Sparkle Bank: Will Uzoma Dozie’s new venture succeed after Diamond Bank debacle?

Uzoma Dozie

 

 

 

 

The flak he has taken, and perhaps continues to take, for midwifing the collapse of Diamond Bank  hitherto one of Nigeria’s biggest banks, is perhaps unfair. Uzoma Dozie, son of the defunct Diamond Bank’s founder, Pascal Dozie, had only just been a big man’s son, who was rarely equipped for the rigours of managing a bank, THE WITNESS writes.

 

His father, who wanted his son to be in charge, prodded him on to take the role of managing director and CEO (of Diamond Bank), which he was evidently ill-equipped for. His poor decisions, not least an alleged attitude problem, coincided with dad’s bad investment choices, to deliver a fatal blow to the bank.

 

Today, Diamond is history, subsumed in Access Bank, and Uzoma has moved on to other things, being today, the proud founder of Sparkle, one of Nigeria’s emerging digital microfinance banks, THE WITNESS learnt.

 

In October last year, Sparkle raised $3.1 million funding to scale operations, and has continued to make a bit of steady progress in its stated pitch of providing financial, lifestyle and business support services to Nigerians.

 

“We’re quite different in a way because instead of separating financial services from lifestyle, we’ve tried to bring them together, especially as we’ve seen that more people are beginning to lead more digitally-led lives,” Uzoma had told TechCrunch in an interview.

 

“It means that we don’t see our customers from accounts, payments, deposits or credit perspectives, but from how can we help them do what they want to do at any particular time.”

 

The CEO appears to be doing a good job of his new venture. As at October last year, Sparkle had over 40,000 customers on the individual banking side and 2,000 businesses, and its $3.1 million raise had come on the back of the launch of Sparkle Business, aimed to acquire a different set of underserved users, notably small and medium businesses.

 

The launch, Uzoma had said, caught on well in its category, and has access to inventory and invoice management, tax advice, and payroll and employee management services.

 

Today, Sparkle Bank’s app has over a hundred thousand downloads on Google Play Store, and a significant number on Apple Store, which suggests growing usage.

 

However, the ghost of Diamond has reared its head again. A new Sparkle promotional video featuring Uzoma as the bank’s face has got analysts talking. The argument is that as one who “was responsible for Diamond Bank’s collapse,” it is unethical for him to emerge as the face of another financial institution less than four years after the bank failed.

 

“Usually, I should say that is his business, but it is not,” Orjiugo Okere, a stockbroker said. “If he wants to make a success of the latest venture, Uzoma should take the backseat, literally, and drive the process from behind the scenes. He loves banking, notwithstanding, but he does not have a good standing with the banking public.”

 

Perhaps there cannot be any escaping the Diamond Bank baggage for the Sparkle CEO. He will always be remembered for being in charge of the bank when it collapsed, and his face would continue to represent that failure. He may have learned his lessons, but evidently, he can’t undo the past, and that past may continue to be a clog on the wheel of his new venture.

 

“No doubt, Diamond Bank’s failure will continue to hang on his neck,” said Mr. Ola Kayode, a financial analyst. “If he continues to present himself as the face of Sparkle, many people will have reservations. It’s the fact of life.”

 

Is Uzoma Guilty as Accused?
It is hardly in doubt that he played a role in the bank’s eventual collapse. Some of the bank’s erstwhile employees had alleged that he practically killed the morale of workers and had a nonchalant attitude to business.

 

However, while his attitude must have been a huge contributor, it was perhaps more of investment decisions by his father. A combination of bad leadership, poor risk management, the board’s lack of independence may have ultimately collapsed the bank.

 

After Dr. Alex Otti, its former CEO left in 2014, Pascal saw an opportunity to finally take full charge. Working with Uzoma, they were said to have purged the bank of such principled members as Igwe Achebe, Ifueko Omoigu-Okauru and Chief John Edozien and replaced them with palace hands who were too timid to provide the requisite checks and balances.

 

But the bank’s trouble had begun when a corporate international shareholder, Actis wanted to divest its 16 per cent stake, and Pascal out to prove a point, went against the sound advice to get a new investor, to rather take a $125 million facility from Guaranty Trust Bank, pledging his flagship investments in MTN and creating a basket of securitization which included even his personal residences.

 

Things did not, however, go as planned. The economy plunged, the naira lost value. Exchange rate weakened, from the N160 per dollar in 2014 when the transaction was done to about N500 when Guaranty Trust Bank Limited called its loan, the bank’s share price plummeted and Pascal was in real fix.

 

He became increasingly unable to service the facility with GTBank and GT Bank moved to foreclose his assets to recover its money, prompting him to finally opt to offload the bank to save his other businesses.

 

– The Witness