Two-time winner of the CFO of the Year Banking Sector, at the Nigeria CFO Awards, Mr. Ugo Nwaghodoh, the Group CFO at UBA Plc, says every day is a different day. The affable professional, in this exclusive interview with The CFO, shares his views on the macroeconomic environment in Nigeria, financial reporting, new media, family time and many more. Excerpts…
What does your role entail as the CFO of a leading financial institution in Nigeria; what is your typical day like?
In a global financial institution, like UBA Plc, the Group CFO is responsible for individual and corporate performance management. The CFO has responsibility for financial reporting in compliance with relevant accounting standards and extant regulatory requirements in the different countries of operation. It is my responsibility to continuously seek efficiency gains in cost and balance sheet management for the Group. Together with my colleagues, we are responsible for regulatory management, including tax planning and strategy, capital management and investor relations as well as broader corporate strategy. The CFO is a decision analyst and provider of fact-based business intelligence, just as he is one of the anchor drivers of the CEO’s strategic actions towards achieving the vision of the institution.
As regards my typical day in office, every day is a different day. Whilst there are standard dashboards and action triggers, my day is always shaped by the different priorities of each day. So, I will say that every day is always exciting, challenging and dynamic, as the diverse responsibilities, fast changing business environment, scope of operation and geographic coverage of UBA colour each day with new opportunities and challenges requiring new thinking and approach.
What is your view on the new media? How is new media impacting the decisions in the financial services sector?
We are in a digital age and the new media is revolutionizing not just banking but the entire ecosystem within which we operate. Interestingly it is helping to deepen banking penetration in a lot cheaper way than the “old order” of setting up “brick and mortar” structures to serve customers. With the new media, customer interaction is stronger, closer and more personalized. For instance, we at UBA pioneered the twitter alert in Nigeria. We are one of the most active banks on Facebook, Linkedln, Google+ etc, as we leverage these platforms to serve our customers, particularly the millennials, who we see to be the next customer segment growth frontier for our business, since they will be the next generation business leaders and middle-upper income class. UBA also supports RED TV, an entertainment digital TV that appeals to trends in fashion and lifestyle. Overall, new media is helping to break barriers and boundaries. We continuously invest in new technologies to proactively take on emerging competitions from Fintechs even as we also partner with the relevant pioneers of this revolution.
What do you think are the key developments and issues in the financial services sector?
Amongst other events, I think some domino variables are notably impacting the financial services sector. Fintechs and attendant disruptive innovations are “good” and “bad”; whilst they create new opportunities and efficiencies on the one hand, they are also encroaching a part of the conventional revenue pie on the flip side, thus the intensified competition to defend market shares. The rapidly growing influence of cryptocurrencies such as Bitcoins, Ripples, Monero, Lifecoin etc are riding on block-chain technologies and presenting new challenges in the areas of money laundering and terrorist financing.
Cybercrime is on the increase and thus necessitating continuous investment in cybersecurity systems. Following the 2008/2009 financial services cyclone, regulatory oversight has been enhanced. Notably, the adoption of risk-based supervision and BASEL II implementation have changed risk management practice and overall culture in the industry.
What are your views about the menace of youth unemployment, which is predominant in Africa and the potential implications vis-à-vis the acclaimed entrepreneurial mindset or capacity of Africans?
It is evident that we are sitting on a huge human capital resource base in Africa but so sad that we all focus on mineral resources. Incidentally, if we do not appropriately harness this idle resource, it may become a curse. I take mild relief in the emergence of a number of philanthropy initiatives that are helping to give hope to youth, particularly in an entrepreneurial way that I believe should help to improve the productivity of our youths. A case in point is the Tony Elumelu Foundation, which is training, mentoring, networking and providing seed capital to start-ups, largely founded by youths. Alhaji Aliko Dangote is also helping in such regard and we are seeing a number of African-sponsored Foundations springing up to address this notable challenge. Good to note the social welfare programme of the new government, but we need to see more, particularly the approach has to be self-sustaining to ensure that the youths are truly empowered. I must say that this should be seen as a national duty for everyone,
and it should not be left to the government and the ultra high networth individuals alone. At our respective levels, we should go all-out to empower youths in an entrepreneurial way that gets them productive. Otherwise, we may all have to contend with the negative social menace that may arise from this ugly youth unemployment situation in Africa.
The volatile macroeconomic environment is intensifying competition in banking, what will be UBA’s edge in 2017 and beyond?
Competition is what makes the market interesting and I must say it remains critical for the growth of the industry, so we are always prepared and ahead of the curve. Our medium term strategy is built on our clear values of Enterprise, Excellence and Execution, which are the fundamentals behind every competitive strategy. We continue to invest in all our three growth levers; people, process and technology. We have reinvigorated our Enterprise culture, that ensures we create exceptional value to customers at all times, anticipating their tomorrow’s needs and meeting them today. Being a service business, our strategy is at best, as good as its execution, so we are investing quality time and substantial resources in our human capital to accelerate productivity. We strive for excellence at all times, driven by the culture of continuous improvement.
As a doyen in the Accountancy field, how would you assess the progress Nigeria has made in corporate financial reporting, particularly since adoption of the International Financial Reporting Standards?
There is still a lot of room for improvement, but it is satisfying that financial reporting and disclosures have improved greatly in the last half decade. This has enhanced transparency and has modestly helped to bridge the information gap in the market. I must say the transition to IFRS has been pivotal to the evolution of corporate reporting in the country and with the continuous review of IFRS, the disclosures are getting better each year. You may be aware of the imminent adoption of IFRS 9 by January 2018; this replaces IAS 39, which is the standard that guides the Recognition and measurement of Financial Instruments. This comes with even higher level of disclosures and the approach is more forward looking, proactive and anticipatory. One of the good things coming out of this, is also the global alignment in terms of financial reporting, as this is also helping to drive investor appetite for Nigerian investment. I eagerly look forward to the wider global adoption of integrated reporting, which is the next
level of corporate reporting. Integrated reporting is the strategic reporting of critical non-financial and social performance that truly represent a more holistic view of the performance of the organization, as it helps stakeholders to better understand and assess the fundamentals of the business as well the prospects.
What is your outlook on the Nigerian economy and the broader African continent?
The last two years have been quite challenging for Nigeria and indeed Africa, largely on the back of vulnerabilities to global commodity prices and a host of domestic distortions. In Nigeria, relatively weak fiscal revenue and lingering FX scarcity may subdue GDP recovery, albeit I am quite optimistic on the growth outlook. Whilst the IMF and World Bank forecast a soft sub-1% GDP growth for Nigeria in 2017, I am more upbeat on the economy given higher crude oil price and increasing output, rising external reserves, which has seen some 7% YTD gain towards USD28bn, with attendant expectation of Naira stability. Also, we are gradually seeing improving productivity in the non-oil sector, as reflected in the recovery of this mainstay of the economy in the third quarter of 2016. Interestingly, the recovery in commodity prices should complement the economic diversification reforms across most African countries. So, I see a return to the strong growth years, which will now be driven by a blend of commodity price boom and improved productivity in agriculture, manufacturing and ICT sectors.
What are your biggest accomplishments?
What I consider to be my best career achievement has been the number of my replicas in the market. I find resounding satisfaction in helping those who work with me to grow to the peak of their career through leadership and conscious mentoring. I am happy to have seen a number of colleagues I supervised in the last couple of years, become CFOs in reputable institutions including banks. This is particularly exciting, because it further reinforces my emphasis on human capital development through learning-on-the-job, formal and informal knowledge exchange and career mentorship.
What is your advice to new entrants in the field?
Whilst different factors make people thick, I believe in continuous self-development, professionalism, team work, diligence and hard-work. These, for me, are the cardinal stones for a successful career in finance. It is important to say that a minimum dose of accounting, finance and general management is critical to being a CFO of a global financial institution, albeit the role requires a lot more versatility and thus CFOs need to acquire minimum knowledge of economics, analytics, MIS and broad information technology and relevant bodies of knowledge to adequately meet the rapidly and continuously changing responsibilities of the function.
How would you describe yourself and how do you use your leisure time?
I like to spend my leisure time with my family, bonding with them and exchanging views about life and recent events. When I have a bit of time, I see movies, play in-door games and hang out with friends. I also spend a bit of time with my mentees, exchanging views and providing guidance on their career, business and lifestyle.