‘Diversification’ driving force behind winning formula-Sekibo

After years of gorging on rivers of money flowing from the oil sector, Nigerian banks have begun to realise how unhealthy their appetite for oil money has been.

For decades oil companies kept bank executives’ pockets filled with money.

But with the value of oil refusing to recover from deep down in the Earth’s crust, banks have had to actually work hard to maintain profitability.

The decision by OPEC members to cut production to boost or stabilise oil prices has not worked, which would no doubt be disappointing to both the banks and the federal government.

But with the Nigerian government waking from its slumber, the latest buzzword has been ‘diversification’.

From CEOs, to politicians and business owners, diversifying from an unhealthy dependence on revenue from oil has been the mandate.

The Central Bank of Nigeria has even got on board, encouraging banks to get stuck into helping out Small and Medium Enterprises.

It’s important to note that SMEs are the biggest job providers and create 60% of GDP in developing economies across the globe.

Founder of Investor King, Samed Olukoya, said banks needed to turn to other sectors “like agriculture, real estate and invest in a long-term viable business” to keep profits healthy.

“The healthiness of the Nigerian banking sector is directly proportional to oil sector performance,” Mr Olukoya said.

“As long as commercial banks continued to rely on quick oil money, the circle will continue at the expense of real growth.”

But while most banks have been slow to the party, Heritage Bank has already enjoyed the success of a well thought out drive to diversify.

Recently Heritage Bank invested N2 billion in Triton Aqua Africa Limited (TAAL).

Heritage Bank MD Ifie Sekibo said this move would allow TAAL to expand and grow its aquaculture business in Ikeja, Iwo, Aswjire and Gambari towns in Oyo.

He said the investment would not only create a lot of jobs but also improve food security in Nigeria.

“The disbursement of the N2billion loan and the readiness of Heritage Bank to treat Triton’s application for another credit facility for the third phase expansion is part of the bank’s support to one of the cardinal programmes of the federal government’s administration,” Mr Sekibo said.

Heritage Bank has always backed businesses to grow but now they have placed a greater emphasis on steering the economy back on course.