Are Nigerian banks useless?

Public Service Announcement: If you generally don’t like me or my writing, or think me a blow hard braggart, please stop reading. You will probably miss the point and become more angry with life in general. Don’t. It’s not worth it. Be happy. I’m not worth it. Okay? Cool.

December 2013. Mrs Njoku was worried. A few months earlier we had just became parents with our first born and she needed some security. As a Nigerian Nigerian, she looked upon startup equity with a measure of scepticism. It was all too casino-like, negotiation-heavy and emotion driven for her. She needed something solid. Mrs Njoku was concerned that we were living in rented accommodation and rather than me trying to remedy that, I was busy trying to buy Rolexes, Hublots and such things. Very immature of me. Rightly so, she was very worried.

So I relented. I’m a grown up, a father in fact. I have to do the right thing. So I told her to find a house in Lagos. Let me go find the financing. Contrary to what most people think, the Njoku’s are absolutely not rolling around in dollars. That $40m raised was for Iroko. Iroko does not = Njoku. I am a founder, CEO and shareholder, and still have to negotiate my salary with my board etc. If they see fit to not increase it, they can 100% refuse to. But granted, I am not complaining. I’m pretty well paid and would sit in the top 3% of salaried earners anywhere in the world. If I lived in London or NY or Paris, I could pretty easily get a $1m mortgage without too much effort. (this isn’t me bragging, it will be apparent shortly).

So she looked in Lekki/Ikeja etc. This is 2014 so ~N167 = $1. We found a few places we liked. N130–150m. ($778-898k). We had some savings so we ‘only’ needed N100m. Again. Globally, I earn in the top 3%. In Nigeria I am pretty certain I am in the 0.01% of salaried earners. So I went to my friends at Zenith Bank and asked for a mortgage. Below is what they sent me.

Reminder. This is early 2014. Today that 22% would be more like 28–30%. Below is the equivalent in a normal world from Rightmove (UK) and Streeteasy (NY). But Nigeria is not normal, so in principal I’m fine with a ‘risk factor’.

So to fully grasp this, in order to borrow N100m ($600k), I would need to pay back in interest over 60 months/5 years ($389k) at N2,761,891 per month. Now considering this was my primary house of residence and not some crazy investment thingy I was pitching, I was a little disappointed. That’s an understatement. I obviously couldn’t afford this type of thing and simply wasn’t prepared to take a mortgage at such rates. Mama didn’t raise no fool. Was I annoyed? You betcha. Both mine and Mrs. Njoku’s salaries sat in Zenith. We had never asked them for anything. Their general attitude was very much take it or leave it. With a respectful smile. They were, at the time, Iroko’s primary bank in Nigeria and I knew they were earning fat fees from us importing USD to pay Naira expenses here (Lagos office is still very much a cost centre). But they refused to budge. It appeared they didn’t need to.

So I went to my board and asked if I could borrow the money from Iroko. Inasmuch as they wanted to be supportive, CEOs borrowing money from companies is usually a big fat red flag for corporate governance. So they suggested I do a small secondary and sell some Iroko shares to fund the new house. With much regret, I did just that. In the end, I didn’t buy a house. I bought some land and am plotting how to construct my glass house upon it. Those shares have obviously gone up in dollar value since then. The hope is they will go up significantly more over the coming decades. I hate selling equity. Opportunities in value creation, gone.

For me it was simple. My wife and I ceased operating our personal accounts at Zenith Bank in April 2014. There was literally zero upside to it. We got zero interest in holding our money there and using an ATM? Well, anyone can give us that. We ended up moving to Standard Chartered Nigeria. If we wanted to, at the time SC were offering mortgages at 18% or thereabouts. And that was from their website.

Above is the humiliating moment a Zenith Bank Plc member of staff was made to kneel down to beg Ekiti State Governor Mr Ayo Fayose. As mere civilians, we obviously didn’t get this treatment. But we might as well have.

Reminder. The Njoku’s and Iroko are not the same thing.

So, as they had not really done anything to Iroko, they maintained the accounts, payroll and balance there and for a further 3 years, Zenith Bank was Iroko’s primary bank in Nigeria. Until a few months ago. We needed nothing from them. So, we were a great customer. In 2016, Iroko passed $2.25m and N645m through their accounts. We were great customers, I guess. That was until we asked them for a couple of facilities. You know. Beyond ATM and Internet banking.

We were great customers. Until we required them to add value.

  1. N10m overdraft - sometimes it takes time to import and exchange dollars. If I remember rightly, they asked for an equivalent of $100,000 cash collateral to cover the facility. Which is kinda besides the point. So we never even progressed with that*
  2. We had secured a 5-year low interest N500m (at N10.4m/month) loan for content, but needed a bank guarantee (we are long Naira debt) in order to access it. Remember, we passed through N645m and $2.25m through their accounts last year. Zenith Bank refused. They needed collateral. Cash or assets. They needed N600m equivalent in cash or land. My account officer literally told me he needed ‘Something tangible’

Tangible — ˈtan(d)ʒɪb(ə)l/


  1. a thing that is perceptible by touch.
  2. “these are the only tangibles upon which an assessment can be made”

Zenith Bank made us jump through hoops during due diligence, we tried to use our cashflow and content contracts and offered to pay N30m/month rather than the NN10.4m/month as we didn’t need 5 years to repay. They refused. Reason? Everything we had done in the past was kinda irrelevant. It was the past. In very simple terms, from a credit risk perspective, ‘anything can happen tomorrow’. The guy from Zenith actually told me that. Upon N5m/month repayment, forget we had raised $40m from international investors and had a business that had y-o-y revenue growth of 90%. Not only was I shocked, I was actually saddened. Six years of enjoying juicy inflow fees, transactions (and we make many), every Iroko member of staff was encouraged to open a Zenith account and most did. But that all meant nothing. Because, you know, anything can happen tomorrow. Yes. It can. I can close my account with Zenith Bank Nigeria. This happened on Monday, I think. By week’s end I have cleared 99% of Iroko money from Zenith. Since then, they can’t have seen more than N1m from us. If they are, we are simply in the process of shifting it elsewhere.

Really and truly. What is the point of a bank? ATM/Internet Banking. Fuck that. In normal markets it’s to extend credit (mortgages / business loans), support investments and pay interest on your deposits.

The Nigerian banking system for me is like Nigeria. It has basically failed. If I could, I would keep my money under the bed. I would get the exact same return on interest. I would probably be able to access it more readily. And finally, I wouldn’t have to put up with the BS marketing campaigns about supporting Nigerians in fulfilling their dreams. Rather than marketing about how supportive they are, they should go ahead and be supportive. If you are a top 100 company, they kneel at your feet. If you are one of the hundreds of thousands of regular SMEs ( Nigeria is an SME) then you’re on your own.

I actually don’t need the Nigerian banks. But many, many others do. They don’t have the opportunity to tap international capital. They are stuck with the Nigerian banks.

Nigerian banks don’t support. They suffocate.

Why would I bother bringing this up? With the failure of Etisalat, once again the Nigerian banks are out of pocket hundreds of billions of Naira. That’s our money. That’s depositors’ money. They are playing casino with our money and giving us nothing back in return. They get rich. The tycoons get rich. And we, the depositors, lose.

AMCON top100 chronic debtors owe 953.43billion. And this was before the N541Bn recent default of Etisalat.

That Etisalat deal. Apparently banks involved in the loan deal include: Zenith Bank, GTBank, FirstBank, UBA, Fidelity Bank, Access Bank, Ecobank, FCMB, Stanbic IBTC Bank and Union Bank.

THISDAY had exclusively reported that a breakdown of the amounts owed to the banks showed that ‘my friends’ Zenith Bank has the highest exposure to Etisalat amounting to $262 million and N80 billion. GTBank has the second highest exposure of $138 million and N42 billion, Access Bank follows with $131 million and N40 billion. Etisalat also owes UBA $125 million and N38 billion; FirstBank — $79 million and N24 billion; Fidelity Bank — $56 million and N17 billion; Stanbic IBTC — $25 million and N7.5 billion; FCMB — $15 million and N4.5 billion; and Ecobank — $10 million and N3.1 billion.

To one company. Which was 4th out of 4th position in its market and didn’t really employ that many people. Rumour has it that Etisalat had negative cashflow when this deal was structured. Please, where is the security the bank used to secure this facility? Everyone has walked away. Chairman, CEO, CFO, board. But our money is still owed. Depositors’ money. What model or formula did they use to calculate this one?

I am genuinely interested in what landed property? What collateral? What tangible assets they used to collect this $1.2Bn or N541,000,000,000. Did they use the entire Lekki Axis or was it the whole of Lagos used to secure this money?

An investor once told me that Nigeria is basically owned by 200 families. And maybe every 25 years, 5–10 join their ranks. It appears the Nigerian banking sector is for them. The rest of us are just here to spectate and fund their party. Then wallow in the mess they create.

For me. Fv3k Zenith Bank PLC and their like.

With the recent fund raising activities, I think it’s amazing that internet startups no longer have to be suffocated under the burden of having to deal with these idiots. Let them embrace their old industry giants who, per clockwork, build up big debts and default over and over again. When will they learn? Never.

They should stop advertising all over the place and actually provide a service which creates jobs, supports SMEs and helps Nigeria grow. Economies are built on normal credit markets. What we have is 100% not that. Thank God I don’t actually need them. This is for the many who actually do.

And don’t get me started on why every bank now needs a digital tv play. AccelerateTV / NdaniTV / REDtv COMPLETE. WASTE. OF. MONEY. Focus on your basics. It’s not like you are making folks very happy on that front.

*special mention to Ladi Balogun (former CEO of FCMB) who took a little time to hear my lamentations and his team at FCMB organised something which made sense. Even though we never concluded, there was definitely a spirit to support the Njoku clan.