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Awojobi: Trusteeship Business Needs More Awareness

Awojobi: Trusteeship Business Needs More Awareness

The Managing Director/Chief Executive Officer, FBNQuest Trustees Limited, Mr. Adekunle Awojobi, spoke to Goddy Egene on the 40th anniversary of the company and developments in the trusteeship industry. Excerpts:

What are some of the key changes the Trusteeship industry in Nigeria has recorded over the last 40 years?
The Trusteeship industry has come a long way. Most of the changes the industry has witnessed so far have been either regulatory, structural or operational. Certain other major changes witnessed by the industry had been the growth in the Nigerian economy. At a time in Nigeria, most of the Trust companies were largely bank-owned. The Central Bank of Nigeria (CBN) regulation changed this completely as ownership of a trust company by banks is a non-permissive asset.

At the last count, we have close to about 26 corporate trust companies operating in the country today with ownership in either a banking group structure or privately owned by non-bank related group of investors. In terms of operational changes, the National Pension Commission in 2004 rolled out the Pension Reforms Act. Entities like FBNQuest Trustees had to exit the administration of pension activities in order to comply with the new law. Nigeria’s return to democracy at the close of the 20th century ushered in some business optimism and some form of economic growth, which directly impacted the Nigeria debt capital market.

 

The early 2000s saw a rise in opportunities within the municipal bonds space, which had been stunted during the military era of the 80s and 90s. Various state governments like Lagos, Plateau, Rivers, Bayelsa, Zamfara, Oyo, Benue, Bauchi and Cross River States were major beneficiaries of the growth of the debt capital market. Within that period also, issuances by corporates also increased. Several financial institutions, manufacturers, real estate companies took the opportunity offered by the debt capital markets, even with multilateral institutions such as the International Finance Corporation (IFC) participated. On the regulatory side, the increase in transactions in that space meant that the Securities and Exchange Commission (SEC) also became more active doing a fantastic job not only to grow that market but also to ensure that investors are protected as much as possible.
In Nigeria, where many people are not educated on the relevance of wealth preservation and there are cultural challenges on adopting wills, how challenging has it been running a trustee business?

This was one of the biggest challenges we faced some 10 years ago when we made up our minds to grow the private trust space. When we mooted the idea back then, we realised that people were not prepared to discuss the concept of Will as they assumed it involved discussing death. We needed to try and first break that belief. That was what eventually gave rise to our Legacy Series. We started with writing articles in the major newspapers in the country. We then noticed that while this was creating successes for us, we still needed to make a much bigger impact. We at some point decided to go electronic by extending the Legacy Series to radio.

We have continued to run both in the print and electronic media ever since. Some two years back, we decided to go digital, using the various social media platform as our target. All of these have been geared towards ensuring that the right kind of information is spread to the public. Gratefully, we have seen people relax when we discuss estate planning with them. However, a lot still needs to be done as I am not sure we have been able to capture a significant number of the market. The Pension Act of 2014 has also been helpful in terms of providing a platform for Trust companies to market Wills. Like you know, without a Will, it is practically impossible for your heirs or beneficiaries to access your pension funds unless they obtain a Letter of Administration from the probate court. So with this, we are better able to speak to professionals and workers alike on the need to have, even if it is just a Simple Will that captures certain aspect of one’s Estate.

What information do you think Nigerians lack in order to be encouraged to embrace Trusts as a viable means of wealth transfer?
We believe there is a need to create more awareness on what wealth transfer truly entails. Generally, the knowledge of Trust, how it works, the protection around the concept and the parties involved is yet to be fully understood for people to embrace. In addition, people need to understand the distinction and benefits of Trusts as against Wills. This is part of our focus which is covered under our Legacy Series.

Would you say certain government policies have been instrumental in driving Trustee services to both individuals and corporates?
One major issue we can readily talk about here is the cost of transferring assets to a Trust arrangement, particularly with real properties. While this cost varies across states, we typically find a situation where clients feel that the cost is on the high side. So take for example, you acquired a number of properties before you got to discussing trust with us; if you intend to transfer these properties to the Trust duly created by you, you will be paying between five and 10 per cent of the total value of these properties depending on the locations of these properties.

Would you say that certain government policies have been instrumental in driving Trustee services to both individuals and corporates?
One major issue we can readily talk about here is the cost of transferring assets to a Trust arrangement, particularly with real properties. While this cost varies across states, we typically find a situation where clients feel that the cost is on the high side. So take for example, you acquired a number of properties before you got to discussing trust with us; if you intend to transfer these properties to the Trust duly created by you, you will be paying between five and 10 per cent of the total value of these properties depending on the locations of these properties.

How will you describe the growth of the FBNQuest Trustees business within the last 40 years?
Our growth has been quite tremendous. We are quite pleased with our progression in terms of contribution to society, financial performance and scale of operations. When we look back and realise that we have progressed from being a small entity which depended entirely on its parent company for staff, office space and operational facilities to a full-fledged, industry-leading trust company with branches in several regions of the country, one can say the growth has been phenomenal. Let me also add that in terms of the business itself, the company started primarily focusing on the management of Pension Funds. We were pension managers to several textile and industrial concerns back then as well as managing the pension fund of the entire workforce of First Bank in those early days. Over the years however, we have become more focused and better positioned on our core responsibilities. This has enabled us to better leverage our strength and become a very innovative and trailblazing company, moving from selling products, which most trust companies do, to providing bespoke services and solutions clearly tailored at meeting the client’s needs.

What are some of the major roles played by FBNQuest Trustees to drive growth and impact the industry?
One of the company’s key objectives, according to its founding charter was “to position First Trustees as the leading Trust and Asset Management Company in Nigeria”. We are proud that that objective has been largely met and our aspiration is to continue to set the trend and become an invaluable factor in the industry’s value chain. Let me quickly state a few striking impacts we have had on the industry over the years:

First, FBNQuest Trustees is quite distinguished in its reputation as a pioneer mass educator. We are known as an enlightenment Trust house in Nigeria particularly with the popular “Legacy Series”. Through this programme, which features in both the print and electronic media, we have educated thousands of households in the area of succession, inheritance and estate planning over the last decade. We are quite pleased that some of our competitors are taking a cue from our lead as they are beginning to contribute their bit to mass education especially in estate planning, inheritance and succession.

Secondly, based on our professionalism and brand strength amongst peers, we unarguably continue to be the preferred local partner for international and multilateral entities looking to do business in Nigeria. For example, in 2013 when the International Finance Corporation (IFC) issued its up to $50,000,000 fixed rate senior unsecured bonds, the very first bond issued by a multilateral institution in Nigeria, FBNQuest Trustees was trusted to serve as the sole bond trustee on the transaction. AFC and Afreximare other multilaterals that have since issued similar programmes, which we have served on. Thirdly, the forward-thinking legacy handed down by the founding fathers continues to put the wind in our sails.

For example, by 2015 non-interest/ethical finance as inspired by Islamic Finance had begun to gain traction in Nigeria. FBNQuest Trustees immediately took initiative by propagating education about Islamic/ethical finance amongst finance professionals and interested segment of the citizenry. In partnership with some of the most prominent scholars and training firms in the country, we organized successful knowledge sharing seminars on this growing area of finance. It was not a surprise therefore, that in 2017 when the first government issued Sukuk instrument was launched by the Federal Government of Nigeria, FBNQuest Trustees was one of two Trust Houses trusted to handle the transaction.

Recently, FBNQuest Trustees began an awareness programme on Islamic Estate Planning in Nigeria. What is the impact of this type of inheritance planning, and how far have Nigerians embraced it?
I would not call it an awareness campaign. As the most innovative Trust company in Nigeria, we saw a need in that space and we keyed into it. The need arose essentially from the fact that several activities have been going on in the Islamic Finance market. We have had Islamic banks and Insurance companies play their bit; and we had to intensify our efforts in this space. The beauty of Islamic Estate planning is the fact that it is well structured. In terms of acceptance, we are beginning to see an increase in the number of people subscribing to this service. While the level of acceptance is still on the low side, which is typical of services of this nature, our future growth expectations are on the high side.

Are there any challenges in encouraging Muslim clients to embrace this solution?
Like the conventional Trust arrangement, knowledge is a key aspect of Islamic Estate Planning. The structure is also complex and requires a high level of skills if you really want to venture into this. So, in addition to providing education and developing literature that help ease these difficulties, we are also collaborating with experts in that field. We currently have subsisting arrangements with notable scholars and firms in that regards. The collaboration and partnership has been quite successful.
What are some of the firm’s key achievements recorded during the course of this 40year milestone?

We have achieved several first in this regard. Permit me to highlight these briefly. We are the first Trust Company to actively engage and project Estate Planning solutions to stakeholders through the weekly the Legacy Series in both print and electronic media, the first Trust company to publish a compendium on Estate Planning, the first Trust company to host a mass education radio programme on Estate Planning, the first Trust company to introduce Islamic Estate Planning and host an Islamic Estate Planning clinic, the Trust company to act as sole Trustee to the very first bond issued by a multilateral institution in Nigeria (IFC) and the only Trust company to partner and organise a stakeholders meeting on VAIDS and its implications for Estate Planning. Finally, we are one of two Trust companies to participate in the only FGN Sukuk bond. We have contributed significantly with respect to the expansion of the Trust business in Nigeria.

What is FBNQuest Trustees looking to achieve in the next decade?
Technology will play a big part in the Trust business. While a number, of companies, both trust and non-trust companies have ventured into this area, I believe that ours will change the entire landscape of the Trust business. I believe we are aware of the implications of fintech and how it continues to shape the future of finance. We will therefore continue to innovate in our bid to stay ahead.

SOURCE:-https://www.thisdaylive.com/index.php/2019/09/25/awojobi-trusteeship-business-needs-more-awareness/