‘Nigeria’s lending, investment space are ever-growing consistent areas’

With almost three decades of experience in corporate finance, structured finance, corporate banking, and asset management, Sonnie Babatunde Ayere, the Group Managing Director/CEO of DLM Capital, is optimistic about the opportunities in Nigeria’s financial industry.

In this interview with BusinessDay’s Endurance Okafor, the former IFC professional who played a major role in deepening and growing Nigeria’s debt capital market, shares insight on his journey to stardom and how Nigeria can leverage its young population to boost economic growth. Excerpts:

Let’s start from the beginning, tell us about your upbringing and early childhood memories.

I spent my early childhood in the UK, I was born there but moved back to Nigeria in 1970. I went to my primary and secondary schools in Lagos before moving back to the UK in the early 1980s. My childhood was great, and I would say we had quite a different childhood compared to what the generation Z are having today.

Back then Nigeria was a very pleasant place to live. Most of us still think of that past and hope that the country can revert to those good times when there was a pretty good standard of living for many citizens.

I went to university in the UK and afterwards, l started my career there and later did my MBA at Cass City which is now a college of the University of London.

Transitioning into adulthood, I guess one thing that I would say has helped me was just being razor sharp focused on becoming an investment banker. Even before I went to university, I was focused and knew I wanted to do investment banking which is the reason I went on to study financial economics up to masters’ level. On the aspect of relating this to our young populace, I would say that you need to know what you’re doing or what you want to before you leave home. In other words, knowing your goal helps you focus on your goal – not knowing, leaves you sailing the seas of success with no port of call.

Did you always know it was going to be investment banking or was there some motivation along the way?

As you get older you start to look at what life has to offer and you look at the kind of lifestyle that you want and the sort of profession that provides that lifestyle, that was the thing that sort of helped in choosing my career path.

The first version of Wall Street released in 1987 was very much a catalyst, anybody who wants to do some research should go watch it. Michael Douglas won an Oscar with his performance as Gordon Gekko in Wall Street and that helped a lot of people back then, as it opened the city and what happened in that sector of finance to a lot of young people.

The financial market became attractive to most of us – the work, the job, the lifestyle, and the impact it had was very attractive. That kind of helped to provide the sort of razor-sharp focus for anyone interested in that profession.

Yes, I hear it a lot from most young people that they don’t know what they want to do. The question should center around; what kind of person you are? What are you looking for? What kind of lifestyle do you want and then look out for what provides the kind of lifestyle and then find yourself attracted to it and then from doing that, it opens up your passion for it, because one of the things that help you grow is when you have passion for what you do. In other words, the adage, ‘love what you do’, helps a lot.

If you were not in the investment banking/finance industry, what would you have been doing?

I started on the path of architecture because I was naturally creative. So, architecture would have probably been the alternative or at least something in the creative industry. When I was a kid, I loved comics a lot. I would make my own comics.

In those days, music, creative arts, and stuff like that were not encouraged by parents, it’s only now in this generation that it’s being encouraged. If you said you were going down that road in those days, you will be seen as not being serious.

With almost 30 years of experience, you have achieved a lot of milestones. What is the secret of your success?

One is a razor-sharp focus; you need to be focused on the price and on what you are trying to achieve. Resilience as you know is also critical, as in, never giving up. You need to have that tenacity because life is a roller coaster and in an environment like this, you are always faced with curveballs. As such, tenacity, resilience, focus and knowing exactly where you want to be, to me, are the keys to success.

To give an example, if I’m about to leave my house and I know that I am going to 66-68 Alexander, l know exactly where I’m headed, there are many ways to get there and all kinds of potholes, traffic, etc but, so long you know you are going to 66-68 Alexander, chances are 99.9% that you will get there.

It’s like going for an interview, you would have checked out the address a day or days before the date of the interview and you would do everything possible to ensure you get there, including getting on a motorbike if you are stuck in traffic, run if necessary, to get to the venue at the appointment time. The same formula works for achieving your goals.

Entrepreneurship is not for everyone, not everybody has that strength of mind to go through the sort of volatility that entrepreneurship avails people to.

Having worked in a lot of firms including IFC, what inspired you to set up DLM Capital?

The main driver, I guess ties back to creativity. My goal was to create a sustainable institution and also, to be able to provide my quota to the country’s development. Having several people today that are employed by the group makes me happy and I know that the number will grow exponentially over the coming years.

I think creating an institution is one of the greatest joys one can have. Making people happy, working and being productive citizens of the country, provides a lot of joy to me.

Beyond contributing your quota to economic growth, was there a gap you envisioned to fill through DLM Capital?

Even before I joined the UBA Group or set up DLM, in my IFC days I was heavily instrumental in creating the Nigerian bond markets that we have today and to me, that was major. What did I see then? At the time when the contributory pension system that we have today was being established, for me it was critical then that if you can mobilize domestic capital, which was basically the contribution of pension savings, you must have a market into which those funds can be efficiently allocated.

So, you must be able to mobilize the domestic capital and then allocate it efficiently to the market. The bond market was absolutely necessary at the time and so l put every fibre of my body into making sure that the market happened and today it is probably the biggest domestic market that we have in the country.

After that market was created, I met Tony Elumelu and he asked me to come join the UBA group – a move that was one of the best life decisions for me, working with TOE as mentor was the greatest guiding light into how our dear country works. So for me, after creating a market, the next thing was to show how this market works and hence the beginning of the UBA global markets, now the very successful United Capital Plc which at the time was guiding light in terms of fixed income, bonds, trading, et cetera to the Nigerian capital market operatives. That platform was provided by TOE and the UBA Group. Today, we have several firms doing the same thing. I’m pretty glad about that.

In one of my recent meetings, an investor was like – “you created this market”. So, that’s certainly a joy for me. Recognizing that gap, filling that gap and seeing how it is having a very positive effect on the growth of Nigeria today.

I will give you an example, it was very common in the early 2000s to hear that IFC gave $20 million to GT Bank and $7 million to Diamond Bank, for example, but you don’t hear things like that anymore. Because instead of them giving fish to a hungry man, what we have done is to create an opportunity for them to be able to fish for themselves. So now what you hear is, the banks are issuing subordinated bonds. So, we created a market in which financial institutions and other companies can now raise money from their domestic market.

If anybody asks me, I would say that’s my greatest achievement so far.

I’m sure there were bumps on the road. What would you say was one of the biggest challenges you have had to face?

Working in a regulated environment is tough. Sometimes things get changed and you get thrown curveballs all the time. Let me give you a very simple example, today, if you look at my set, people that I grew up with in the industry, Chuka Eseka, Bolaji Balogun, Ike Chioke, Kayode Falowo and many others, the question is where is the second eleven for the industry? We’re getting to our mid-50s now but, as said, where is the next set that will take over? Most of them are in Canada or elsewhere because the industry can’t pay the way it should.

In the US, for instance, you have a young professional working in the investment banking space starting at $100,000 per annum, that’s over N50 million in Nigeria. You don’t have that here because you have regulated fees, which caps how much the firm can earn, and makes the business not as attractive as it should be. Retaining talent, growing talent, and maintaining talent has become very essential and those are part of the issues that become difficult to overcome due to compressed incomes.

Nevertheless, I also give kudos to the regulators for providing the opportunity for these markets to exist and also working well with the operators. As you know, Nigeria is a difficult market. There are many macro and micro factors that none of us can put a handle on. Things like currency depreciation for instance. Two years ago, the pound was around N420 per pound but now it’s over N700 and who knows in another year years it might be N1000.

So, it’s like you have to run faster and faster and faster to keep up with the world. And that’s not easy.

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What is your take on the monetary policy system in Nigeria? What should thedecision-makers do differently to boost growth?

Let’s look at what’s going on in other parts of the world. For instance, since the financial crisis of 2008, we have regulated digital currencies being created to buy bonds at very low interest rates to boost their GDP.

Yes, there is a need for Nigeria to look at how to achieve and maintain a very low-interest-rate environment and I think that’s important.

If you want to have companies be able to raise money that is economically viable, to be able to employ more people, et cetera then yes, that’s the way to go. Issues like exchange depreciation need to be addressed because I don’t think it is fair for anyone to live or grow up in a time where you are getting poorer by the second and it’s no fault of the person. So, the issue of currency needs to be fixed.

In other words, for people to be able to plan, you have to have some level of stability. It is crucial for economic stability and with that, I mean, stable interest rates, stable inflation, stable currency so that citizens can plan as, one of the things that make the economy so difficult is that it is so difficult for citizens to plan. Like we need to have less of have knee jerk reaction to economic movements but long term carefully planned strategic goals and stick to what makes them happen.

A lot of work needs to be done and there has to be some sort of harmony between the monetary and fiscal policy. Remember we had Ngozi Okonjo-Iweala as coordinating minister and had to work with the central bank and the ministry of finance to ensure there was coordination to improve monetary and fiscal policy transmission.

Nevertheless, we also need to give it to the people up there because managing Nigeria is tough. The Central Bank Governor has done a very good job, the ministry of finance has also done a good job. But like the aged old saying, good work leads to more work.

How do you think Nigeria can ride on the demographic of its young population to boost economic growth?

Let me start with the Nigerian music industry, despite all the madness we have in this economy look at how the youth have been able to take music to the global market.

Also look at Nollywood, despite the madness, look at what the industry has become.

Now I’m going to give an example of how citizens build an economy, if Nigerians were not watching Nollywood would it have grown as big as it has become today or if they were not buying Nigerian music, would we be global today? The average young citizen who accounts for about 80 percent of the economy has helped give a boost to these industries.

Compared to what the quality is today, you can see how poor the quality of the films were when they first started. It is because people, the citizens, were watching and paying to watch it and the money was being reinvested into growing the industry. It is now part of the contributions to the GDP which it never was until it became homemade and grown by Nigerians. Imagine that this was happening in other sectors.

Let me give you another example of when Arik started flying to the UK, you know in the airline business where you make your margins is the business class, but the people that can afford business class were not flying Arik, they flew BA or Virgin.

Assuming all Nigerians flew with Arik to the UK, how big do you think the airline would have been today?

It is citizens that grow the economy, and they are the ones that also grow businesses. Nobody is coming to do anything for you from the outside.

What role can the Government play in enabling citizens to boost the economy?

Providing an enabling environment for them to thrive. The job of the government should be to provide the right policies. It’s like saying you guys want to play a game of football. Okay, we are going to give you the freedom to play but these are the rules and the policies, but we are not going to play football with you.

So that’s the whole idea, the government’s role is to provide that enabling environment not ownership of assets and there is also a need for that very beautiful handshake between the private sector and the public sector.

If you want something to work and work well, it is best you place it in the private sector but to protect citizens and ensure people are doing what they are supposed to do, that’s where the government comes in.

What is the one lesson you have learnt in the course of your professional career?

Patience, learn to be patient. It’s very important. Things that you think will take one year can take six years and vice versa. The reality is when you’re focused on something then the only way of achieving it, is to be pretty patient. In addition, learning not to be distracted because you would always have distractions.

What advice do you have for large companies and start-ups who want to raise growth capital?

For start-ups, I would always say look for patient capital. Except the business you operate, generates cash very quickly and as you know, most businesses don’t bring that much cash quickly. So, it’s always best that start-ups start with the patient capital.

The likes of the series A, B and C that you often hear of are generally preference shares which are structured in such a way that they can be converted into equity, this gives some long term span. As the firm begins to grow and generate cash, then it can explore debt capital markets.

With Sofri, DLM is going into the investment and lending industry, what inspired the idea?

We see the lending and investment space as growth areas and they are timeless because consumers will always be needing financing for their different needs. It’s an ever-growing consistent area that we can focus on.

The next thing of course, is that digital banking is one of the next big things for Africa. Most businesses in the next phase of the industry in the next 10 to 15 years should be Pan-African.

The African Free Trade Agreement opens up a 1.4billion people growing market and so it does make sense that one looks into the Pan African space.

There is a very high unbanked population, not just in Nigeria but across Africa and therefore, it lends itself to enough institutions to penetrate and to ensure that in the next decade or so, at least, say, 80 percent of the African population, is included in the financial system.

So, we hope that Sofri will be one of the many institutions that will help to achieve that.

What advice do you have for young professionals?

Every success story starts with a dream. If you can’t picture something, you can’t make it happen.

So, the first thing I would always say to young people is to learn to dream and I mean visualise what people may say is impossible and make it happen.

I have heard it many times, and I believe that whatever the mind can conceive, is possible. Oh yeah. So, from Elon Musk to Richard Branson. When I look at the young guys in Nigeria; the Flutterwaves, the Kudas, Paystack, Carbon and the Cowrywises of this world, I give all of them my kudos.

That’s the beauty of the Nigerian entrepreneur, because despite all the challenges, people breakthrough. Rather than saying, we are not doing anything because of the problems in the country, the mindset is that we are doing it in spite of the problems.

If you look at the tech guys and those in the financial services industry who are changing the way we do things, you just have to give them their props.

I’m pretty sure that the next set of successful entrepreneurs in the next decade or so would be 10 times bigger than the current successful Nigerian entrepreneurs.

There is a lot of hope, there’s a lot of light at the end of the tunnel and I believe in the youth because I think that they have a very resilient culture; they are not letting any woes of Nigeria bring them down, they keep innovating and keep creating and if you also look at the same set of Nigerians in different parts of the world, you will see that the genes of these guys are pretty much switched on.

How do you unwind when you are not working and what are some of your hobbies?

Yes, I find time to relax. Back in the day, I played polo. I now like films a lot, documentaries etc. I enjoy the ability to learn and relax because I do a lot of work.