Chief Olabode Goerge, an elder statesman and a chieftain of the Peoples’ Democratic Party (PDP) recently made a rather simplistic statement about how banks and their CEOs make income.
He took an unfair swipe at Tony Elumelu, Late Herbert Wigwe, Fola Adeola, and other high-profile bankers. He attributed their wealth majorly to forex arbitrage.
Bode George claimed that because the Banks’ MDs didn’t own manufacturing companies, dollar racketeering was the only way they made money over the years.
As an industry watcher, this is a rather simplistic and unfair attack on the topnotch bankers who have created so much wealth for the country, created thousands of jobs, enabled other sectors of the economy to thrive, and lifted hundreds of thousands out of poverty with their ingenuity, creativity, and investments foresight. They added that others were scared to even invest. This is aside from their philanthropies like the Tony Elumelu Foundation.
For someone who was at some point a military administrator and later the Chairman of the Nigerian Ports Authority (NPA), it is befuddling that he would hold such a narrow view of the banks’ operations and their sources of income. For instance, the United Bank for Africa grew its loan portfolio by N605bn in the 2022 financial period. This is aside from other investment portfolios of the banks. These investments yield profits at maturity.
The banks’ loans and advances stood at N3.4trn in 2022 even as the bank’s total assets climbed to N10.9trn. For a bank this large, the CEOs cannot be rely on forex arbitrage to make money.
Without holding briefs for the banks’ Chiefs, Chief Bode needs to recognize that the individuals (Tony Elumelu, Late Herbert Wigwe, Fola Adeola etc) are part of the founders of their banks and have significant share capital positions in those banks. What this means is that when the banks declare dividends from their profits, the shareholders make income. For investors like Tony Elumelu, the dividends received are usually huge annually. This is aside from other investments in other sectors of the economy.
Tony Elumelu is a top shareholder in UBA, Transcorp Plc, Heirs Holding, and several companies nt under the Heirs Holding group.
In UBA’s 2022 audited financial statements, Elumelu held directly 194,669,555 units of UBA shares and 2,185,934,184 indirectly through HH Capital Limited (140,843,816), Heirs Holdings Limited (1,814,003,900 ) and Heirs Alliance Limited (231,086,468 units).
The bank in 2022 posted a profit before tax of ₦200.8 billion. The bank declared a dividend for the year of N1.10 per share. Bode George can do the math as to how much Tony would have earned in that year alone. This is aside his earnings from investments from other companies in the insurance, hospitality, power, and, energy sectors.
Chief Bode George needs to understand that not only manufacturing adds value to an economy. In fact, without the banks, manufacturers wouldn’t be able to access structured credit to invest in machinery and raw materials. This explains the high exposure of banks to the manufacturing sector.
If all wealthy people must own factories to earn legitimate wealth, what would Bode George say about entertainers, fintech companies, airlines, transport, companies, logistics companies, and others?
