The Group MD/CEO of Growth and Development Limited (GDL), Kola Ayeye, has said that it is a contradiction for social infrastructure to collapse, the middleclass to remain emasculated while the financial sector profits are approaching N1 trillion in the country.
He made the declaration on Thursday, May 10 while speaking to the media during a briefing to mark the opening of the asset management company’s mainland office in Ilupeju, Lagos.
“We think it is a contradiction for social infrastructure to collapse, for the middleclass to remain emasculated and for profits of the financial system to be approaching N1 trillion. We think there must be a way to achieve the two,” Ayeye, who recently left the Asset Management Company of Nigeria (AMCON), said.
Talking about GDL, he said the company was started to deliver strong social impact, but also to make money, as it is not a charity organisation.
“We are a financial institution, we are here to make money but we are not only here to make money, we are here to deliver strong social impact. We want to be a leading diversified financial institution, creating wealth and transforming society. We want to provide unique financial solutions which strengthen and expand the middleclass,” he said.
Ayeye said that over the next few months, specific funds and products to actualise GDL’s mission would be unveiled.
“We have started business. We are doing the things that other financial institutions do, but these are the things that will differentiate us. And God willing, we are confident that we will succeed,” he declared.
Ayeye, who said that Nigeria was generally punching below its weight, explained that there is substantial collapse of social infrastructure and as a result, the middleclass is very thin and continues to get thinner.
“From where we stand in Growth and Development Limited there are three kinds of wealth and this is how we define wealth. There is personal wealth, which is what individuals hold. It could be the money in their bank accounts, the houses they own, the shares they have bought. That is one class of wealth. The second class is generational wealth. That is wealth that is structured in such a way that it is likely to transcend generations. And one important category of transgenerational wealth is when a company has become not only stable but has become institutionalised so that it can go from one generation to the other. That is the second category of wealth,” he said.
The third category, he said, is the commonwealth, which belongs to everybody.
“For example, the medical system of a country is part of its commonwealth, the social infrastructure, the schools are part of the commonwealth,” Ayeye stated.
For there to be a thriving middleclass, he said, the last two classes of wealth, that is transgenerational and commonwealth, are very important. Ayeye pointed out that in societies where you have a thriving middleclass, there is also a very robust and large commonwealth. There schools work, the health facilities work, the infrastructural facilities are up to par.
“Regardless of the quantum of personal wealth that you have, there is a certain minimum standard that you can achieve because those things are commonwealth. So, there are societies where even if your child were going to a public school, he will be getting close to best in class education. Transgenerational wealth on the other hand makes the wealth that is created by a generation available to other generations. Essentially, in societies where the middleclass is thriving and robust the emphasis is not only on personal wealth but on transgenerational and commonwealth,” he said.
He said it was unfortunate and even sad that that is the way a lot of African countries, including Nigeria are run, which leaves just the first category of wealth, which is personal wealth, prominent.
He said that is part of the focus of GDL, which is also concerned with how to grow and expand the middleclass.
“We think it is time to look at how financial institutions can focus not only on personal wealth but on creating transgenerational wealth and on helping society to transform by strengthening the commonwealth, i.e. social infrastructure.
“That is a measure reason for GDL. There is no use belabouring what we have done well or not done well. It is much better to think of how to re-innovate and re-invent our institutions. And that is what GDL is about. To give you an example, the kinds of things we need to start to think about are how do we redeploy our savings pool to transform society? I think the savings pool in the country is now approaching N4 trillion. And our own estimate is that that N4 trillion of savings contributes almost N300 billion of income annually to banks. So, the issue is, is there a way to redeploy those savings to improve living standards?” He said.
He explained that these are the models and the opportunities that GDL wants to concentrate on.
“We have an asset management licence. One of the things we want to do with our asset management licence is to pool savings from both the private and the public sectors under new frameworks such that there can be interventions in areas that have so far defied solutions. Notably education, health and housing in such a way that will produce not only decent financial returns but also some social dividends.
“We are not in this business for charity. We are in this business also to make money but we think you can make money and also deliver significant social impact. That is one of the major things we look to do with our asset management licence.
Ayeye is a seasoned professional with over 30 years’ experience in banking, financial services, audit and advisory services. Before returning to the board of GDL he served as executive director of AMCON with responsibility for recoveries and resolutions, a role central to AMCON’s mandate of recovering bad loans acquired from banks.
He was previously appointed to the board of Mainstreet Bank by banking regulators in 2011 owing to the financial institution’s solvency and liquidity problems becoming part of the team that turned the bank around in preparation for it sale to a new owner. Before that he was at National Bank of Nigeria where he played a pivotal role in recapitalising and turning the bank around.
Nigeria’s President appointed him to the board of AMCON in 2015 and he returned in February of this year to serve as group managing director/chief executive officer of GDL.