A former Managing Director and Chief Executive Officer of the Nigeria Inter-Bank Settlement System PLC, and Presiding Pastor of the Glorious Restoration Church of Christ, Paul Lawal, talks to TOFARATI IGE and MOTUNRAYO AKINRUN about his career, pastoral calling and other issues
The issue of cash scarcity, both last year and recently, revealed that banking infrastructure for electronic money transfers is not as strong as was previously thought. As a former MD/CEO of NIBSS, what is your take on this?
The hitches with electronic money transfers are as a result of technology. The payment infrastructure has different levels— overlays. When a transfer is initiated, it goes through a certain process, before it is sent to an aggregator, though the customer might not know that. The aggregator, switch or payment company would then forward it to NIBSS, which would subsequently send it to the bank. All this happens in seconds. There is a lot of interdependence among the players in the electronic payment space. As a result of that, the inefficiency of one is the inefficiency of all. A shortcoming in the system could be in the form of a technology breakdown or system overload.
In recent times, there have been so many companies coming up in the electronic payment space. Many of them are just there, because they see it as an opportunity to do business.
But, in some cases, the volume may outstrip their capacity; which results in downtime. For example, let’s say company B has a little problem because of volume, and company C that has no such issue has to deliver money to company B. C will send the money to NIBSS, which will in turn deliver it to company B that has an issue. But, the money won’t go to the bank or the person that is supposed to receive the money. What happens is that there is a huge volume of transactions at a high speed. That was what happened when a lot of people resorted to doing transfers. It is like having a three-lane road, but suddenly, some of the lanes are closed. That will naturally affect the seamless pace at which the transactions are supposed to go through.
The way out is that the technology has to advance and be expanded to accommodate the high volume. However, I believe that the banks are working hard to catch up with their volume growth. That is why even if there is an issue, the customer will still eventually get results.
However, I agree that the efficiency can be improved upon.
Having spent over 15 years at NIBSS, what were the highlights of your time as the MD/CEO?
I actually spent 15-and-a-half years as the MD/CEO of NIBSS. The highlight is that when I became the MD in September 1996, the mobile phone, as we know it today, did not exist. At that time, Nigeria had even very limited landlines. So, if one wanted to make electronic payments, one had to be sure that the average person had the means to receive the information on their phones. So, I became the MD of the organisation at a time when things were still being done manually. To get to the level we are today, we used to educate everyone in the value chain about how things could be done digitally.
We had to move from manual processing of inter-bank transactions to premium-manual. Then, we moved to online interbank transactions. All those movements had their own issues at that time. We moved from manual to semi-manual; then the cheque system. When I became the MD, the cheque system was very slow. Back then, if anyone got a cheque from a bank in another state, it would take about three weeks for the money to eventually reflect in their accounts.
We had to figure out a way to get things done faster. The first automation we actually did was called the Nigeria Automated Clearing House System. We automated the cheque clearing system. In every cheque, there are some lines, which are called Magnetic Ink Character Recognition Lines. Those lines are pre-encoded in every chequebook. Those lines contain information as to one’s bank, the bank code, and the specific branch code.
When one wants to make any transaction, one would give it to the person one is doing business with. That person would then present it at their bank, which might be different from the issuer’s bank. The person’s bank would then do what is called ‘post-encoding’. Meanwhile, there is machine called cheque payment machine. The banks would put the cheque in the machine, and the machine would electronically convert the amount to the MICRL. That step is called ‘’bank post-encoding’. After that, the cheques will be put into a processing machine, called reader sorters. Those machines can read the lines, and subsequently the cheques by putting all the ones originating from a particular bank in the same place.
For example, if the bank in question is Union Bank. The bank’s machine will put all cheques of Guaranty Trust Bank, for instance, together.
The system has evolved so much over the years, and these days, if one drops a cheque, one can get one’s money anywhere in Nigeria.
From the cheque system, we moved to interbank. Banks then used to come to NIBSS with bank transaction vouchers. It was the job of the treasurers to raise money between the banks. That is what’s called the interbank treasurer market. It is a system to fund the banks’ activities, lend out money, and short-term deposit of money in another bank. In those days, one would just write a cheque on special papers provided by the bank. The bank would then instruct that, for example, N200m should be paid to First Bank from UBA. The bank would then bring it to NIBSS. We (NIBSS) would then capture it. And, First Bank would then be able to send money to other people.
For the interbank, we moved from vouchers to an online system. The banks would send information to NIBSS, and so many things would happen behind the scenes, such as telecoms connectivity, and authority. All those were put in one software. All this was done electronically. At the end of the day, NIBSS would tell each bank how much credit and debit they had (for the previous day).
However, all that was done about 13 years ago; because I retired in 2011.
When I joined NIBSS, the organisation was just about a year old. The first MD had died within one year of setting up organisation, so I was employed to oversee the place. At that time, the organisation was still in its infant stage.
When I joined the organisation, the capital base was only N7.5m. But, by the grace of God, when I was leaving, it had grown to N3bn.
Yet another highlight of my time as MD of NIBSS was that we bought a property on Victoria Island, spanning two streets.
Also, when I joined, banks were relating to NIBSS as if was a cooperative society, because every bank in the country, including the Central Bank of Nigeria, have shares in NIBSS. So, they were doing something called subscription. They would pay a certain amount of money to NIBSS in the form of subscription.
But, because I was coming from a banking background, I felt we could not continue doing business that way, because NIBSS is also a specialised financial institution. And, I did not want to run the place on a subscription basis. That was because subscription is a fixed income for NIBSS. It also meant that one could not be proactive or plan ahead. Also, one could not see new opportunities or technologies and use them, because one’s capital.
I then called for a meeting with other members, who were the representatives of the different banks. I told them that for me to move the company forward was to be more business-inclined. I wanted the income of the organisation to be determined by the volume of transactions it is able to process. I added that we would then have to charge based on transactions. I did not want the banks to continue giving us subscriptions. I also told them that half of the money they paid would be put in capital reserve in order to sustain them. They would still give me the other half, and I would be charging them a little amount per transaction. Then from the next year, I did not take subscription from them again. Any money they (shareholders) would go to their capital. From the second year, we started charging for transactions; and that had a significant effect.
When we wanted to start the automation of cheques, some banks felt that we could not do it. So, we had to convince them that we actually had the capacity to do it. And, that we were business-oriented.
I told members of the board that they were doing business in their respective companies; and that we also needed to do business. I said to them that we wanted to be a responsible corporate citizen, and not just live on subscription alone. We wanted to live on the income that we earned. We then made a presentation to the banks that we were going to automate the cheque system, which was a major thing.
Meanwhile, some banks were also interested in setting up a clearing system. But, we told them that something like that had to be done centrally, and not in silos. Eventually, it was agreed that NIBSS should do it, particularly because we already had a structure in place.
In addition, we had to look for technical partners that could do the job.
At the time you started work at NIBSS, there were no GSM phones or even easily accessible Internet connection like what obtains today. Didn’t you find that daunting considering that the job was technology-driven?
There were challenges, but I have always been project-driven. If something has to be done, I concentrate my energy on getting it done.
Even for the bankers, who are basically the owners of NIBSS, to accept that NIBSS could do that job took a lot of convincing. They had to vote as to whether to let us go ahead or not.
The NIBSS provides various services for the banking system. But, back to the interbank system that was automated, we then had things like NIBSS Instant Payment. That is what result in people getting alerts for transactions on their accounts. That was driven by another infrastructure that NIBSS set up, called the Nigeria Central Switch.
However, we did not do it alone. We had a committee of people from NIBSS, and the banks. Members of the committee travelled to places such as the United States of America.
We went to places where things like that had been done before, such as Canada, United Kingdom and South Africa. We were then able to know which path to follow, because there were different ways of getting it done.
All we needed was sensitization, as well as proper planning. And, we always carried the banks along.
Thirteen years after you left NIBSS, a lot has changed. Do you think the organisation is still living up to the reason for its creation?
NIBSS continues to work efficiently. If it does not work efficiently; trust me, people will know. NIBBS processes transactions worth trillions of naira per day. A structure is already in place; all they need to do is expand the processing equipment, as well as security overlay, and they are doing that. They have also brought new customers to the system, because they system had already been designed that way.
When I left, there weren’t platforms like Opay or Moniepoint. But, they are already in the system today, because there was a structure in place. Those who are there (NIBSS) now are expanding the infrastructure to accommodate new players.
So, I will say that they (NIBSS) are building on what we left behind, and they are doing it well.
The economy is not in a good shape at the moment, and many people are finding it difficult to make ends meet. What advice do you have for such people, especially in terms of providing creative solutions that will fetch them money?
Things are tough in the country, and one of the key issues is unemployment. The second key issue is distribution of income.
There are two ways to get employed. It is either one gets a job and be collecting salaries, or one creates something of one’s own.
But, to create something of one’s own, one needs capital. In that regard, there is a need to have consumer credit in the banking system. We place too much emphasis on cash and heavy loans for companies. However, if one has a good consumer credit rating, one should be able to approach a bank (for loans).
Banks need to expand their departments that deal with small and medium scale enterprises. If the banks support such initiatives, we would have more of software companies, phone repair company, construction firms, agricultural business and others.
Even for salary earners, they ought to have access to loans, and they would return them when their salaries get paid. However, I heard that some financial entities charge as much as five to 10 per cent interest on loans per week. That does not make any sense.
Banks should package credit in a way that it would be more friendly to their customers, especially those in the low-income cadre. The gap between the poor and the rich is too wide.
Another problem we have in Nigeria is that there isn’t inclusive growth. Inclusive growth is economic growth that is distributed fairly across society. It creates opportunities for all. We must look into ways of increasing the rate of employment, and reducing poverty. It is not all about banks giving loans of N100m or N2bn to already established people. Rather, they can make a difference in the lives of many young people, by giving them small loans of N1m.
It is sad that only less than 5,000 bank customers are taking about 70 per cent of loans from banks. Yet, those banks have over a million customers.
Also, the government should release some capital. They should give out lands for agricultural purposes as well. There should also be more industrial estates that will have clusters of small-scale companies.
What was the reaction of your family members and other loved ones when you heeded the call to become a pastor?
I had known that I would be a pastor for quite a number of years. But, I was so busy with my career as a chartered accountant, banker, and payments person. As far back as when I was undergoing the National Youth Service Corps scheme, I had a dream that I would become a pastor.
My vision was to start a ministry, and not just to join an already existing ministry, because my ministry also has to be what God has deposited in my life from when I was younger.
When I mentioned it to my family members, some of them expressed concern that I wanted to start all again. However, I don’t believe in having too many church (branches). I believe that just one church can make a lot of impact.
My family did not quickly embrace it, and they said we should continue going to the church we had been attending— the Redeemed Christian Church of God. I was actually born into the Baptist Church, but I joined the RCCG way back in 1990. I was already a leader of men in our parish on Victoria Island, Lagos. My loved ones asked me why I wanted to put the pressure of starting all over on myself.
However, I am happy that since we started, I have been getting encouragement from my family members, including my wife and children. Everybody is now supporting the ministry, which is called Glorious Restoration Church of Christ.
What were the challenges you faced in the early days of the ministry at the time you did, having retired from corporate life?
When one starts a ministry, one will come across three different groups of people. The first are Christians, who already go to church who go to church on major occasions, such as Christmas, New Year and Easter. While another group is made up of Christians who attend church every Sunday. The other group is made up of those who are not Christians. The challenge is that the people in the neigbourhood where one starts the church, will look at the new church and say things like, ‘What are they looking for’? ‘These ones have come to collect our money’. But, those impressions are not right. I am not in ministry because of money. One will only be cursing oneself if God did not call one and one claims that God has called one.
But, if one has genuine intentions, with time the ministry will keep growing, and people will start understanding one and the church. There are some people who come to our church and say that since they started attending, they have got confirmation that God is there.
Being a pastor is like being a public servant, in the sense that it could sometimes be a thankless job. What have been the pros and cons of your pastoral journey?
Indeed, being a pastor is like being a public servant in the sense that any member of society can come into the church. That is the prayer of the church anyway. And, if anybody comes to church, the primary reason will be to worship God.
The second reason is that people have challenges in life and they believe that if they come to God, He will resolve it. For example, somebody does not have a job, the rent is due and there is nobody to support, the naira falling, inflation is rising, men can no longer pay their children’s school fees, and different family issues. Attending to those challenges is much for any pastor who is empathetic, so the pastor feels the burdens and pains of society. It would have been good if pastors were to even be part of government in a way, but we just have to separate them from government, because of politics. One cannot do government without politics; otherwise, it is pastors who actually know where the shoe pinches the people the most.
Being a pastor is not a tea party. It is about connecting with people’s needs. The joy in it is that there is expectation. People rely on one to support them in resolving their issues spiritually.
There is a very high number of churches in Nigeria, yet corruption is also at an all-time high. What do you think is the missing link?
Corruption in Nigeria is so broad. There is corruption in high places. We also have what I call ‘poverty complex’. Many people that are coming from a generation of poor farmers, then they suddenly find themselves in cities like Lagos, Port Harcourt or Kano, with a good job and wonderful opportunities. They start to make some money, and society starts expecting them to construct roads, bridges and other huge demands. I was recently in the United States of America, and I got some information on my phone that senior citizens were entitled to $3000 vouchers for groceries.
But, in Nigeria, senior citizens have to mostly depend on what they get from their children. And, the children have to be successful to give a substantial amount to the elderly people in their families.
Unfortunately, poverty has made many people selfish and greedy. Everybody wants to eat and have an overflow. Some people even bury money in the ground. One of the reasons for the increasing rate of exchange of the dollar is that some people are hoarding dollars. They make money one way or the other, and because they don’t trust the naira, they will buy foreign currencies, especially dollars, and keep it somewhere. Some people have the mindset that they never want to be poor again, so they keep stacking money away. But, how much does anybody really need?
When it comes to the issue of corruption, the churches alone cannot stop it. There is corruption not because people are not getting the word of God from the churches, but because of human nature. Some people cannot manage pressure well. I heard somebody say he is making money for the next generation. There are people in government who have that same mindset, and it is a lie. Only God make one rich.
I always say that the government also should be structured to shoulder its full responsibilities. For example, the income of people (minimum wage) should be better. When the government and companies pays well, things will be better.
In countries like the US, there is social security, and healthcare policies. Is there anything like that that for the people in Nigeria? Education is compulsory in America to a certain level, and they even give them lunch at school. The government tried to do something like that here, but the process has not been so smooth. The government should see every citizen as their children. They should put in place structures to assist people that cannot help themselves. Old people should be given allowances and medication.
I believe that things are not even worse than this, because people are praying for Nigeria.
You mentioned so many things that the government ought to do. But these government officials attend churches, and many people believe that church leaders don’t do enough to tell the truth to power. What is your reaction to that?
There are two ways to look at the truth. First, what do you consider as the truth? As a pastor, truth is what God says in the Bible.
But, another truth, which is the primary responsibility of the church, is to let the congregation know what God expects of them according to the word of God. However, a pastor should also not be seen to be political, so it does not seem as if one is favouring one political party over another one.
Tell us about the schools you attended.
For my elementary education, I attended St. John School in Mokola, Ibadan, Oyo State; and eventually finished at St. John, Igbeyi, Kuto, Abeokuta, Ogun State.
For my secondary education, I went to A’level Comprehensive School, Ayetoro, Ogun State.
I went on to study Agricultural Economics at the University of Ibadan. Upon graduation, I was a graduate trainee in the firm of the famous accountant, the late Akintola Williams Akintola, between 1978 and 1982. After that, I went into banking. And from there, I went into payment systems. Since I retired from that field, I have been engaged in construction and church work.
What were the highlights of your banking sojourn?
When I left Akintola Williams in 1982, I joined the then Bank of Credit and Commerce International. While there, I had a fast rise, and by 1985, I was already a management staff, with an official car and a house. I later moved to Africa International Bank, where I became a shareholder. In 1996, I moved to NIBSS, and I was there till 2011.
How do you unwind?
I used to play long tennis. And, most weekends, I attend my friends’ parties.
How do you like to dress?
I am very flexible with my dressing. But, I like to dress well.
