Executive Director, United Bank of Africa Plc, Northern Nigeria, Emem Usoro, in this interview with GEOFF IYATSE speaks on challenges affecting financial inclusion in the north, how the bank has navigated the impacts of the recent economic crisis on business activities and the impacts on AI on the sector.

Given the global economic impact of the Russia-Ukraine war on businesses, how are Nigerian banks navigating the challenge in the North?
Before the advent of Russia-Ukraine in February 2022, UBA had put in place a robust risk management framework to adapt to any emerging risk in all its countries of operations.

Hence, the challenges of food security, supply chain disruptions, increase in fertilizer costs, increase in the cost of diesel and aviation fuel and others occasioned by the Russia-Ukraine war did not come to us as a surprise. All we did was review the sectors and customer segments that would be severely affected by the war and activated proactive measures we had in place.

These measures included but not limited to re-evaluation of the capacity of borrowing customers in affected sectors to repay as and when due, reduction in banking costs for some affected customer segments, aggressive financial inclusion drive to increase the number of the banked population, especially in rural communities in the north, active participation in special intervention schemes of the Central Bank of Nigeria (CBN) such as Anchor Borrowers Programme and Commercial Agriculture Credit Scheme (CACS) aimed at increasing local food production, boosting the nation’s self-sufficiency and reducing hunger.

Others were greater partnerships with donor and multilateral agencies for the execution of various intervention programmes like the World Food Programmes in Borno, Yobe, Gombe, Bauchi, Adamawa, Zamfara, Sokoto, Katsina, Kano states and Abuja, where cash disbursements and fund transfers were made to hundreds of beneficiaries over N12 billion as well as the N350 million United Nations Women programme and the $538 million Federal Ministry of Agriculture Special Agro-Industrial Processing Zones Programme, just to mention a few.

How have you helped in addressing food insecurity, especially in northern Nigeria?
Headline inflation has remained high largely due to a host of monetary and non-monetary issues such as the unification of the foreign exchange (FX) rates, removal of fuel subsidy and hike in the pump price of PMS, rising price of various energy sources and a host of headwinds confronting the food supply chain.

In this circumstance, the fiscal authority needs to explore other avenues to expand the fiscal safety net in an urgent bid to improve its ability to respond to legacy and emerging shocks. Economic diversification and non-oil revenue sources, such as the expansion of the tax bracket, will aid the reduction of fiscal deficit and public debt to improve fiscal space.

The President approved the setting up of a new infrastructure fund, which will enable states to intervene and invest in critical areas such as transportation, including farm to market roads improvements, agriculture encompassing livestock and ranching solutions, health with a focus on basic health care, education especially basic education, power and water resources.

While these policies hold immense potential, it is important to acknowledge potential short-run challenges. However, as a responsible corporate citizen, UBA is prepared to collaborate with the government, private sector entities, and other stakeholders to overcome these challenges. We can leverage our financial expertise to support infrastructure development and facilitate the transition to clean energy.

You’ve been setting out ambitious expansion into unbanked northern markets, what goal do you hope UBA northern operation will have achieved by the end of the year?
For UBA, our strategic goal remains to lead in Nigeria by having more than 15 per cent of the total deposit market share and being among the top three most profitable banks. In line with this, to make UBA a bank of choice in Northern Nigeria and to have a UBA account holder in every nuclear family in Nigeria. That is why leveraging digital technology to drive financial inclusion remains paramount in our hearts, given the low level of financial literacy in Northern Nigeria.

In providing access to the unbanked and underbanked, do you consider the current bank branch networks across the north sufficient?
Currently, our branch network is very optimal and we would do more to leverage the existing branch network, digital technology and partnerships with fintech to reach the unbanked and underbanked for financial inclusion and access to credit.

UBA has deployed 610 agency banking partners in the north, who have reached over 1.5 million underbanked individuals, using e-channels such as agency banking, POS and mobile money in rural areas. Furthermore, we have strategically deployed over 200 offline BVN devices, which currently process over 400 BVN numbers monthly. This, in turn, is used to open Tier-3 bank accounts to carry out transactions.

However, we will not shy away from opening more branches in strategic areas whenever the opportunity presents itself.

In your efforts to boost financial inclusion in the north, what is your thought on forming strategic partnerships with various state governments and other organisations?
We have profitably supported government at all levels such as the federal, state, local governments and National Assembly, and with intense focus on the value chain to finance short-term loans and temporary overdraft facilities to meet urgent obligations, contract finance facilities anerm loans to support infrastructural development, including but not limited to roads, bridges, hospitals, among others, special intervention loans, such as Anchor Borrowers Programme, Commercial Agriculture Credit Scheme (CACS), among others, Issuance of Bonds for capital projects via SUKUK, FGN Bond, among others.

Others are, partnership with the UBA Foundation and Tony Elumelu Foundation (TEF) for the provision of $5,000 seed capital to empower young African entrepreneurs since 2010, Read Africa Initiative and Annual National Essay Competition among secondary school students, provision of books, school bags and other learning materials to schools, cash and material support for victims of flooding, support for cancer patients in partnership with the Medicaid Cancer Foundation in Sokoto State, provision of access roads to schools and beautification of metropolis.

We have also forged partnerships with donor and multilateral agencies for the execution of various intervention programmes with the United Nations and the World Food Programme for the provision of food assistance through the provision of banking services to their beneficiaries (internally displaced persons) through bank accounts and prepaid cards in states, where cash disbursements and fund transfers were made to hundreds of beneficiaries over N12 billion, among other programme with the federal and state governments.

Just recently we submitted our proposal for a regional bid for the provision of financial services/operations to 19 West and Central African countries where UN–WFP exists. The contract is valued at over $350 million, we are now undergoing various evaluation meetings and I am certain we will win the bid.

What is the most single effective solution for boosting financial inclusion in the north?
Financial literacy remains the most single effective solution for boosting the financial inclusion level in Northern Nigeria. As of 2019, the literacy level in the North is 34 per cent compared to 67 per cent in the South, according to NBS. Furthermore, Northern Nigeria is reported to have 16.34 million unbanked population, which represents 43 per cent of its population.

I would like to enjoin the government at all levels to declare a state of emergency on the generally low level of literacy in Northern Nigeria due to its ripple effects on the endemic insecurity, banditry, gross poverty and other vices in Northern Nigeria.

As a responsible corporate citizen, UBA has contributed significantly to the improvement of financial literacy in Northern Nigeria as a way of boosting financial inclusion through the deployment of 200 offline BVN devices and 610 agents across strategic locations in the rural areas of Northern Nigeria, periodic training of agents in the region on financial literacy who will, in turn, educate people around their vicinity. Strategic focus on our presence and visibility in market locations to spread financial literacy to the grassroots, periodic market storms to sensitise indigenes in rural areas and dispatch of promotional materials to agent locations that aid financial literacy.

We have a lot of agricultural and MSME-sector businesses in Nigeria. Do you think they are adequately supported by banks?
Agricultural and MSME-sector businesses in Nigeria are receiving adequate support from banks, though there will always be areas for improvement. UBA has been at the forefront of supporting SMEs because SMEs have been proven to be the bedrock of any economy.

In June 2023 during Afreximbank’s 30th Annual Meeting in Accra, Ghana, UBA signed an agreement with the Africa Continental Free Trade Area (AfCFTA) Secretariat to invest $6 billion as funding for African Small and Medium Enterprises within the next three years.

A breakdown of the $6 billion investment shows that a total of $1.2 billion has been budgeted for the year 2023, $1.9 billion for 2024 and $2.88 billion for 2025. By this agreement, UBA to boost intra-Africa trade, will provide financial services in four main areas, which are agro-processing, automotive, pharmaceuticals, as well as transport and logistics, to small and medium enterprises in all the 20 African countries where UBA operates.

These countries are Nigeria, Benin, Ghana, Sierra Leone, Liberia, Côte D’Ivoire, Senegal, Mali, Burkina Faso, Guinea, Zambia, Tanzania, Kenya, Uganda, Mozambique, Gabon, Congo Brazzaville, Congo DRC, Chad and Cameroon.

Nigerian banks are aggressively adopting artificial intelligence (AI). Does this have real benefits?
AI has a significant impact on the banking industry. Not only has it provided better methods to handle data and improve customer experience, but it has also simplified, sped up, and redefined traditional processes to make them more efficient. With the availability of technologies such as AI, data has become the most valuable asset in a financial services organisation.

Banks are investing heavily in AI and predictive analytics to make better decisions and provide customised services to their customers. AI is playing a significant role in customer services, support, fraud detection and prevention, risk assessment and credit scoring, data analytics and process automation.

Our journey in AI started six years ago with the launch of our conversational chatbot – Leo, to prioritise our customers as well as put the bank at the heart of disruptive technologies that will transform the experience of our esteemed customers.

What are the biggest challenges in banking Nigeria, especially the north? And are their solutions?
The biggest challenges ahead of the banking sector, include slow GDP growth. Available data and forecasts for key macroeconomic indicators suggest that the economy will continue on a moderate recovery path through 2023 as legacy headwinds linger. These include insecurity in food-producing areas, high cost of energy and rising cost of debt servicing, increasing wave of cybercrimes and cyberattacks.

Disturbing trends in financial fraud and cybercrimes have put at risk, electronic payment or e-payment transactions, now estimated to be worth an average of N30.2 trillion monthly. Findings show that as more Nigerians are embracing e-transactions daily, so is the surge in cybercrimes, as cybercriminals are getting adept in the clean sweep of bank accounts of unsuspecting users. While banks are facing a dearth of IT staff (japa) to promptly respond to cyber threats, bank account compromises are expected to get worse as the festive season approaches.

Also, the increase in the Monetary Policy Rate by the CBN, coupled with the increasing inflation rate, will make banks and other financial institutions adjust their lending rates accordingly, which may affect the ability of borrowing customers to pay as and when due, thus leading to deterioration in asset quality and the need for provisioning in line with regulatory guidelines.

These challenges require a synergy between fiscal and monetary authorities, while I will encourage all banks to enhance their risk management frameworks and the risk scenario plays to enable them successfully mitigate any emerging risk or challenge.