A Banker’s Perspective on Developing Africa

Published on by Joey

By Jemila Abdulai on 03 March 2010

It takes passion and vision to succeed in Africa’s challenging business climate, and Arnold Ekpe has both. Along with 13 of his businesses colleagues, Ekpe transformed Ecobank Transnational Incorporated from the first African bank holding company in 1988 into what he calls “the first pan-African bank.” And that’s just the tip of the iceberg.


Since 2005, Ekpe has been the chief executive officer of the Ecobank Group, a full-service banking institution with operations in 30 African countries and 11,000 employees. He has graduate degrees in mechanical engineering and business administration from the University of Manchester and over 30 years experience in both the African and international financial markets.


The Ecobank chief believes that challenges are opportunities waiting to be seized. He knows what he’s talking about. Ecobank was started in Togo in the “doom and gloom” of the 1980s at a time when state and foreign banks dominated the African financial industry, and the prospects for a private multinational bank were practically inconceivable.


Ekpe and his team decided to adopt a competitive regional approach to banking by carving out a niche for themselves: they targeted “middle Africa.”


“Ecobank did not start as a single country bank and evolve into a Pan-African bank,” Ekpe said. “Our strategy, our vision, our mission, from origin, was that of a Pan-African bank.”


Since its inception, Ecobank has established itself as a success story in Africa. And, despite the odds, it continues to grow.


In 2008, Ecobank “set out to raise a humongous amount of money” from its shareholders.


“Unfortunately, Lehman Brothers collapsed while we were still in the market and the market changed,” Ekpe said. “But we were able to raise $550 million from African investors, and that came as a big surprise to me because I did not believe that we could do that successfully under the circumstances.”


According to Ekpe, this reflects the enormous opportunities within the continent. Devex sat down with the Group’s CEO during Kellogg School of Management’s first Africa Business Conference to discuss what the secret to doing business in Africa is.


You are the CEO of a bank with operations in 30 countries. What is your philosophy on development?


I think that’s a very easy question to answer. We believe passionately in the future of Africa. We believe passionately in development being a private as well as a public objective. And we believe very actively that Ecobank should be part of that process.


Ecobank is described as a “pan-African bank.” What, in your own words, is a pan-African bank?


I think a pan-African bank is a bank that is present in a large number of African countries and that has a pan-African identity.


Aside from providing traditional services, Ecobank undertakes investments in development projects through the Ecobank Foundation. Can you give some concrete examples of these projects and the impact they have on development in Africa?


Ecobank Foundation was part of Ecobank’s mission to not only build a world-class African bank, but also to contribute to the countries in which we operate in. We set aside up to one percent of our profit after tax, and that is applied by the foundation – which is independent from the bank – for projects relating to women, children, culture and education.


For example, we have the Ecobank annual Sembene Ousmane award for film and art, in honor of the famous Senegalese filmmaker, the pioneer in filmmaking in Africa. We’ve supported the Pathfinder project in Mali, for example, which is a project for putting women into useful vocation, as opposed to having them unemployed or perhaps employed in activities that may not be positive to their development. And I can give you several other examples.


What kind of partnerships does Ecobank currently have and which partnerships are you looking to build upon?


Our alliances have been driven by three factors. One is to enter certain markets, have access to certain products, or have access to certain skills in a cost-effective manner. For example, we have an alliance with Accion on a microfinance basis and that is what we’ve been using as a basis to expand our microfinance presence in Africa. And incidentally, we’re probably the leading microfinance bank in Africa. We do have, in the case of South Africa, an alliance with Netbank of South Africa. And that alliance is to enable both institutions work together to build the leading banking champion in Africa. Netbank brings a certain knowledge of South Africa, and we bring a certain knowledge of the rest of Africa. Together, I think we’re stronger than individually. So those are the sort of alliances that we have. We do have an alliance with Bank of China as well. And that allows us to access Chinese capital and Chinese companies, and also allows Bank of China to also access the 29 countries in Africa in which we’re present.


Have you formed alliances with smaller non-governmental organizations? In what way?


We haven’t had alliances in the formal sense of it, but we’ve worked with a lot of NGOs. In those cases, we’d probably look at specific situations where we could work with NGOs, but we haven’t had a formal alliance in a commercial sense; in the way I described earlier.


With the onset of the global economic crisis in 2008, many African banks were cushioned from the initial effects because they may have been less integrated into the global system. But analysts project that Africa’s financial institutions will probably be affected by the global financial climate. How is Ecobank gearing up to protect itself?


I don’t think African institutions are necessarily cushioned from the global economic and financial crisis. I think the impact we’ve felt certainly in Africa, to a greater or lesser extent depending on how it’s managed. For example, Nigeria suffered significantly from the process and all the banks there have suffered and Ecobank has not been an exception.


At Ecobank, we’ve done several things. One, firstly we have significant increases in our capital as a group. We’ve taken more provisions than we had done in the past to acknowledge the fact that some of the assets have been impaired. And thirdly what we’ve done is that we’re luckily at the final stages of our expansion program. So we’re now focused more on consolidation and optimization rather than expansions. So we’ve managed to try and keep back costs on things like that.


Having worked extensively in the African and international finance markets, what would you say are the key differences?


I think a very clear difference is that the African banking industry is not as sophisticated as the international industry. But the African banking industry on the other hand is grower much faster. So the key to success in the African banking industry is growth rather than cost containment. But for me personally, I think it’s making a difference. I think people who work in Ecobank and people who work in Africa generally make a difference. And if you have a passion to make a difference then banking in Africa is actually a very, very fulfilling profession.


You have succeeded in turning Ecobank into one of Africa’s premier banks. What advice do you have for small and medium enterprises and local organizations that seek to persevere in the challenging climate in African countries?


Well, first of all I think I should point out that Ecobank is team work, so I did not grow it alone. I grew it with a team of very capable and very committed people right across the institution. I think if there’s any message that we’ve learned from that, it’s that, first of all, you must take a long-term view. You must never be discouraged by challenges but try and convert them into opportunities. And above all, you must have a passion and a belief in Africa.


The U.S., a key donor for African countries, is undertaking a reform of its foreign aid machinery. What is your opinion on foreign assistance?


Quite frankly, my view is that Africans should get as much help as they can get. The U.S., the Chinese, wherever it comes from. What is important is not so much the aid, but how Africa applies the aid. We cannot always blame the West for misapplication of aid by Africans.


Experts report that Africa experienced its largest growth within the last decade. What would you attribute to these advancements?


I think part of the growth obviously is due to globalization, as you know. And improvement in the terms of trade has been positive for Africa. Part of it is also due to increased capital inflows into Africa. Especially from China and the large emerging economies that require Africa’s resources. So my sense is that Africa’s growth and Africa’s development has been dependent largely on the fact that these sorts of changes are happening. Within Africa itself, there is better governance. There is the belief that, you know, things should change and things have to change. I think that’s powering change in Africa.


What do you think are Africa’s top three strengths?


I think you have to be very careful what you call strengths. There are real strengths and there are potential strengths. I think Africa has the natural resources. Okay, that’s a major strength. Africa has the people. But that’s a potential strength, it’s really not a real strength right now. And I think, thirdly, Africa has the market. Again, it’s a potential strength but it’s not really a real strength.


What is your vision for development in Africa?


Well I’m biased. I’m pro-Africa. I have spent my life working in and promoting Africa. I believe that Africa is the future. I think that all the signs point to Africa being the future. And in spite of whatever they might want to say in the international press, the signs, the data we have, is that over the last 20 years, significant progress has been made in Africa. So I think, very clearly, you won’t go wrong betting on Africa for the future.


What can people expect from Ecobank in the near future?


I think the first thing is that Ecobank is close to the expansion phase right now. We’re not focused on expansion anymore. We still have a few markets to cover, but that is not the major focus, that is not the priority. The priority for us now is on several fronts. One is improving our processes, improving our technology, and improving our people. Because we think that only by doing that can we translate that into sustainable performance.


Anything else you would like to add?


I think the only thing I’d like to say is that above all, only Africans will develop Africa. Foreigners can only help us. So every single one of you out there, and every single one of us in Nigeria and other African countries, must work together to have as an objective the development of Africa. I speak as somebody who is a pan-Africanist, somebody who has been working in Africa for the last 30 years. No country in the world is ever developed by foreigners. Only the nationals and the people develop their country.



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