‘Challenges in Nigeria’s economy provide opportunities for businesses’

Charles Kie, an Ivoirien, recently assumed duties as Managing Director and Chief Executive Officer of Ecobank Nigeria. Prior to this new appointment, Kie was the Group Executive, Corporate and Investment Bank for Ecobank Transnational Incorporated (ETI). He joined Ecobank in October 2011 as Chief Operating Officer of the then Ecobank Capital, and was subsequently appointed the Head of the Group’s Corporate Banking business. A graduate of Ecole Superieure de Commerce d’Abidjan (Cote d’Ivoire), he has an MBA from the London School of Economics-New York University Stern-HEC Paris, and an MSc from the University Of Clermont Ferrand France. He has attended the Harvard Business School- Advanced Management Programme. Kie, who is fluent in both English and French, spoke with newsmen few days ago on his bank’s growth projection, the banking industry and Nigeria’s economy. Business Editor, ADE OGIDAN was there.

Since you came into the country and took over the management of Ecobank Nigeria, what were the initial issues that confronted you?

First of all, before I come about the issues, I think it’s important to restate the position that this bank has in the country. Ecobank Nigeria by several dimensions is seen as the sixth largest bank in the country. Therefore it has very critical role to play when it comes to not only providing financial services but also supporting the economic development of Nigeria. As an institution, we see our role not just as providing financial services but we also think that we have a role to play when it comes to supporting and participating in the development of each of the countries where we operate.

After a long phase of growth, with the bank successfully embarking on several acquisitions in this market and especially the merger with Oceanic Bank, I think the bank has come to a point where it has to clearly think about how to achieve the leadership position in this market. It is in that frame that it was told that after my predecessor has spent five years in his position, which is the rule we have in our group, a proper succession plan should be put in place, so that the team that would come would have the mission of bringing Ecobank Nigeria to leadership position in the banking industry.

So, I wouldn’t talk too much about the issues, I would rather talk about the opportunities that we see ahead of us. Because, obviously, since I came, I have been hearing a lot of people talking about the challenges the country is going through, like the foreign currency issues and the oil price going down. But as you probably know, whenever you are faced with challenges, you also have to look at the opportunities that come along with those challenges. And that requires at least two things: The ability to adjust to the conditions that are prevailing; and the means to prepare for the opportunities that will come with what the economy will offer, whenever it comes back to more normal conditions. And this is what I and my team are working on in order to precisely drive Ecobank Nigeria to that leadership position.

Specifically, which strategies are you trying to put in place to achieve that?

I could spend a lot of time talking about detailed strategies, but I don’t think this is necessary at this point. But as you can imagine, when it comes to driving change, it is important to understand the kind of vision that we have and what we are trying to achieve.

And what do we want to achieve?

First, it’s important for us to say that we want to be the most respected bank in this country. Two, I think it is important to also state that we also want to be a leading bank in this country, and when I say leading bank, it means being ranked 1,2, or 3. Three, we want to be winning in the markets where we operate, and precisely looking at the opportunities that we have in front of us. The opportunities in Nigeria are enormous, especially looking at the large population and the number of consumers who are still largely unattended to.
The bank penetration rates are still very low, and therefore, one of our key strategies is to make sure that we position ourselves to really tap into the opportunities that we see in that space.

The second thing obviously is to make sure that we attract with our customers, the kind of attention that they deserve. What they need and what they expect to see from us is what should be driving us as opposed to just coming with classic long standing products without any innovation. So, the second element is to provide innovation in the space of serving our customers and ensuring that we can effectively penetrate sustainably when it comes to serving them.

The third aspect is that, because we also have responsibility to create value for our shareholders, it is important that we significantly improve the productivity of our staff and run this business in a most profitable manner. This will require that we take steps to improve operational efficiency, to reduce the cost of transactions, thereby improving the profitability of the bank.

For an organisation like ours to be nimble, it has to have a structure that is really in accordance with what the best practices in the world. And in doing that, when we come to a situation where we see imbalances or where we see that we are by far overstretched compared to competition, it’s our role to make sure that we can bring the structure that we have at the lowest level possible when it comes to people and that we also improve the productivity of our people, so that we can have a situation that we can manage. At the same time, it is important to also say that while we had to let go a few people, we have promoted almost six times more people whom we found were good performers, who had talents we wanted to retain, and that is the kind of thing we have to do going forward. We attract in Ecobank, the best talents in this market and the ability to retain and grow them is what really drives everything that we do.

Can you just briefly explain what you mean by being “most respected bank”?

It’s not just good enough to be a profitable bank, also not just good enough to have good service. It’s also extremely important to abide by the regulations and operate with the highest standards of the industry. The bank acquires trust and respect when such regulations and rules become part of the DNA of the whole organization. This is what sets it apart when it comes to knowing which bank to go to, even though they can be the most profitable in the industry. So, it’s not just about the bottom line. It’s about creating an environment where people have ethics, know what compliance is all about; where people know the regulations and set themselves the highest standards to operate. With this, we want to become the most respected bank because we want this to be fully part of what we achieve in this industry.

We learnt that you are trying to convert some contract employees to permanent staffers. What guiding philosophy brought about the initiative and how are you strategising towards this?

Yes, indeed, we have made that decision because we still have quite a number of what we call outsourced staff. We thought that it wouldn’t be right having so many people who are seen as being outsourced without trying to find out whether in that population, we have real talents whom we could convert into permanent staff and therefore, we decided that we would run a series of tests; identify those talents, ensure that there is a transparent process put in place and at the end of that process, some of them will be converted into permanent staff.

Talking about expansion strategy, are we looking at Ecobank opening up more branches or going into acquisitions if the opportunity emerges?

One topic that is dear to my heart is financial inclusion. And when it comes to financial inclusion, it is important to find the best means to achieve penetration of financial services, not branches. It is not about having a wide spread of branches across the country that makes a difference, it is about finding a means to actually reach anyone in the population, without having to open a branch. So, obviously, because technology has evolved, the means of achieving that will be alternative channels but not branches. What that will require is that we design a strategy that addresses each segment of the population. We do have a microfinance activity; that microfinance will be developed in such a way that we make ourself known and perceived as a leading microfinance institution in this country. Obviously, the number of branches that will be dedicated to that activity will be defined, agreed on, duly approved and then we will roll out a strategy to touch the population that today requires microfinance, for example, as a means to have access to financial services.

For all the others, obviously, technology will drive it. Social media, analytics, and cloud are items that today drive what we do when it comes to operational efficiency and inclusion. And as a bank, these are the elements that we will embed into our technology strategy, to precisely achieve that financial inclusion.

Therefore, the whole of the technology strategy that we have in place will be built around those items; social media, analytics, cloud.

How do you intend to drive this retail banking with the hope of breaking the barrier and reaching the unbanked, under your financial inclusion agenda, considering the fact that the purchasing power of the average individual is being gradually eroded?
Let us move away from the idea that populations that are perceived not to have a high purchasing power do not have needs when it comes to financial services. How many people in the rural areas know how to send and receive money? A lot! In fact, more than we even think about. The mistake that has been made for a long time was to think that while talking about bank penetration, we assess in terms of the bank accounts that people have and not about bank ability and about financial access. What we are talking about today is to make sure that whoever has disposable income can also have access to financial services, and as you know, mobile banking is a key means to achieving that. Obviously, we are investing in mobile banking and in solutions that will allow that accessibility to be made available to the population. Indeed, when we think that the current situation is what can prefigure what will happen later, for me, it’s not exactly the case. The country is just going through a phase, but we should understand economies are cycle related. It’s just a cycle and we just happen to be at the bottom of the cycle. But at some point, there will be a rebound. We now need to think about what we are going to do to precisely to attract those people in the financial sector while we are the bottom of that cycle, so that we can effectively take advantage of the upside whenever it comes.

Can you give a preview of the bank’s 2015 financials?

Well, we have just closed the account and they have not been published yet, so it will be difficult for me to actually give you. But one thing is clear: If you look at the industry, based on the challenges the country has been facing, and because of the fact that this country has a large part of its economy that is related to oil and gas, not too many countries would have absorbed the shock of seeing 70 per cent of their resources going away, without literally tumbling. And because the banks have been financing the real sector, particularly the oil and gas industry, it can only be expected that the situation will have an impact on the portfolio of banks.

Is the bank likely to exceed the threshold of five percent, or making a loss or breaking even?

No, I’m just saying that the situation the country has gone through can only translate into a deterioration of the credit portfolio, particularly those related to oil and gas.

What is the contribution of Ecobank Nigeria to the group?

Depending on the dimension, we can say between 40 per cent and 45 per cent.

In how many countries is the group currently operating?

We are in 33 countries where we have full licences. Out of the 33 countries where we operate, obviously Nigeria is the largest in terms of its size, contribution to the asset size and the number of people that we have. That is the reason why it is so important for the group that Nigeria takes leadership position.

And how many people are employed in the group?

The group today has about 20,000 people. Out of this, Nigeria has 9,000 people.

You spoke of being impressed with the financial inclusion programme in the country, as it offers a lot of opportunities for banks. But there is one area which has been contentious over the years, and that is the interest rate regime which has been described as business-unfriendly. What’s your take on this?

I think people should understand that interest rates are not artificial. It is about supply and demand and therefore, there is obviously an intrinsic link between how much money is supplied in the economy and the rate that it can be offered. The question here is not so much about rates, it’s about competitiveness; how we make sure that this economy remains competitive, and how we make sure that industries operating in this country remain competitive.

You give the impression that the bank will try to tap into the opportunities in the retail market and also allow technology to drive its growth…?

[Cuts in] It’s not an impression, it is the case, the reality.
What then is your strategy in terms of training and development programme for your staff in respect of this new vision?
A lot of people talk about customer service, but not all of them manage to translate what they know about customer service into reality. My view is that to achieve excellence in customer service, the teams have to be hired, trained, and framed to achieve the level of customer service that we want. And therefore, it can only become part of the DNA of the organisation; which is what we want to focus on to make sure that the people we attract, train and retain are in fact moulded to fully embrace the culture we want to build when it comes to customer service.

Analysts have been suggesting that there would be a rise in mergers and acquisitions in the banking sector this year. Is Ecobank looking that way?

Let me just make a clear statement: As far as Ecobank is concerned, the group as a whole has come to the end of its geographic expansion and its inorganic growth. At this point in time, we are not talking about acquiring a bank or merging with a bank. This is not on the agenda. The only thing we want to do now is to make sure we consolidate and grow organically, strongly enough to attain the leadership position that we have set as our objective. This is what will drive everything that we’ll do in the next two years

What is your vision for Ecobank Nigeria in terms of market share and product development by the time you’ll be leaving?

We are taking a five year horizon as the least time to see the full impact of all the strategies we have put in place, and we think that by 2020, we should be in the leading position, that is, number one, two, or at a minimum, number three in the Nigerian market.

Since I came, I have been hearing a lot of people talking about the challenges the country is going through, like the foreign currency issues and the oil price going down. But as you probably know, whenever you are faced with challenges, you also have to look at the opportunities that come along with those challenges.