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FINANCE FOR ALL WHAT’S NEXT & HOW TO GET THERE

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FINANCE FOR ALL WHAT’S NEXT & HOW TO GET THERE. PRESENTATION BY MR. ALBERT ESSIEN REGIONAL DIRECTOR FOR WAMZ, EAST & SOUTHERN AFRICA ECOBANK TRANSNATIONAL INCORPORATED. CURRENT STRUCTURE. The African banking sector has seen some governmental reform however bottlenecks still exist

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finance for all what s next how to get there

FINANCE FOR ALLWHAT’S NEXT & HOW TO GET THERE

PRESENTATION BY

MR. ALBERT ESSIEN

REGIONAL DIRECTOR FOR WAMZ, EAST & SOUTHERN AFRICA

ECOBANK TRANSNATIONAL INCORPORATED

current structure
CURRENT STRUCTURE

The African banking sector has seen some governmental

reform however bottlenecks still exist

  • More focus on government and large corporates
  • Low banking penetration
  • Lack of adequate branch infrastructure
  • Neglect of SME sector
  • Lack of adaptable products for informal SME sector
  • Affordability of minimum deposit requirements
  • High cost of finance
current structure1
CURRENT STRUCTURE
  • Low level of competition
  • Cash orientation of markets
  • Remoteness of communities
  • Ineffective or absence of national individual identification systems
  • Lack of verifiable address systems
  • Lack of depth in financial intermediation
  • Limited coverage of products
how ecobank has addressed these challenges
HOW ECOBANK HAS ADDRESSED THESE CHALLENGES
  • EXPANDING OUR REACH TO IMPROVE ACCESS: Two pronged approach – channels and products
  • Strategic focus on Retail Banking
  • Aggressive network expansion across the group through brick and mortar, ATMs, Kiosks, Direct Sales Agents strategic alliances
  • Ecobank currently in 18 countries, with over 300 branches in West and Central Africa
  • Will be in 25 countries in Middle Africa by 2009 with 1000 branches
  • Provision of convenient, accessible and reliable banking and banking and financial products and services
  • Focus on liability generation and transaction banking
  • STRATEGIC ALLIANCES
  • Partnership with ACCION on microfinance
  • Partnership with AMADEUS to use their channels to sell bank’s liability products
  • Partnership with WESTERN UNION
  • Other “local” partnerships such as EBG’s alliance with TRANSOL
how ecobank has addressed these challenges1
HOW ECOBANK HAS ADDRESSED THESE CHALLENGES
  • IMPROVING EFFICIENCY TO REDUCE COST
  • Setting up an efficient and reliable shared technology platform to deliver cost-effective services across the Group
  • This will be the first of its kind in West Africa
  • SHIFT FROM GOVT/LARGE CORPORATES TO SME SECTOR
  • Retail banking desks in all affiliates to cater to the needs of SMEs and individuals
  • Structured product programs for SME sector: distributorship financing, inventory financing, receivables financing, warehouse financing etc
  • Partnering with relevant agencies to provide training and other support for SMEs
  • Locally developed debt rating model focusing on limited disclosures common to African SME’s
  • Working with Moody’s to develop a West Africa specific database to be used to rate local corporates
how ecobank has addressed these challenges2
HOW ECOBANK HAS ADDRESSED THESE CHALLENGES
  • ADAPTABLE PRODUCTS FOR SME/CONSUMER CLIENTS
  • Introduction of customised Product Programs with local flavour to speed up credit delivery
  • Group Guarantee schemes – lending to Tomato farmers who guarantee each other
  • Guarantees from government and other donor agencies in supporting SME credits
  • Liability products with “affordable” minimum deposit requirements e.g. savings product
  • Mortgage financing
  • Lease financing
how ecobank has addressed these challenges3
HOW ECOBANK HAS ADDRESSED THESE CHALLENGES
  • ADAPTABLE PRODUCTS FOR SME/CONSUMER CLIENTS
  • Non financial based indicators in assessing client risk profile and suitability for credit expansion
  • Collaboration with “Susu” collectors who have in-depth knowledge local communities and help reduce loan defaults
  • Electronic products – ATM cards, payroll cards, gift cards, travel cards, credit cards, debit cards, internet banking
  • Telephone/Mobile phone banking to be rolled out in the near future
steps to further enhance access banks
STEPS TO FURTHER ENHANCE ACCESS: BANKS
  • Need to tap into the vast potential that exists in large informal sector
  • This will require

- new products

- revised documentation requirements

- re-look at minimum deposit requirements

e.g. Mzansi product in South Africa

- new channels e.g corner shops, fuel stations, pharmacies

- The “African flavour”: product branding, signage for branches, use of local people, ambience in banking halls, dress code etc

  • Provision of shared infrastructure in rural areas to be spearheaded by banking sector as part of corporate social responsibility
  • The Challenge is to “THINK GLOBAL BUT ACT LOCAL”
  • How do we build African banking institutions that meet world class standards and portray our “African-ness”?
  • How do we “formalise the informal”?
steps to further enhance access governments
STEPS TO FURTHER ENHANCE ACCESS: GOVERNMENTS
  • Implementation of National ID system
  • Transformation of Land tenure system
  • Improving ICT
  • Provision of legislative, administrative and funding support to network of community based banks to provide points for delivery of banking services to rural communities
  • Improve investment climate to encourage more banks – will ginger competition
  • Use of tax incentives to redirect lending to targeted areas and also to encourage project financing
steps to further enhance access development partners
STEPS TO FURTHER ENHANCE ACCESS: DEVELOPMENT PARTNERS
  • Need to forge partnerships with banking sector
  • Investment in infrastructure development – telecommunications
  • Provision of medium to long term financing for on-lending
  • Technical expertise to bridge skills gap in banking industry
concluding thoughts
CONCLUDING THOUGHTS

“Every morning a gazelle wakes up, it knows it must run faster than the fastest lion or it will be killed.

Every morning a lion wakes up, it knows it must outrun the slowest gazelle or it will starve to death.

It does not matter whether you are a lion or gazelle, when the sun comes up, you better start running”.