The Economic Confidential recently met with the Managing Director of Jaiz Bank Plc, Alhaji Mohammed Mustapha Bintube for an exclusive interview.
Alhaji Mohammed Mustapha Bintube began his career with New Nigerian Development Company (“NDDC”) in 1982 as an Investment Executive and rose to the position of Senior Investment Executive. He moved into core banking in 1989 with Commercial Bank (Credit Lyonnais) Nigeria Limited and served variously as Head of Corporate Finance and Medium Corporate and Private Banking Departments. He was member of the Bank’s Credit and Executive Committee before leaving to join FSB International Bank Plc in 1995.
At FSB, Alhaji Bintube rose from the rank of Assistant General Manager to Executive Director and successfully oversaw the growth of various businesses within the bank including: Corporate Banking, Public Sector, Private Banking, Consumer Banking, Financial Institutions and the Energy Sector.
He is an alumnus of Wharton Business School, USA; Columbia Business School, USA and Insead, France. He served on the Boards of many Nigerian companies as Director including: Hogg Robinson Limited, Nigeria Life and Pension Consultants and Nidogas Company Limited. He resigned from FSB in June 2004 to take up the new challenge of establishing and driving Nigeria’s first non-interest based financial institution. He holds a Bachelors Degree in Business Administration from Ahmadu Bellow University, Zaria and an Advance Diploma in Banking from Finafrica, Milan, Italy. Below are the excerpts from the interview with the Economic Confidential:
EC: What is Islamic banking system all about?
It is a specialized financial service that is based on the Sharia principles of ethics, fairness, transparency and objectivity. In other words, it is an alternative financing method which is driven largely by the principles of profit and loss sharing as against the conventional mode which is interest driven. It is based on the concept of sharing risks and rewards. What do I mean by that? It means there’s nothing like absentee landlord, if you want to benefit from something, you should take some share of responsibility or risk. This by implication means that when you’re going into a business with somebody, whether it’s an individual or company, you should be fair and objective. Don’t take too much advantage of other people. In other words, you have to be fair in your dealings and you don’t gamble with people’s money. These in a nutshell are some of the basic principles of Non-Interest Banking and it is open to all irrespective of race or religion. Today non- interest banking is a global phenomenon practiced all over the world. Britain, United States of America (USA), France, Malaysia, United Arab Emirates, South Africa etc, with a global market size of over $1 trillion.
EC: Interesting! But so far how has the story been for Jaiz Bank?
Well, first am pleased to say that we got our license from the Central Bank of Nigeria on a very special day, special in the sense that we go it on 11/11/11 which is eleventh month of November 2011. The business started slowly, but I can assure you now it is picking up and is growing gradually, but surely and steadily in terms of number of customers; in terms of number of accounts that we have opened, in terms of number of real sector financing that we have done which will ultimately contribute to the socio-economic development of the country and its citizenry.
EC: Which sectors have benefitted so far from Jaiz Bank?
Manufacturing, Trading, Oil and Gas, Education, Real Estate, and Consumer Finance. I am also pleased to say here that we have very big corporate customers like the Dangote Group, and its major dealers and distributors. We also have high net-worth individuals with an average net worth of N300million and if you look at it within the Nigerian context, I think it is a good beginning. Bear in mind that we are not yet up to one year since we commenced operations. We are still about seven to eight months old. In a nutshell, we started slowly, but we are moving surely and steadily and making progress by the day.
EC: Does it mean only Muslims patronize your bank?
No! Right now we have non-Muslims and Muslims who are benefiting from our services. As a matter of fact, our first ever credit was to a Christian. Besides him there other Christians that we have provided financing for and they actually got the largest share of the initial investment for facilities that we have provided. To re-emphasize what I said earlier, Jaiz is not an exclusive club. It is a business and a bank that is opened to all irrespective of race or religion. So my appeal to Nigerians is that they should take advantage of this alternative financing option that is practiced and accepted globally. I assure them that it will be a rewarding experience.
EC: Since your bank doesn’t deal in interest, how does Jaiz Bank survive or make money?
We make money through three basic means. One is through buying and selling or what we call Murabaha (Cost-Plus Mark-UP). You see non-interest banks are the only ones who are authorized to engage in trading. Here a customer can approach us with a need to acquire an asset. We will in turn look for that asset that he/she require, purchase it on his behalf and we put our little mark-up (profit) and sell to him/her. If the terms are acceptable to both parties then we enter into a sale contract whereby the customer is given the benefit to conveniently pay on agreed installments. Secondly, is through Leasing or what we call Ijara. Here customers (Individuals or Corporate bodies) approach us based on the need to acquire equipment say a generator for their businesses. Consequently, we will acquire the generator and give to you on lease basis, but you will be paying us rental for the use of the generator also based on agreed terms and conditions. Note that under the lease agreement the leased item is not your property; it is the banks' property. The third way we make money is through partnership or what we call Musharaka (partnership through profit and loss sharing). So I can safely say that we make money or we survive like you said through three main financing outlets Ijara (lease), Musharaka (partnership), Murabaha which simply means buying and selling at a profit.
EC: Do you have any specialized products under your banking scheme?
Yes we have. In the consumer section we have what we call Jaiz Home Finance, which is mainly to finance workers and others to own their own houses. We also have Jaiz Auto Finance to help the lower and middle income earners to own their own cars either new or fairly used. And then we have Jaiz Home Appliances Finance which completes the value chain ant it enables our customers to conveniently acquire items like television set, deep freezer, refrigerator, furniture etc.
EC: The other time you were talking about your capital base which was N6.6 billion and then you said you were working towards raising it to N12 billion. How far have you gone with that?
We have gone very far, I think right now we have about 80% of what we require, so what is remaining is only 20%, but even the 20%, they are people that have indicated interest to take that. So if you have investors you better tell them to come now, because in a while the whole thing will be taken up and you know that the Bank has immense potential. Perhaps to also add, the overall objective of this exercise is to enable us raise the required capital that will enable us achieve our plan of going national by next year, God’s Willing. Our migration plan is to grow from a Regional bank to a National bank and to Sub- Sahara Africa. By then, we will have branches in major commercial cities of all the States of the Federation. Specifically, we would have branches in Lagos, Ibadan, Ilorin, Onistsha, Aba, Nnewi, Enugu, Port Harcourt, Calabar etc.
EC: So that means the 80% should translate to about N9 billion?
No. It is more than that. It is more like N10 billion in liquid cash.
EC: Recently you introduced some corporate awareness campaign, what is it all about?
Well, the overall objective is to create awareness about the existence of a specialized kind of banking in Nigeria and the first of its kind too. Hitherto, the thought of Jaiz was only on paper now, it is a reality. The campaign which is captioned ‘Rest Assured…Our Interest is Mutual’, is actually intended to convey the partnership that exist between us and our various stakeholders and it goes to emphasize the basic principles of Non-Interest Banking which is based on sharing risks and rewards. The golfer in the advert is a visual metaphor of the banks customers while the caddy represents the bank as a supportive service provider. The campaign includes above and below the line advertising activity with national press ads and billboard communications. The objective is to convey appropriate levels of information using elements of the sport in a way that is easily comprehended and digested by the target audience.
EC: How many branches do you have?
Right now we have 3 in Abuja, Kaduna and Kano. But I assure you we have made significant progress and by December, 2013 we should have 10 branches up and running. The second phase like I said earlier is to after raising the required capital, progress to become a national bank and our goal is to have a branch in every state capital of Nigeria, North, South, East and West.
EC: There were some viral messages on online medium and on the mobile phone as text messages, where some of the initiators were appealing on behalf of your bank for patronage and, some were even doubting the strength of your bank. What can you say about the messages?
First, let me assure our customers and other stakeholders that our license is not under threat of revocation. Our license is intact. In fact, I can say we are a very liquid bank. It is very unfortunate these messages are coming from some detractors that are deliberately de-marketing the bank. It is not in their interest or our interest to do that. Agreed there might be some genuine friends of the bank, who mean well for us and are probably sending out these messages innocently. The truth is unfortunately, they are not helping the bank because the main message in the SMS is that our license is under threat, which is not correct. So we appeal to these people to kindly desist from this act. If anybody is in doubt about the safety of the bank, we have the Central Bank, SEC and the NDIC that are the regulators. They can go and ask these organizations about our health. They records are there for all to verify and the regulators will even be the first to shout if we have any kind of problem. So I assure all our customers and prospects, stakeholders and shareholders that the bank is safe and sound.
EC: Where do you expect the bank to be in the next couple of years? Let’s say next 4 -5 years?
In the next 5 years like I have always said, we want to be first, a national bank with presence in all the State Capitals of the Federation. Then we will expand our footprints beyond the shores of Nigeria by expanding to Sub-Saharan Africa. We should by then be seen and respected by most of these banks. They would respect us for our high quality service, specialized products, ethics and for our professionalism. Simple! Not because of the name that we have. Mind you, we don’t necessarily have to be the biggest bank around, but we will be the best bank in all criteria of profitability, sound management, capital adequacy, solvency etc.
EC: Thank you very much Sir for giving us this audience.
We thank your magazine, Economic confidential too for being factual and authoritative in its editorial contents.