Hamid Joda is the CEO of TAJ Bank. In this interview, he spoke on how the bank has grown in the three years of its existence and it plans to participate in the international arena to bring Islamic Banking to the world. Excerpt
How did your career start?
My father, Late, Abubakar Joda, served the country in various countries across the world as a diplomat in China among others. His last posting was in Cameroon and that is where I was born in 1975 and he retired in 1977. In 1988 I started my nursery education in Kaduna at Labai International Primary School, from there we moved to Yola, my home State, and I started my secondary education at the Yelwa Government Secondary school. From there, I proceeded to the university of Maiduguri. I have always had a passion for accounting and when the opportunity came in my second year to study banking and finance, because I enrolled into the university to study business administration, in your second year, you get the opportunity to major in either marketing or management or banking and finance. But I have always had the burning desire for banking so I chose banking and finance and graduated with baking and finance.
I further went to Lagos to explore opportunities; I had a very brief stint in insurance at the Niger Insurance Company. The opportunity later came for me to start my banking career in 1999, so I started in City Express Bank. From there, I moved to Continental Trust Bank, I relocated to Kano, from there I joined Savannah Bank. From Savannah, I moved to a couple of banks. My career later took me to FCMB from 2010 to 2015. In 2015, we had a new administration, at that time, I was head of the public sector for the bank. The new administration, which is the Buhari administration, introduced the Treasury Single Account (TSA). With the new policy, I felt my job was threatened, so it was an uncomfortable position to be in at FCMB. Of course, I have always had the idea of starting a bank. When the policy came in, I reflected on my future plan and I made up my mind that I will pursue my course of setting up a bank.
So, I called my friend and colleague, Mr. Sheriff Idi, I suggested the idea and he didn’t hesitate, he bought into it. We started the journey and appointed a consultant to guide us through the journey and started capital raising. We did not have the money at that time, so, we had to go round Abuja, Lagos and Kano looking for investors to believe in our idea to invest. At that time, we had a recession and it was very difficult to get investors to believe in your idea because when there is recession, investors tend to hold back. We pushed and persevered and at the end of the day, we were able to raise sufficient capital to qualify for a CBN license. When we raised the capital, it was an extremely difficult thing to do. After submitting our proposal, the CBN rejected about 80 per cent of it. It meant we had to go back to the drawing board to re-strategize. At the end of the day, the CBN was satisfied and they issued a license to us and we started TAJ Bank on December 2nd 2019 and the rest is history.
Before 2015 when you felt your job was threatened, you have had your entire experience in the conventional bank, why did you choose non interest when you thought it was fitting for you to start something?
I chose non-interest because it aligns with my faith and beliefs, that is the first reason. Also, the non-interest industry was a very small one. I saw the opportunity there because conventional banks in Nigeria have already saturated and developed. I felt what do I have to prove in conventional banking because we have seen banks rise to prominence and some going to bust. So, we have seen everything in conventional. I felt Nigerians and the market needed something new. We took advantage of the opportunity and thank God, today, the industry is growing and we have two other non-interest banks, so the space is growing. The yearning of Nigerians for non-interest banking can not be underestimated, so, it is all about looking at the opportunities and taking advantage of them.
You came into the business in 2019, COVID came in 2020 that affected every sector. How prepared were you when the world had to shut down suddenly?
It was a very difficult moment, we started with a lot of energy and COVID struck that we had to shut down our offices. At that time, we were not making revenue, we had only our capital to rely on. We were paying salaries from our capital and not generating anything. It was a very difficult moment. We used to meet online and the advantage there was, pre-COVID, we used to meet physically, but when COVID hit, we started meeting online and we saw the benefit. Till today we still meet online. That is one of the benefits of COVID. So, the shutdown came and after some weeks we opened up and by the time we opened, we said everyone should resume. We recalled all our staff and said no more online work. The staff did not like it and we were taking a big risk because at that time, we began to have COVID cases, there is no way we would not have shutdown the entire bank. To God be the glory, there were no COVID issues and we continued till today. When we came back, we came back with more energy, drive and enthusiasm and within the first eight months, we broke even and in our first year we made profit.
How has the bank being able to deal with different policies put in place by the Monetary Policy Committee and are you prepared for the rush that would accompany the change for the new naira note?
There are several initiatives that have been introduced by the CBN, the key ones, first is the RT200, which I think is a noble initiative and the goal is to improve Nigeria’s export earnings from $40bn to $200bn, outside earning from crude oil. That I think is a very good initiative. If we are able to drive our export to $200bn, we will be able to stabilise the value of the currency. Today, the currency is not stable because it is a demand and supply issue because we need more dollars and we are unable gets the dollars in because we are having a lot of challenges with crude oil sales. If we drive the non-oil export, which is more stable to $200bn, we will stabilise the value of our currency and create more jobs. This is a policy we have keyed into and we have created an export desk which we had to create when the policy was introduced. We have also increased our financing to exporters.
Today, we are seeing the benefits. Our export volume has increased and the dollar we are receiving has more than doubled and I believe it is the same story in all banks. I believe the policy is working. The second policy is the new CRR policy, which increased the CRR from 27.5 percent to 32.5 percent, CRR is the deposit you keep at the CBN. At the last policy committee meeting it was increased to fight inflation because it is running at 20 per cent and the CBN is really fighting hard to bring down the rate. It is with that view in mind that they increased the CRR. We have keyed in and we are beginning to see the benefits.
In terms of the naira design, there are several steps we have taken, first, is to increase our banking hours on weekdays so as to accommodate customers or depositors who want to bring old notes. Second, is to increase it to Saturdays just to accommodate depositors. We have also strengthened our e-channels as the whole essence of it is to reduce the volume of cash in circulation and migrate people to e-channels. The government has also given us the opportunity to deposit mutilated currency because before now, depositing it was a big challenge. Now we can take it to the Central bank. I believe the volume of cash there is more than N2trn. It is actually a lot and it is making it very difficult to control monetary policy when you have a lot of cash out there. It is also contributing to inflation. I believe it is a well-intended policy and hopefully by December 31st we will have a newly redesigned note in the country.
I remember when the Yar’adua regime came into power, they introduced the e-payment policy and said all MDAs will transfer funds through e-payment and there was so much hue and cry but today we are deriving so much benefit from it. The same thing with the BVN that Sanusi Lamido introduced. It also helped the system. Today, with a BVN, the security system tells how many accounts you have. It is also good for identification. These are policies when they are introduced, people kick against them but as people key in, you begin to see the benefit to the economy and unlock opportunity. By the time this naira redesign comes into effect, there will be an increase in the volume of e-payment in the economy. So, that segment is bound to grow. It is a sector that creates many jobs.
Do you see that growth affecting the growth of the eNaira too?
At the last meeting, we were told there were about N8bn transactions on the eNaira platform, so it is also growing and by the time the policy takes effect, people will be looking for e-opportunities.
Can you take us through you what have been able to do in the last 12 months in terms of achievement?
In the last one year we have done a lot. First, we got our national license and it is a record because we started as a regional bank and two-and-half-years later, we are going national. Secondly, we have developed our digital banking platform and it is the first o its kind. it is a mini bank on its own. It is a place where you can download the app, open an account, request for a card and have it sent to you anywhere in the world. You can do that without stepping into our banking halls. You can also open a tier one, two or three account. You can open a normal current account or company account on the digital bank. You can request for PTA and everything you can do on the TAJ Bank digital platform. We made the investment and very soon we will launch it to the public.
In terms of financial results, from day one, this bank has been profitable. In our first year, we made N850m profit, second year it was N1.6bn profit and by the first half of our third year, we have N2.5bn in terms of profit. So, it means that by the end of the third year, we will be able to triple our profit. So that is a significant achievement.
Again, we are the first bank to introduce a fully private sector SUKUK. All the SUKUKs that we have seen in Nigeria are sovereign SUKUK but this is the first private sector entity that is fully private driven that is issuing it. I believe it will inspire other companies in Nigeria to look at opportunities in the SUKUK market. It will also deepen the capital market in terms of non-interest finance instruments. We just closed the offer and the results are looking very good. That is also quite unique in the annals of Islamic Banking in Nigeria.
Will you take everything when you get an over subscription?
Yes, hopefully, but there is a limit to what you can take. You can only take 15 percent of the over subscription, so there is a regulation about it. In terms of branch networks, we have been able to expand it from two when we started to 20. So, in two and a half years, we have done about 20 branches and we are still expanding the branch network because we believe that brick and mortar is still relevant. We have a two-pronged strategy; plan A is to drive our digital banking and strengthen it across Nigeria to be able to compete with any digital bank out there. Plan B is also to increase our footprint in terms of brick-and-mortar branches. This is because Nigerians still want to see the branches, if you go to an area and preach digital, especially in the hinterland, not many people will believe you but if they see a physical branch, they are more likely to trust and do business with that brand. That is why we believe it is still very relevant.
What are your hopes for the bank and what kind of legacy you want to leave behind?
In terms of future aspirations, we are very confident that the future is looking very bright, in terms of the branch network investments we have made, we are beginning to see the results in that branch network expansion. Today, we are going to the south-eastern part of the country. It is interesting to know that there is no non-interest bank in that part of the country. We want to see how we will be received. We believe we will be received very well and we know Nigerians in that part of the country are yearning for non-interest banking services. We are also going to the south-south. We are setting up in Port Harcourt and Owerri. We are expanding our branch network in Lagos. So, we are expanding on a national scale and by the time we conclude our national expansion, we will be looking at opportunities in international space. That is also an aspiration we have. We believe strongly that our digital platform will do very well because we made significant investment in that and we believe we have a product that is one of a kind in the market.
Generally, I will say our future is very bright and if you look at our trajectory and financial performance it is a pointer to what is likely to come in the future and we are very confident with where we are.
In terms of legacy, I want to leave a legacy of strong corporate governance because I am happy to say that in the last three years, we have not been sanctioned by the CBN. This is because if you leave a legacy of strong corporate governance, the institution will run itself, whether you are there or not, the institution will continue to thrive. That is one challenge we find in Nigeria. The corporate governance standards are quite low and when the founder or key person leaves, succession becomes a challenging issue. But here, we take inclusive decisions. We have a collegial atmosphere and everyone is involved in decision making.
Secondly, we are operating in the non-interest banking space, we have a pioneer and we are the second, I want to set a unique record in the sector. If you look at our achievements, we have done well but we want to become a beacon. Today, everybody goes to Malaysia to learn Islamic Banking because it has a strong Islamic Banking system. We want to do the same thing here for people from Malaysia and other countries to come here and see what TAJ Bank has done and adopt it. So, the goal is to become a beacon of excellence.
