conducted. If I set up a branch today, I would need to provide my infrastructure, I need to provide power, water and in some cases, we even construct the road to provide access to the branch location. So, as a result of the poor state of infrastructure, you see that businesses would now have to contend with providing these resources to get their operations running. So, if we have more available and cheaper utility services and infrastructure to support businesses, of course, the cost would go down.
Then, looking at cost of doing business in banking, it goes beyond those operational costs. We also have things like regulatory cost. A bank like Zenith, given our size, the burden of regulatory cost on us is heavy. By regulatory cost here, I am referring to the Nigeria Deposit Insurance Corporation premium and the Asset Management Corporation of Nigeria fee. So, because of our size, if you look at the numbers, you will see that these regulatory costs account for a whopping 28 percent of our overhead. So, all of them come together to add to the cost of doing business for us as a banking institution in the country,” Onyeagwu said.
On why it is difficult to get single-digit loans from Nigerian banks, Onyeagwu highlighted 3 key reasons why single-digit loans are very difficult to obtain in Nigeria. He listed the following:
- Fiscal deficit
- Government Borrowing
- Money supply and demand
The Zenith GMD stated that it is nearly impossible to issue an interest rate by fiat. He stated that the interest rate will always be determined by market forces.
He said, “First of all, if you are looking at the interest rate, you have to look at it in terms of the theoretical framework and issues around money supply, demand for money, issues around government borrowing, and the fiscal deficits. So, when you put all that together, you will see that you cannot have a situation where you decree interest rate by fiat. Interest rates would always be set by the dynamics and realities in the market. In this case, if you are looking at the interest rate in Nigeria, you have to index it to the risk-free rate. The one-year risk-free rate in Nigeria is like 10 percent. So, it will be difficult to have a single-digit rate in Nigeria.”
Onyeagwu highlighted the various ways the Central Bank of Nigeria has intervened in a bid it provides single-digit loans to entrepreneurs in certain sectors. Sectors like cinema, movie, ICT, and fashion designing have been enjoying single-digit loans courtesy of various CBN initiatives.
He said, “We have intervention funds such as the Creative Industry Financing Initiative, where banks in the country provide long-term single-digit funding for entrepreneurs who are in cinema, movie, ICT, and fashion designing. We also have what is called the Agri-Business/Small and Medium Enterprise Investment Scheme. It is also a pool of funds available for businesses in that space. You can as well access these loans. Apart from these, the CBN also has different intervention schemes such as the Anchor Borrowers Scheme, the Commercial Agricultural Credit Scheme, and others, and all these loans are single-digit and they provide long-term financing. The big problem we have is that when you see an SME approaching you for the loan, the SME may not have a track record; he walks up to you and tells you that he needs a single-digit loan and needs N20 million.
“But I can’t give you N20 million without looking where you are coming from. So, we cannot decree the interest rate by fiat. But the regulators have done good work by providing funding schemes and whoever is eligible would get such single-digit long-term loans once they meet the criteria. So, the funding is there, but the SMEs when they approach the banks don’t often meet the eligibility criteria
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