In 1993, Dr James Mwangi walked away from a promising career at one of Kenya’s largest banks, to join the Equity Building Society. Three decades on, few could have predicted his entrepreneurial leadership would work to transform not just Equity but the financial services of the region. FORBES AFRICA meets the man behind East Africa’s billion-dollar banking empire.



Dr James Mwangi, Managing Director and CEO of Kenya’s Equity Group, is a captivating figure. His trademark smile and down-to-earth demeanour set him apart from the traditional banker. But Mwangi isn’t your run-of-the-mill chief executive. His journey to the C-suite has been fuelled by sheer resolve, belligerent bravado, and an uncanny concern for his customers.



It’s hard to believe that the force behind East Africa’s pioneering billion-dollar banking brand grew up in circumstances far removed in rural Nyagatugu, a tiny village flanking the Aberdare mountains in central Kenya.



“I am a product of my upbringing [and] it has [had] a significant influence on how I see things today&#8230; [but] my village of Nyagatugu was not enough to say that I conquered Africa,” declares Mwangi from his office at Equity’s corporate headquarters in Upperhill, Nairobi’s swanky business district, in an interview with FORBES AFRICA in July.



The banker describes his childhood as humble, dignified but fraught with difficulty. Born in 1962 to peasant farmers, Mwangi’s parents had no formal education and lived apart from what he calls the ‘monetary society’. As a boy, he had never met anyone who owned a bank account or even fathomed being served by any of the country’s banks which, at the time, only catered to a privileged few.



“It was a simple life. As boys, we grazed cows and goats&#8230; we hunted wild animals like rabbits. Growing up, we didn’t know [if] people were ‘well-off’ or [if] people were ‘poor’, we were all equals. [As a community], we built houses together, tilled the land together, and even socialized together at village dances,” he reminisces.



While it may seem contradictory, it was this deeply communal atmosphere that inspired the business that Mwangi built.



Founded in 1984, Equity did not start its commercial life as a bank but as a mutual society trading as the Equity Building Society (EBS). Back then, as Kenya was forging a new national identity, most banks were hesitant to provide its vast population with even the most basic financial services. As an answer, indigenous building societies took root. However, while buffeted by good intention, these fledgling financial institutions were poorly run, leading many to ruin.



<blockquote class="wp-block-quote">&#8220;I realized that there is no wealth without work! Entrepreneurship means folding up your sleeves and working. Profit is the reward.&#8221;</blockquote>



In the 1970s, while these societies were emerging, life’s challenges had already begun to shape the young Mwangi. Shortly after his birth, his family had suffered a major tragedy with the untimely death of his father. His mother, Grace Wairimu, was not only widowed but was left with seven children to raise on a meager income.



Never having gone to school herself, Mwangi’s mother, who was an anchor throughout his life, was adamant that all her children, including her daughters, would study; a controversial decision at the time. And she was not prepared to compromise.



To achieve this dream, Wairimu imposed a strict code of discipline in her household whilst encouraging an entrepreneurial fervor in her children. The family sold milk, tea, charcoal, and fruits to stay afloat. It was an important training ground for the young Mwangi.



“We were vending to eke out a living, to pay school fees, and to feed the family. My instinct for commerce [came] from [there]&#8230; I realized that there is no wealth without work! Entrepreneurship means folding up your sleeves and working. Profit is the reward,” he explains.



Nyagatugu was where Mwangi really cut his teeth in business. Then, owing to his academic talent, he had the opportunity to study the theory that governed his early entrepreneurial experiences, on scholarship, at the University of Nairobi several years later.



“Taking milk to the village restaurant or selling fruits to the village middleman, who would take them to [the market] in Nairobi, introduced me to the concept of ‘supply chains’. I realized that I was the ‘primary producer’ with my mother, the ‘middleman’ dealt with logistics, and then an ‘aggregator’, who was our face in the marketplace, played on volume and made more money than everyone else. The owner of the shop received [goods] from the ‘aggregator’ and sold them to ‘consumers’, through the ‘brand’ of his shop. I [finally] understood how the value created [in the supply chain] was shared.”



After university, Mwangi began his career as an auditor with Ernst &amp; Young in Nairobi. Four years later, he moved to the now-defunct Trade Bank Group. Then an innovative financial services firm, founded in 1985, it quickly gained prominence as Kenya’s first attempt at mass-market banking.



Over a brief career at the bank, he climbed the ranks from teller to Group Financial Controller.



However, just as things were looking up, a familiar face came calling. In 1993, the EBS was in trouble, with debt on its books. Founder and Chairman, Dr Peter Munga, had known Mwangi as a boy and was convinced that the young banker was his only hope. By then, Equity had been declared insolvent and was facing dissolution.



“We came from the same village where I had developed the reputation of a ‘brilliant boy’. I was the first boy [from Nyagatugu] to get a university degree. I was also a youth leader in the church. In Nairobi, I had risen up to be a director at Trade Bank by the age of 28 [where] I had a reputation for being a sharp young man who was good at analytics and bold decision-making. All of that combined to package me, in the eyes of Dr Munga (and other EBS executives), as a credible, reliable person,” he says.



Munga’s confidence was not misplaced. Eager to oblige, 31-year-old Mwangi left his job at Trade Bank to take on a role as Director of Strategy at the stagnating society.



“I had gone with [EBS executives] to Central Bank because they had been condemned with closure. Suddenly, the Governor looks at me, as I try to plead their case for more time, and he says [to me], ‘if it was you who was talking of turnaround, then I would give you the opportunity’. I was between a rock and a hard place; if I hadn’t made the sacrifice to join them, then they would [have had] to close,” recalls Mwangi.



<blockquote class="wp-block-quote">&#8220;I had a singular mind to build a bank for my mother who [I saw] bury savings under her mattress.&#8221;</blockquote>



So, in a seemingly fool-hardy move, the young banker agreed to take on mounting debt, unpaid salaries, dwindling membership, and declining morale at Equity. He even remortgaged his own house to inject some desperately needed cash into the business, inextricably linking his fate, and hard-won reputation, with that of the beleaguered building society.



&nbsp;Given a carte blanche to transform the business and with no option of turning back, Mwangi was determined to meet his mandate.



“I had made the decision from an emotional aspect [and] I didn’t want to fail them. But I hadn’t realized that Equity was in [such] a bad state. It had not done any [debt] reconciliation, it had not published accounts for three years, and it had not had a board meeting for [over] two years. With everything at stake, it was only my entrepreneurial skill that would [eventually] get us out of insolvency.”



Mwangi’s reforms were more an attempt at reinvention rather than resuscitation. He began by re-training the organization’s remaining staff in the ethos that would later come to define them – customer care.



“We didn’t have money&#8230; the currency that created Equity was a passion to please the customer. I had a very small staff, none of whom had gone beyond Form 4 [Grade 10]. They didn’t have the skills but they had enthusiasm. We didn’t [even] have a meaningful product so we had to give our clients an experience that they had never had anywhere else and that they were willing to pay for,” he continues.



According to a Lagos Business School case study, Mwangi ensured that, in this way, his 12,000 customers were accorded with the dignity they deserved, breathing new life into the institution. This had an impact on both sides of the counter. Customers felt valued and continued to patronize the building society. On their side, staff felt confident and empowered even whilst working long hours.



&nbsp;In 1997, things looked promising. Equity had cleared its debts, encouraging staff and customers to begin purchasing shares in the company. This time around, Mwangi made sure that records were meticulously kept.



<blockquote class="wp-block-quote">“We didn’t have money&#8230; the currency that created Equity was a passion to please the customer.&#8221;</blockquote>



According to its website, Equity’s client accounts had grown exponentially from 32,000, in 1997, to 482,000 by 2005. This exemplary track record allowed Mwangi to raise capital from the European Union (EU), the International Finance Corporation (IFC), and other institutional lenders to introduce computing technology to the building society, paving way for his ambitious expansion plans.



“Transaction times dropped from 30 minutes to five, queues disappeared, the process, including signatures and so on, was automated. Equity was now on a rapid, but solid, growth path,” notes Mwangi in a 2012 interview to African Business.



Steady growth made the building society’s transition to Equity Bank, in August 2004, possible. Two years later, the bank listed on the Nairobi Securities Exchange (NSE). Bolstered by further investment, Equity made its first foray into the region, listing on the Uganda Securities Exchange, as EBL in 2009.



Within five years, the bank was operating subsidiaries in Rwanda, Tanzania, and was among the first to open branches in South Sudan, Africa’s youngest country. By 2019, the bank had transformed, yet again, becoming Equity Group Holdings, with customers across East Africa.



In 2020, three decades after Mwangi made his debut, the Equity Group boasted a market capitalization of KES128.1 billion (approx. $1.3 billion) making it the largest banking outfit in East Africa, out-rivalling its closest competitors.



Equity’s tremendous transformation is due, in large part, to what is now known as ‘The Mwangi Model’. Thanks to this ground-breaking framework, Mwangi has been able to introduce a bulk of East Africa’s low-income population to the financial services sector. It is a model of inclusion that thrives on high volumes, low margins, and mass-market appeal.



“I realized [after leaving Trade Bank] that it was not the bank of the common man. My mother would have never been able to [open] an account there. Nobody in my village would have qualified for an account either. In fact, not even [EBS Founder] Dr Peter Munga would have qualified. I had a singular mind to build a bank for my mother who [I saw] bury savings under her mattress,” reveals Mwangi.



At the time, this drive to serve the so-called ‘unbankable’ population had only been attempted once before at the Grameen Bank founded in 1984 by Nobel Laureate Muhammad Yunus in Bangladesh. However, in Kenya, the model was risky, untested, and needed modifying.



“To be honest, [in 1993] I didn’t have a very good view of what Muhammad Yunus was doing. His [main product] was group lending, Equity started out with individual lending. I simply wanted to remove the barriers for people, like my mother, in opening bank accounts. We could do better than a mattress!”



This revolutionary perspective blew open the Kenyan banking sector. By eliminating monthly ledger fees, minimum balance requirements, and easing withdrawal limits, Equity ended up engineering a product that it could bank on.



By 2000, Mwangi says, Equity began signing on an average of 100 new clients per day. Going directly to its customers, initially, in weekly marketing campaigns in rural towns and villages, the bank eventually developed a network of third-party ‘banking agents’ to provide services across Kenya, even in the most far-flung corners.



Today, with mobile banking, Equity’s customers benefit from yet more convenience with access anywhere, any time, and at a minimal cost.



As a result, Mwangi’s entrepreneurial reward has extended far beyond profit. The ‘Mwangi Model’ has been recognized and analysed in case studies at some of the world’s most prestigious business schools including Stanford, Columbia, Harvard, and the Lagos Business School.



He is also the holder of numerous honorary degrees and the winner of countless awards for his commercial prowess. The first, and most memorable, he says, was the ‘Global Vision Award’, which Mwangi won alongside fellow micro-finance trailblazer, Muhammad Yunus, at the 2007 G8 Summit.



In 2012, after clinching the title of FORBES AFRICA ‘Person of the Year’, the Kenyan banker triumphed over 58 global business leaders to become the first African ever to be crowned Ernst &amp; Young’s ‘World Entrepreneur of the Year’ in Monaco.



Mwangi, as Founding Chairman of the Equity Group Foundation (EGF), is also a prolific philanthropist. In May this year, EGF, with the Mastercard Foundation, pledged KES1.1 billion ($10.3 million), to Kenya’s Covid-19 response and to provide personal protective equipment to frontline medical staff in public hospitals. A portion of the endowment, KES300 million ($2.8 million), was a personal donation from the Mwangi family. Since March, the banker has been a member of the Covid-19 Emergency Fund Committee, a 10-member board peopled by the country’s most accomplished private sector leaders, convened by President Uhuru Kenyatta.



A key feature of the ‘Mwangi Model’ is its resilience which the current pandemic is putting to the test. In June, Equity saw its acquisition plans, through the highly-anticipated Altas Mara deal, in Rwanda, Tanzania, Mozambique, and Zambia, halted. Instead, Mwangi announced that the Group was doubling down and would take a more conservative approach to see through the crisis. In an unprecedented move, shareholder dividend payments were also delayed to safeguard liquidity reserves.



“Covid-19 has been a turning point. We have analysed over 1,200 years of data, starting with the bubonic plague, to understand this [Covid-19] pandemic. The only way we can survive this is if [our] business is agile and resilient enough to navigate these times.”



While much is still uncertain, the pandemic has had some positives for Mwangi, a proud husband and family man.



“I am not a very outgoing character so ‘working from home’ has been very exciting for me. I’ve been able to spend more time with my family, which is important for me,” he says.



On another high note, Mwangi jests that Covid-19’s most visible impact has not been on his balance sheet but his waistline.



“I have been making the best of this crisis. Instead of 30 minutes, I am now able to put in at least two and a half hours at the gym. When I look at myself [in the mirror], my body is looking much better!”



Despite the present tumult, Mwangi insists that the fundamentals remain unchanged and only the things that matter get him up, at 3AM, to start his day.



“Seeing a smile in people’s lives still makes me happy. I’ve lived a full life and it’s humbling to know that the child my mother raised has not changed and [with the values she taught me] I’m able to share what I have with others. Thirty years later, it’s been a journey of changing one life at a time.”&nbsp;



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="683" height="1024" src="https://www.forbesafrica.com/wp-content/uploads/2020/08/frbs01-07-2020-0073-683x1024.jpg" alt="" class="wp-image-46892" srcset="https://cms.forbesafrica.com/wp-content/uploads/2020/08/frbs01-07-2020-0073-683x1024.jpg 683w, https://cms.forbesafrica.com/wp-content/uploads/2020/08/frbs01-07-2020-0073-scaled-300x450.jpg 300w, https://cms.forbesafrica.com/wp-content/uploads/2020/08/frbs01-07-2020-0073-scaled-600x900.jpg 600w, https://cms.forbesafrica.com/wp-content/uploads/2020/08/frbs01-07-2020-0073-200x300.jpg 200w, https://cms.forbesafrica.com/wp-content/uploads/2020/08/frbs01-07-2020-0073-768x1152.jpg 768w, https://cms.forbesafrica.com/wp-content/uploads/2020/08/frbs01-07-2020-0073-1024x1536.jpg 1024w, https://cms.forbesafrica.com/wp-content/uploads/2020/08/frbs01-07-2020-0073-scaled.jpg 1707w" sizes="(max-width: 683px) 100vw, 683px" /></figure>



James Mwangi’s 10 Tips For Entrepreneurs During Covid-19



1. Stick and focus on purpose, use essence to filter dos and don’ts.



2. Protect the public license. Society will never forget the side or position you took when you had the chance.



3. Support the supply and value chain and recover. Bend backwards to accommodate your business’ unusual circumstances.



4. Adopt a shared prosperity model using social and impact investing.



5. Adapt to ‘the new normal’. Be aware Covid-19 might have irreversibly changed your world in terms of resource reallocation, priorities, tastes and preferences.



6. Be part of the solution to our shared global challenges in humanity, health, and livelihoods. Don’t run away from the reality your customers are facing.



7. Focus on the opportunities of the fourth industrial revolution like digitization, big data, technology and innovation.



8. Adopt an appropriate leadership style for these uncertain times. Provide visibility, hope and answers to concerns and when carrying your followers along with you.



9. Preserve cash, liquidity, and capital reserves for the long haul.



10. It is all about people: staff, customers, society and humanity.



– By Marie Shabaya

frbs01-07-2020-0038

The People’s Banker: ‘Entrepreneurship Means Folding Up Your Sleeves And Working’

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The $100 Trillion Opportunity: The Race To Provide Banking To The World’s Poor

Jaydeep Gupta, the Regional Head of Retail Banking, Africa and Middle East, Standard Chartered, on why banks need to adapt and respond to an ever-changing operating environment in Africa.

Africa’s growth prospects
There is no doubt there is significant opportunity in Africa not just in banking but across many industries. While the banking industry has faced a slight slowdown in other global markets, in Africa, this hasn’t been the case. According to a recent report by McKinsey, Africa’s banking sector is projected to grow significantly over the next five years. In fact, it’s nearly twice as profitable as the global average. Looking at retail banking, in 2017, retail bank revenue in Africa was at $35 billion and, according to McKinsey, it’s expected to increase by 8.5 % per year, reaching $53 billion by 2022.
By bringing both digitization and technological innovations into the economies, we are seeing more companies rival new segments with the progressive application of risk analytics. There is also an increased use of non-bank data for customer behavior analytics and proactiveness in looking at credit extensions over a period of time.
Digital transformation  
We have been exploring opportunities in the market to drive digital banking and, in March, we launched our first digital retail bank in Côte d&#8217;Ivoire. This marked the bank’s first digital bank in Africa and the first-of-its-kind launched.
It was the perfect opportunity to launch a fully end-to-end digital bank, with only one physical branch to test our model for future roll-out. The platform allows customers to execute all banking activities from a mobile device, including 70 banking services through the app. In addition, for the first time, the client onboarding journey has been digitised and in under 15 minutes, a client can open a new account through the app. What has also been introduced is the ability for clients to track and trace a request submitted, which is a first for Standard Chartered… We are now preparing to launch digital banks in our other markets across Africa.
Challenges in developing markets
We have faced a number of different challenges in Africa, some of the most common being the heavy reliance on cash and low-banking penetration. The most important challenge in my opinion is to stay ahead of the curve and evolve along with market demands. In today’s digital world, it’s critical that we collaborate with different partners and form alliances in order to provide clients with a convenient and superior customer experience, in line with a rapidly-evolving market.
Investing in technology
We always protect and grow our market share by utilizing our client services and capabilities which keeps us ahead of the competition. We are also putting a heavy focus on digitization, which is one of the key items on the bank’s transformation agenda. We are making strategic investments in technology to stay ahead of the curve and are constantly enhancing our products and services to make banking simpler, more convenient and secure.
A great example of this is the introduction of enhanced digital banking services, including our mobile app, SC Mobile, and Retail Workbench ‘Bank on an iPad’ platform.
<a href="https://www.forbesafrica.com/entrepreneurs/2018/04/26/banking-on-technology-new-mobile-bank-set-to-launch/" target="_blank" rel="noopener">READ MORE: Banking On Technology: New Mobile Bank Set To Launch</a>
Promoting inclusiveness
Look at multiple ways of including and empowering women in the banking industry, one of which is providing innovative and tailored products and services designed to suit the needs of women in Africa. This is especially evident in, and made possible by, the digital journey. With enhanced digital and analytic capabilities, we are able to develop solutions which are specifically designed for women, as well as students and entrepreneurs. We are also exploring ways of empowering women and providing them with the necessary tools to succeed in banking and hold leadership roles in the industry. A great example of this is our Women in Technology Incubator originally established in the United States and rolled out in Africa in 2017 with Kenya taking the lead.
<div id="attachment_37739" style="width: 310px" class="wp-caption alignright"><img aria-describedby="caption-attachment-37739" decoding="async" loading="lazy" class="size-medium wp-image-37739" src="https://www.forbesafrica.com/wp-content/uploads/2018/11/JGchosen1-300x200.jpg" alt="" width="300" height="200" srcset="https://cms.forbesafrica.com/wp-content/uploads/2018/11/JGchosen1-300x200.jpg 300w, https://cms.forbesafrica.com/wp-content/uploads/2018/11/JGchosen1-600x400.jpg 600w, https://cms.forbesafrica.com/wp-content/uploads/2018/11/JGchosen1-768x512.jpg 768w, https://cms.forbesafrica.com/wp-content/uploads/2018/11/JGchosen1-1024x682.jpg 1024w, https://cms.forbesafrica.com/wp-content/uploads/2018/11/JGchosen1.jpg 1241w" sizes="(max-width: 300px) 100vw, 300px" />Jaydeep Gupta. Photo provided.</div>
Mobile wallets
The digital banking movement in Africa started with the mobile wallet. There are over 100 million active mobile money users in Africa. The mobile wallet has improved the lives of Africans by facilitating participation and accessibility.
We are starting to witness the next generation of products being made available to customers in Africa. A great example of this is the recent widespread use of e-wallets which are beginning to pave the way to less reliance on cash in Africa. Along with less reliance, other benefits like affordability, increased security and greater convenience act as key drivers for customers.
Digital banking in Africa is especially unique because it has the potential to remedy some of the continent’s greatest economic challenges while simultaneously presenting some of the largest opportunities for digital and online banking.
More regulation 
Banking in Africa, and the world, has evolved significantly over the last 10 years. Customers are now demanding more convenient, quick, and easy services from banks. Providing online and mobile platforms is no longer a benefit, but a requirement. We have also seen regulators in Africa more heavily, and frequently, enforce regulation across the continent. This, in turn, has forced banks to adapt and respond to an ever-changing operating environment. Looking at online and mobile banking solutions specifically, banks have not necessarily replaced them, but they are definitely exploring options for updating them in line with these changes and ensuring the security of their customers. For many, this has forced them to think outside of the box.
Robotics and AI over people?
There is no doubt that robotics and Artificial Intelligence (AI) will change the people interface, but it definitely does not mean that it will replace it. If anything, leveraging advancements in technology will only complement customer services and help us be more efficient and targeted. For example, banks today are utilizing AI to analyze financial data in order to provide customers with tailor-made and fully-customizable banking solutions, designed specifically to suit customers’ individual needs.
Advanced analytics 
It’s critical that these capabilities are invested in and continue to be built on. Without proper analytics, companies will struggle to understand consumer behavior. To provide customers with the best possible service, you must understand where they are coming from. Therefore, it is very important that solid collection strategies and procedures are put in place.
<h2>Africa: hotbed of innovation</h2>
<ul>
<li>According to a recent report by McKinsey, over 40% of African banking users prefer to use digital channels for their financial needs. This is no surprise and is indicative of the digital shift we are witnessing across sub-Saharan Africa.</li>
<li>The African banking sector has been described as a ‘hotbed’ of innovation. As Africa begins to enter an exciting era of digitization, innovation will play a key role in unlocking the future potential of banking.</li>
</ul>

Mobile/Contactless Payment

Why Digital Banking Is Unique In Africa

One of West Africa’s richest men and a formidable force in banking, Jim Ovia conveys some key lessons for Africa’s entrepreneurs in his first book.

In Africa’s business and banking world, a man like Jim Ovia is a textbook case study.
As the founder and chairman of Zenith Bank, and with a net worth of $825 million according to FORBES, Ovia’s prolific banking career spans almost three decades.
His book, Africa Rise and Shine: How a Nigerian Entrepreneur From Humble Beginnings Grew A Business To $16 Billion, launched in August, which marked his debut as an author, details this trajectory, building the bank from the ground up, brick-by-brick. Ovia started with a single branch in Lagos on the ground floor of an impoverished residential duplex that he shared with a private tenant.
“At the time, there were no high-rise office structures in the area and we were not able to afford any standalone structures,” says Ovia to FORBES AFRICA when we meet him at the iconic Civic Centre building located on Ozumba Mbadiwe in Victoria Island, Lagos.
The sprawling high-rise office structure we occupy on this rainy Saturday morning is a far cry from the early years.
Ovia recalls erecting a signage and the company logo in the impromptu commercial space where they could carry out the banking business.
<div id="attachment_37227" style="width: 693px" class="wp-caption alignnone"><img aria-describedby="caption-attachment-37227" decoding="async" loading="lazy" class="wp-image-37227 size-large" src="https://www.forbesafrica.com/wp-content/uploads/2018/09/Jim-Ovia-Forbes14545-683x1024.jpg" alt="" width="683" height="1024" srcset="https://cms.forbesafrica.com/wp-content/uploads/2018/09/Jim-Ovia-Forbes14545-683x1024.jpg 683w, https://cms.forbesafrica.com/wp-content/uploads/2018/09/Jim-Ovia-Forbes14545-300x450.jpg 300w, https://cms.forbesafrica.com/wp-content/uploads/2018/09/Jim-Ovia-Forbes14545-600x900.jpg 600w, https://cms.forbesafrica.com/wp-content/uploads/2018/09/Jim-Ovia-Forbes14545-200x300.jpg 200w, https://cms.forbesafrica.com/wp-content/uploads/2018/09/Jim-Ovia-Forbes14545-768x1152.jpg 768w, https://cms.forbesafrica.com/wp-content/uploads/2018/09/Jim-Ovia-Forbes14545.jpg 1365w" sizes="(max-width: 683px) 100vw, 683px" />Photo by: Kelechi Amadi-Obi</div>
He worked at Barclays Bank in Lagos from the age of 18 for three years as a clerical officer before enrolling to study business administration at Southern University, Louisiana, in the United States, and subsequently proceeding to the University of Louisiana, Monroe, where he completed his MBA.
After graduating, he joined Union Bank to complete his National Youth Service Corps (NYSC). Ovia subsequently joined the Merchant Bank of Africa, which was then owned by Bank of America, and worked for over three years before applying for a banking license. And with that, came the birth of Zenith Bank.
“We knew it was going to be a bank that was well run. We knew it will be a bank that will be very efficient and we knew it will be a bank that will offer good and excellent service because that is one of the reasons we set up the bank in the first place,” recalls Ovia.
From those days, he had decided Zenith was going to be run differently from any other bank.
“When you go to many Zenith Bank offices, you will still not see any crowds in the banking hall, yet we are still providing the best quality service,” says Ovia.
The banking major is a London Stock Exchange-listed company with operations in the UK, China, the UAE, Ghana, Gambia, Sierra Leone, and with more than 400 branches and business offices in Nigeria.
The institution has become a byword for credibility in the Nigerian banking industry.
Many of his peers and competitors call the Zenith Bank success story one of hard work, grit and focus.
But what distinguishes Ovia from them is an abiding belief in his entrepreneurial instincts, one that has been validated many times over.
But that is not the reason he has a spring in his step these days. In Ovia’s new chapter as an author, he chronicles the key lessons entrepreneurs can learn from the meteoric rise of Zenith Bank.
<blockquote>“Among the most important of those lessons may be my experience that it is not necessary to be born rich or in influential circles in order to achieve success,” says Ovia.</blockquote>
It augurs well for a man who for 30 years has constantly adapted to changing environments and opportunities, whether it was being an early investor in the internet space, through his company Cyberspace in 1995, or setting up his telecommunications company Visafone and his expansive real estate portfolio. Ovia’s intuitive timing is something a lot of Nigerian entrepreneurs who look up to him as a mentor have been reading about in his book.
Says Richard Branson, founder of the Virgin Group, in a blurb on the back of the book: “Jim Ovia’s entrepreneurial flair demystifies Africa. Africa Rise and Shine shows his meteoric rise from humble beginnings to building a formidable bank. This is a wonderful African success story,”
Africa’s richest man Aliko Dangote, founder and president, Dangote Group, also echoes those sentiments.
“Jim Ovia has been my friend and a trusted banker over the last twenty-five years. Africa Rise and Shine lays bare the secrets to Zenith Bank’s success from one of Nigeria’s most respected businessmen. Jim’s inspirational tale of success against all the odds is an important lesson of how adversity can always be surmounted. His principles of doing business can be applied globally as demonstrated by Zenith Bank’s London Stock Exchange listing. This book is an essential read for anyone that wants to do business in Africa.”
Ovia believes it is imperative to rely on one’s own instincts in taking stock of one’s capabilities, and in evaluating new business opportunities.
<a href="http://www.forbesafrica.com/entrepreneurs/2018/08/02/36923/" target="_blank" rel="noopener">READ MORE: The Nigerian Who Runs His Business On Luck</a>
The book seeks to encourage entrepreneurs to seize the opportunity to invest in Africa by abiding by guidelines such as prudence, due diligence and being able to respond quickly by cultivating the capacity to react effectively.
“I think the readers of this book will gain the spirit of commitment, empowerment, focus, hard work and discipline. They will learn that if you are disciplined and work hard, definitely you will do well. The book is about passing on these principles and documenting how it is to do business in Africa, particularly Nigeria,” says Ovia.
He hopes his book, which is more like an entrepreneurs’ manual than an autobiography, will guide the next generation of industrialists and game-changers to change the narrative of Africa from a hopeless continent to a rising continent.
From boardroom deal-making to creating an impact in the lives of Nigerians, Ovia is a business icon who continues to evolve.
His book is a call to tomorrow’s titans to follow their gut instincts, so hopefully one day, they too can reach their zenith.

Photo by: Kelechi Amadi-Obi (www.kelechiamadiobi.com)

‘Not Necessary To Be Born Rich’

Reinette van der Merwe has been in the banking industry for more than two decades, and risen to be one of Botswana’s most formidable professionals, but says she still sees glaring gender imbalance in the boardroom – most times, she is the only one woman present.
Van de Merwe, Managing Director of Barclays Bank of Botswana, is aware giant strides need to be made to include more women in corporate Africa.
“I have never really seen gender until a couple of years ago when it was pointed out to me that I am the only woman in the boardroom,” laughs the 47-year-old.
While she never felt discriminated against at any point in her career, her exposure and interactions with other women have highlighted to her that their experiences are not all the same.
While 40% of today’s global workforce is female, only 5% of women hold global chief executive positions in Africa.
This is a far cry from the desired target of 50% to achieve gender equality, according to a study by PricewaterhouseCoopers.
In South Africa, there is only one female chief executive in the Top 40 JSE-listed companies and that’s Maria Ramos of Barclays Africa.
<a href="http://www.forbesafrica.com/woman/2017/08/14/we-men-for-women/" target="_blank" rel="noopener">We, Men For Women</a>
Van de Merwe worked her way up the ranks and was appointed Managing Director in 2013 after serving as Chief Internal Audit Executive. She is also an avid equestrian.
“I never thought I’d end up where I am now, but from the time I was a child, I wanted to become a chartered accountant and then one day become the chief financial officer of a company.”
Despite being at the helm of a bank in an industry characterized by an onslaught of fines, slowed market performance and litigation since the financial crisis, Van der Merwe, says: “I really love running a bank and although I develop women and men equally, I see competence, not gender.”
That has been the driving force of Van der Merwe’s leadership.
“For me, talent development and management in a bank [is fundamental]. A bank is made up of the people and we’re a service-orientated organization, so people are your most important assets,” she says.
“So for me the most rewarding element of my job is when I see someone really excelling at what they are doing and being able to promote them.”
Van de Merwe elaborates:  “&#8230; when I moved to Botswana, I had a really strong head of IT and in terms of her development, she put up her hand and showed her capability, she’s now my chief operating officer.”
<a href="http://www.forbesafrica.com/woman/2017/08/30/social-agenda-business-agenda/" target="_blank" rel="noopener">&#8216;The Social Agenda Is A Business Agenda&#8217;</a>
Leading a people-centered organization is central to another one of Barclays Bank Botswana’s passions carried through programs initiated by the government.
“The government is actively involved in developing entrepreneurship,” she says.
Another of the bank’s focal points is investing in cutting-edge technology that enhances efficiency levels across the business for the consumer.
“One of the government’s aims in Botswana is to bank the unbanked and we are firmly set on this path.”
Recently, the bank continued its digital journey which started with mobile banking followed by internet banking, and international money transfers, where customers can pay school fees or suppliers across the borders by launching a card-less cash deposit service which allows for real-time card-less cash deposits into its accounts by both customers and non-customers at any time and on their own.
And, despite Barclays PLC’s divestment in Barclays Africa, there are still many opportunities and resources for the bank to explore in this space.
Under Van der Merwe’s leadership, the bank has been named Botswana’s ‘Bank of the Year 2016’ by Acquisition International. She attributes some of the success to policies enabling ease of business drafted by the country’s leadership.
“The future of the bank is very exciting as we look to continue developing it as a pan-African bank,” says Van der Merwe.
“We are looking forward to a lot more creativity in making [Barclays Bank Botswana] Africa relevant. We can determine how we want to do business in Africa for Africans and if you look at the divestment which took place in June, it was oversubscribed, so clearly, the market has a lot of faith in the management of the group.
“There’s nothing that stops this group from expanding into the rest of Africa, Asia and even back into London as an African brand,” she laughs. &#8211; Written by Rofhiwa Madzena

The Only Woman In The Boardroom

Over the past decade, Kenya has taken considerable steps towards deepening financial inclusion. This is reflected in the 2016 FinAccess Household Survey which shows that slightly more than three-quarters of Kenyans are now formally included by the financial system, which is a 50% increase over the past 10 years.
According to the report, the percentage of Kenyans relying on informal services providers decreased from 32.11% in 2006 to 7.2% in 2015. Thanks to technology, 18% of Kenyans now use new mobile banking services such as M-Shwari and M-Pesa, a scenario that has pushed the proportion of bank account users to 38%, up 10% from 2013, while traditional bank accounts have decreased.
Despite the significant progress seen towards enhancing financial inclusion, there is much less success in the use of investment products, such as shares, mutual funds and treasuries. The study showed that the use of investment products decreased to 10.6% in 2016 compared to 11.6% in 2013. Findings by the same survey also revealed that the number of Kenyans familiar with the Nairobi Securities Exchange (NSE) stood at only 38%. It seems that a lack of awareness could be why less than 30% of daily market transactions at the NSE are attributed to local individual investors.
But there is hope. Mobile phone platforms are being used to increase awareness and participation. Data shows that 26% of Kenya’s adult population own a smartphone or other smart devices. The uptake of mobile banking services has led to an increase in the banks’ penetration in the past 10 years, from 14% in 2006 to 38.4% in 2015. Investment managers, stockbrokers and insurance companies will also be buoyed by market studies that show that 71% of the population uses financial services provided by mobile financial service providers. This is a clear sign that mobile phones are the best way to encourage investments.
In light of this, the Kenyan government is launching the mobile-traded government security, M-Akiba. Kenyans with as little as $30 will be able to bid for the upcoming five-year income tax-free bond using their M-Pesa accounts. Investors will rejoice; M-Akiba returns are expected to be better than the current fixed deposit rates and most money market accounts. Stockbrokers have not been left behind either – at least three of them have recently launched mobile apps aimed at retail investors looking to buy shares, monitor their portfolio holdings and check account balances via their mobile phones.
But, the road ahead is not without obstacles. One is the low incomes among Kenyans. According to household survey, 75% of adults earn less than $150 per month. This may hinder most Kenyans from taking up financial products. A lack of trust among women towards formal financial institution is another major challenge. According to the latest quarterly report by the Capital Markets Authority (CMA), women account for merely a third of the total number of investors. Low levels of education in the country are also an issue, with 60% of the population not completing a secondary level of education. With this in mind, it could be daunting when it comes to selling sophisticated financial products, such as derivatives and exchanged traded funds. Even among the educated, stakeholders will have to fight to shake off the persistent fascination with real estate.
At least Kenya is showing resolve to deal with the challenges. There is a big chance to make real changes to how people invest; all that is needed is a phone.

More Phones more finance

On this Thursday afternoon, in Stellenbosch, a small university town, east of Cape Town, the sky is blue and the air crisp. In the gentle light, dressed in khaki pants and a checkered blue shirt, he doesn’t look much like a multimillionaire but Michiel le Roux has done for banking what Bill Gates did for software and Muhammad Ali for boxing. He has created a bank that in 15 years has forced its way into the top five in South Africa. He wears his $530-million net worth lightly, but behind the smile and humility, is a hint of power with a firm handshake that means business.
“We said let’s build a bank and we were not going to experiment on a small scale, we always stayed very close to our clients and we knew what we wanted to bring to the industry,” says Le Roux.
About a decade ago, few deposited their salaries into Capitec, most had never heard of it. Today, Capitec has over 7.3 million active clients, 720 branches, 11,440 employees and holds R13.7 billion ($1 billion) in shareholders’ funds. For Capitec, simplicity is everything.
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“When I was young, everyone was a Sir in the corporate industry and I hated it. There is a woman here who used to serve tea when we started and she couldn’t get herself to call me Michiel so she called me Mr Michiel,” he laughs.
“Here, there is no distinction between people. Nobody flies business class. How you fly, where you stay, the rental car you drive is the same whether you are the CEO or the junior in the company. Everyone gets the same treatment.”
There is a business reason for this.
“After the army, I worked at a company I thought was a very smart company but there was too much hierarchy. I found it very awkward and terrible. [Imagine] you have meetings out of town and you wait for your flight with your colleagues and you chat while you wait; then in the plane you sit in front and they all pass you to go sit at the back. I find it very stupid. The natural thing is to continue talking,” he says.
At Capitec, they take simple seriously. No suits, the CEO’s office is the same size as everyone else’s, the CEO shares a personal assistant, no personalized parking spots, even the guard at the gate calls him Michiel, while the receptionist jokes freely about his sense of style — or lack thereof.
This simplicity and business acumen has made Le Roux a rich man; the 38th richest in Africa to be exact, according to FORBES. In just 15 years, this fortune has grown rapidly. It has nearly doubled from around $290 million in 2011.
Capitec had big friends early on, on the other side of Stellenbosch. One of the earliest and biggest was PSG Group, an investment holding company, owned by former FORBES AFRICA cover, Jannie Mouton, who is worth $970 million. One day PSG called Le Roux to listen to what they had to say; he believes this was an attempt to lure him into its micro-lending business.
“I said I am not interested, this is not the type of business I want to be involved in because it’s a terrible business; they charge exorbitant interest rates. Those were the old pin and card days. When you wanted a cash loan, they would take your card and your pin number and they would withdraw whatever you owed and then give the card back to you. It sounded, and still sounds, terrible,” says Le Roux.
PSG convinced him to visit their branches and he was fascinated by how the micro-lending company treated its clients. According to Le Roux, in banking, the lower income consumers in South Africa were poorly treated, but not by PSG.
“A bank always determines the value of the client based on their net worth which to this stage in my mind doesn’t make sense because a guy with high net worth might be very frugal with the use of his credit card whereas a guy with a much lower net worth might be exorbitant with his credit card use. The guy that is exorbitant should be much higher in the rankings but banks don’t look at it that way.”
“If you are a factory worker and earn very little, they were not that interested in you and that to me was a failure on banks not accommodating the lower income people,” he says.
In this, Le Roux saw a gap. He was bored at work and he decided to build a bank that would right these wrongs. He joined forces with PSG Group.
Before the bank was called Capitec, it was called Daxacom.
“We had about three branches that we put up and put on the logos and when we looked at it, it didn’t work. We had many other names but I am ashamed to say them,” he chuckles.
Le Roux says it took a long time to find the right name because they didn’t want a name that reflected they specialized in servicing lower income groups.
“We didn’t want to call it people’s bank for example, if anything, we wanted something that sounds modern and as if it could have been an electronic bank only, although we are also a physical bank.”
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Capitec won. The next problems were timing, licensing and money.
According to Le Roux, there was a small banks crisis just before they opened. Timing was not of the essence.
“In the late 90s, South Africa granted a number of new banking licenses and as far as I know, that was the last time they granted new banking licences. Most of those banks folded quickly. A bank called The Business Bank, which was about three to four years old, folded and PSG took them over and we sort of bought the license through taking over a failed bank. If it wasn’t for that, I don’t know if we could ever have got a license,” he says.
As Capitec was about to launch, Saambou Bank, one of South Africa’s significant players in the industry, went bankrupt. It was a very public collapse that did the image of banking no good at all. Lines of people appeared on TV news desperate to get their money out.
“The Reserve Bank closed them on a Saturday to minimize the impact on the markets and we listed Capitec Bank Holdings Ltd on the Johannesburg Stock Exchange on Monday, 18 February, 2002, the week later. That was a terrible time to list a bank and it also meant it was a terrible time to get finance whatsoever. I know I sound like an old man saying you learn from your mistakes but it’s true. Starting a business in good times is always very dangerous because you will think business is easy when the wind is blowing from behind and the sailing is smooth. When you start with wind blowing from ahead, then you know business is tough and you grow,” says Le Roux.
To survive when others failed wasn’t easy.
“It’s a hard slog to create the infrastructure, to network, to decide what you want to do. We take pride in the fact that at that stage, when we were also starting, Old Mutual had a retail banking license and they wanted to start a retail bank. They were looking for systems when we were looking for systems and the rumour mill had that they paid out R800 million ($60 million) for their system and that was when the rand was about R4 to the dollar but they never opened that bank because they couldn’t make it work.”
Capitec kept it cheap and simple.
“Other banks use systems that are designed for them which means that they have to maintain that; when the coders that wrote that leave, you are left with a gap. We made right calls because we had a good management team and we had a good management team because we hired the right people when we started. We don’t spend where there is no need,” he says.
Persistence and good planning helped them survive.
“We have been creating new branches but we try to be creative in the way we do that, we don’t over invest in a branch, we don’t build a branch, we don’t have specialized buildings and we don’t own a single branch, we lease all of them so we have the ability to cut back in future if things change.”
Although they want everything to be digital, they want to keep branches open for their clients.
“Our clients like the one-on-one interaction. In January, 6.7 million people came into the branches. It means, on average, our clients visit a branch at least once a month. Most importantly everything should be done on mobile. We suspect that is the future of banking but we are not quite sure what it’s going to be,” says Le Roux.
While other banks turn a blind eye to South Africa’s “unbanked” or “unbankable”, Capitec has made these customers their market. Over time, Capitec slowly transformed its micro-lending clients, who mainly relied on it for loans, into transactional banking clients who deposit their salaries and manage their transactions through their Capitec accounts.
International banking advisory group Lafferty has ranked Capitec Bank as the best bank in the world in its inaugural 2016 Bank Quality Rankings. According to the report’s findings, Capitec came out on top, with the only five-star rating out of the 100 banking groups listed. In South Africa, Barclays comes second with four stars, while Nedbank, Standard Bank and First Rand have three stars. Lafferty uses a combination of financial and non-financial disclosures in the latest annual reports to determine the quality of the organizations and their respective business models.
“South Africa’s Capitec was the only bank to achieve five stars. The bank has a level of focus, geographically and strategically, which boosted its scores across all of the metrics in the ratings process,” says the report.
Capitec is giving South Africa’s banking industry a run for its money. Michael Lafferty, Chairman at Lafferty Group, says it’s because its founders understand their customers’ needs and they developed an innovative strategy and business model aimed at addressing those needs better than the established players. He says the best quality banks in the world are found in South Africa.
“Capitec is doing well because of its focus on the consumer&#8230; We only found two or three banks in Europe that were near to the top quality rating we saw and only one in the United States. There is something remarkable about South African banks,” says Lafferty.
That focus on the consumer is also visible in Capitec’s decision to open on Sundays. In 2011, according to reports, Capitec’s marketing and corporate affairs executive, Carl Fischer, said the idea has always been to operate like a retailer as a lot of people went to malls over the weekends.
Many people sing the praises of Capitec. But, says Le Roux, you can ignore your competition in other industries, but not in banking.
“If you bank with Standard Bank and I convince your friend to open an account with Capitec and you want to pay money to your friend, your bank must be prepared to pay money to Capitec. If you use a Capitec card and you are in a restaurant and they have a Nedbank machine they must cooperate. We all have to be in agreement and work together.”
Banking is a tough industry. Capitec’s closest rival, African Bank, collapsed in August 2014 as bad debt soared and the lender failed to increase provisions.
“When African Bank went bankrupt, it was terrifying. We thought African Bank were over optimistic with their credit assessments but we thought they were a big strong company. When they closed their doors it practically felt like a funeral. If they can sink, anyone can sink,” says Le Roux.
Capitec however was much more conservative. They set aside cash to cover bad debts and stuck to strict budgets.
The globally-awarded retail bank increased its active client numbers by 1.03 million, to a total of 7.3 million for the year to 29 February, 2016. This bolstered headline earnings to R3.2 billion ($234 million) for the financial year ended February 2016, up 26% on the previous year. Net transaction fee income increased by 16% to R3 billion ($220 million), the value of credit advanced increased by 25% year on year to R24.2 billion ($1.7 billion) for the 2015/16 financial year.
Capitec Bank CEO, Gerrie Fourie, on its website, says the brand acceptance continues to grow substantially in the market and there has been a 26% growth in total retail deposits to R37.8 billion ($2.7 billion).
“We are excited about the continued growth in client numbers and in particular the higher income clients who are finding our offer the best value in the market, which is an important consideration for consumers in the current economic climate,” says Fourie.
As rivals hobbled through two banking crises, Capitec sailed through. The advantage, says Le Roux, is that they thought big from the beginning.
For Le Roux, confidence in yourself and the belief that you can achieve something is the starting point and not money. He says many young potential entrepreneurs see the lack of money as an excuse.
“Money is a valid problem but the bigger problem is management and getting the right people to do the job. We started, knowing it was going to be a difficult journey. At one stage during the founding phases, we reduced the rates we charged for loans by about 40 percent. That meant we had to do 40 percent more loans to break even. To do 40 percent more loans, you need 40 percent more capital and it took about four months before we came to that point where we had 40 percent. In the first month, we made a loss, and in the second, we ran out of money. We had to put our own cash into the company but we knew that if the boat doesn’t turn next month, we won’t have any more cash,” he says.
They also had Riaan Stassen; Capitec’s pioneering CEO from 2004 to 2013. Stassen has been friends with Le Roux for years and served as the Managing Director of Boland PKS from 1997 to 2000, a division of BoE Bank Limited.
“Riaan is a very smart guy. I believe he built Capitec Bank. If I may claim some role, I would claim that I had a dream of creating a bank and Riaan made that a reality. He actually made a different reality. My vision was that we should be a bank for low income people, for instance, to my shame, I must admit that at that stage I said we should have books. Riaan laughed and said ‘you are crazy; we are in the electronic age’. He said ‘we are going to build an electronic bank for the new age and not for low income people but for everyone’ and that’s what we have done.”
As a travel enthusiast, Le Roux wanted to take Capitec across Africa, but, he says the longer they are in business, the more the dream recedes. Emerging market countries such as Brazil, Chile, Turkey or Poland are preferred.
“We don’t think Africa is a natural habitat for Capitec Bank, we are based on a digital financial environment, our client base are more salaried people and if we go into [for example] Zambia only 10 percent of the population earn a decent salary  and most of the people are [in the informal sector]. Even Nigeria is a tough country, it’s not like they have a massive urban digital employed population. We could do business there but we will have to redesign our products,” says Le Roux.
As we leave, the fiery red ball is dipping towards the mountain. This sun may be setting but it seems Capitec is just rising.

‘A Terrible Time To List A Bank’

It is sad how our minds have been conditioned a certain way towards debt. We are told that debt is bad, but there is good debt that can work for an entrepreneur.
There are cases for and against debt. It was the Holy Grail that allowed the automobile, housing, banking and furniture sectors to become successful; it was also the curse that ushered the world into the economic meltdown in 2008.
So, what is good debt and how has it benefited those who know how to play the game?
In real estate, people use debt in innovative ways, like going to the bank to apply for finance for a new house. Once the bank approves, a tenant is brought in and their monthly rental is used to repay the loan. Then they go back to the bank as they still qualify for another property as their income at the time of application still remains the same. This qualifies them for another property, and the model is replicated while tenants service the loan, and their balance sheet increases.
Property developers use this model with a cluster of residential buildings, apartment blocks, and major developments. Developers identify the land, get the correct approvals and compliant paperwork in order, then they hire architects to draw the building plans. Once this is done, the properties are sold off-plan and this money is used to construct the infrastructure.
Another sector where people use debt, with less risk, to become successful is franchising. Firstly, franchises have a proven business model with high probability to succeed. Secondly, banks are more willing to finance new sites or buy an existing branch if the franchise has an established brand. With good management, the debt will be settled.
As entrepreneurs in Africa, we need to be savvy in gearing debt to work for us, and understand the power of leverage.
The recession hit when the US economy was over leveraged in real estate asset class. This is the same asset that many entrepreneurs use as their capital base. They approach banks to take another bond on their house to start a business, or grow it, at the risk of losing their primary residence should things not go according to plan.
Leverage is crucial when you are dealing with financial institutions, particularly banks. However, there is another avenue where leverage is not necessarily a physical asset; there are venture capitalists that fund a company on the perceived current or future value of the company. Others go further by focusing on the team behind the company, credibility and successful track records.
Above all, entrepreneurs need to be careful not to over-leverage themselves. When under-leveraged, the risk is manageable.
Start-up entrepreneurs are famous for bootstrapping their companies, until they produce a viable prototype or penetrate the market. An example of this is Fuseware, a successful African tech company founded by Mike Wronski before he sold it to Ornico.
This presents a challenge between two funding models: debt versus equity financing. Well-structured debt is preferable, provided the company can service the debt in the short term. This is best option for expansion purposes.
Equity is best for start-ups and growth-stage businesses. In this regard, an investor buys a stake in the company and takes on the same risk as you. The downside is that that the entrepreneur loses some control the moment an investor comes into a company.
Sooner or later, it is going to be necessary to approach capital markets to raise money. The fundamental reason for listing on a stock exchange is to raise money. Today, there are other reasons, but raising capital is the main one. A company’s share price is based on perceived value that might be influenced by its income, assets or track record. At the end of the day, the company is worth what the market is prepared to pay for and what investors agree to sell shares for.
There are many times when an entrepreneur’s personal debt overlaps with his company’s debt, predominantly in small to medium sized companies. If able, entrepreneurs should only deal in debt held by the company, rather than their personal accounts.
While debt is not entirely encouraged, any company that is going to be of global significance needs to be familiar with it.

How To Make Debt  Work For You

In its research report on financial technology (FinTech), The Future of FinTech and Banking, Accenture signalled that the revolution is well under way. The report indicated that global investment in FinTech companies had tripled to $12.2 billion last year, up from $4 billion in the previous year. Although it said Africa was lagging behind, the continent holds a lot of promise.
In the latest report by WorldRemit, Currency Cloud and Ixaris, titled Payments Innovation Jury Report 2015, Africa is seen as more promising than the traditional financial capitals of the world.
The digital revolution is not new in Africa. Mobile payment systems on the continent have set the pace internationally. The extraordinary story of M-Pesa, which in just six years enabled more than 15 million Kenyans to send and receive money electronically, is a good example. With more than 140 million registered accounts, mobile payments in Africa are quickly becoming mainstream. M-Pesa’s recent innovations, such as M-Shwari, a mobile bank account which facilitated loans worth of more than $200 million in Kenya last year, is set to continue blazing a trail in global FinTech innovation.
The remittance market is another important area for African FinTech. With the amount of money sent to sub-Saharan Africa via mobile phones set to hit $33 billion this year, it is easy to see why this market is attractive. Innovation is expected to bring down remittance charges, which currently stand at twice the global average according to the Overseas Development Institute, an independent think tank. Innovators, such as MFS Africa, are honing in on the intra-African remittance market, where remittances can rise up to 20% of face value. World Bank figures indicate that $11 billion is sent within Africa each year and African companies are taking advantage of the 650 million mobile phone subscriptions to tap into this field.
Agriculture is another sector being invaded by FinTech. Already, several innovations are bringing financial access points closer to the farmer. E-wallet in Nigeria allows farmers to receive subsidised seed and fertiliser vouchers on their mobile phones. Likewise, Intellect Tech in Kenya is helping farmers and insurance firms track compensation claims. With proven success, it’s not surprising that funding has followed. In June, two start-ups were awarded $50,000 through Village Capital FinTech for Agriculture: East Africa 2015.
Despite the obvious success, there are still many barriers for FinTech in Africa. One key obstacle is regulation. Africa has more than 50 countries, each with their own regulations, resulting in restricted capital flow, like the exchange control that is still in place in South Africa. Another issue is the focus on local problems – innovators need to realize that FinTech is part a global ecosystem. Nonetheless, Africa still faces a massive opportunity to lead the way in the FinTech evolution.
Although funding was a major barrier in the past, the situation is slowly improving. Incubation hubs have sprung up all over Africa, kick-starting the next generation of technologists. Rand Merchant Insurance (RMI) in South Africa has a club called AlphaCode that helps provide networking opportunities for the local FinTech entrepreneurs. Recently, Barclays Bank Kenya launched an innovation lab that will provide a base for local developers to come up with game-changing ideas that will change the future of the financial industry. All this makes the sector an attractive option for investors. Investment in FinTech companies is expected to double to $8 billion in 2018, according to Accenture.
With a young population set to explode in the coming decades, Africa is positioned to benefit from financial innovation. FinTech is making essential services more accessible to the wider population. The African companies providing these services are on the march and there doesn’t seem to be any way to stop them.

A Revolution  on the march

In 1967, there was growing divergence between two parts of Nigeria. Biafra, a secessionist state in south eastern Nigeria, at the time represented the nationalist aspirations of the Igbo people, whose leadership felt they could no longer coexist with the federal government. The desire for a separate state led to up to 30,000 Igbos being killed and around a million refugees fleeing to their homeland in the east. Anambra, the eighth most populated state of Nigeria, provided the base for dangerous relief flights loaded with food and supplies for the war-torn Biafran population. The area was also home to Cosmas Maduka, who was only six years old at the height of the civil war.
“We had a bunker outside our house which we ran into during times where the military opened fire and dropped bombs with their fighter jets. We did not know whether we were going to survive to see the following day,”
says Maduka.
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Once, while on his way to the market, soldiers opened fire, killing a large number of civilians. Maduka narrowly escaped. In a bid to protect her children, Maduka’s mother sent him away to live with his grandparents before he later embarked on the journey that would see him become one of the most successful entrepreneurs in Nigeria.
Maduka is the President and Chairman of Coscharis Group, franchise holders of over eight automobile brands and one of the largest distributors of spare car parts in Nigeria. The company also has interests in real estate, banking, technology, medical equipment, petrochemicals, elevators and agriculture.
Like his early childhood, getting his business to this point has been tough. While talking to FORBES AFRICA in his gigantic dealership, which houses over 300 luxury car brands, he is quick to credit someone else for
his success.
“My mother was the lady who inspired me to greatness. At a young age in my life, she looked at me and told me I am going to be successful. She said people will always like me and people will struggle to say no to me,” says Maduka.
It’s easy to see why. He is composed as he sports his trademark Jesus broche. He has a quiet confidence about him without being arrogant. His mother’s “indoctrination” would later be the impetus he needed to turn N200 ($1) into a $500-million conglomerate.
On average the company sells more than 400 cars per month with prices around N150 million ($752,787) for the top end of its luxury fleet, which includes Rolls Royce, BMW, Jaguar, Range Rover and Ford. This year, the company partnered with Ford to build one of the largest manufacturing plants on the continent for its pickup trucks.
Coscharis’ medical supplies business represents GE Healthcare, Philips and Siemens in Nigeria. Coscharis also holds the number two position in the ICT market through its own brand, Coscharis Technologies Limited, and their pool of partners which includes HP, Microsoft and Lenovo. Coscharis Technologies provides hardware and software applications to organizations.
Maduka’s success is all the more remarkable when you consider he lost his father when he was a toddler.
“The best I knew of my father was the day I saw a man lying lifelessly in a suit&#8230; It was like a festival, people were exceptionally kind to me that day and whatever I asked for, I got,” he says.
The four-year-old Maduka didn’t know it was his father’s funeral. The celebrations ceased immediately after this day. Maduka started street hawking to provide for his family. Every morning at 5AM, Maduka would wake up to sell bean cakes with his older brother, Pius, to generate money for the family. True to his mother’s prophecies, Maduka was a better salesman than his brother. As a result, his mother, who could no longer afford the tuition fees for both brothers, took Maduka out of school at the age of six.
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At the age of seven and no longer attending school, Maduka was sent to live with his uncle and serve as an apprentice selling motorcycle parts. It was not a conventional apprenticeship. Firstly, Maduka worked for seven years without pay. Secondly, the shop floor that Maduka traded on during the day would be transformed into his bedroom at night. He would wake up early in the morning to have his shower on the street before customers arrived and then proceed to manage the shop by himself with occasional supervision from his uncle.
In most countries, these conditions would constitute some form of breach of child labor laws. Maduka has a different take on the experience.
“I believe this was the best university any young man can go to because it was a system where there was no contractual agreement. If you did not behave yourself, you were sent back home to the village, but if you performed, your master would give you start-up capital for your own business at the end of your apprenticeship,” he says.
By the fifth year of his apprenticeship at the age of 13, Maduka had already proven that he had what it took to run a business on his own and was consequently placed in a new branch to manage. In Nigeria, as with many African countries, entrepreneurs are trained by trade schools, craft centers and vocational institutes. Proprietors in the small-scale industries also offer training programs based on an apprenticeship system. Whereas the government-established institutions are formal, apprenticeship training in the private sector is often informal. In lieu of this, there is an ongoing debate as to which system yields the best results. Maduka favors apprenticeship.
“I believe apprenticeship is the best university to go to. If you give a formally educated person N1 million and an apprentice N100, 000, I believe in five years, the apprentice will be able to catch up to the university student and overtake him,” he says.
Maduka learned everything about the automotive components industry outside the classroom. He learned about the internal combustion of an engine, carburettors and centrifugal regulators. He also discovered how to provide the best service to clients and where to go to get the best deals as a reseller.
He understood the power of building a trustworthy reputation with your buyers. He knew about cost price and profit margins and ensured the shop was always stocked with the products the customers often needed. That learning process ended when, due to his newly found Christian faith, Maduka closed his uncle’s store so he could fast for three days. He was immediately fired and, to Maduka’s surprise, his severance package after seven years of hard work was less than a mere $400.
“I looked at my uncle in the face and said to him I deserve something better than this, five years from now, you will regret making this decision,” says Maduka.
Adversity is a constant companion for entrepreneurs, but the successful ones learn to push through tough times. Maduka outlined three key targets for himself after being dismissed by his uncle.
“I wanted to get married before I turned 20, have children by 22 and become a millionaire by 24,” he says.
Maduka immediately put his plan into action. He formed a new company, with his brother, called Maduka Brothers, continuing to trade in automobile parts. The pair sourced parts from Lagos and resold them in eastern Nigeria. In just under a year, the brothers went their separate ways due to differing opinions on how the business’ money should be spent. After the split, the siblings became competitors with automotive shops across the road from each other. However, the apprenticeship experience Maduka had gave him an advantage over his brother.
“In business, knowing where to buy is just as important as selling. You need to buy well to sell well and I had a good relationship with all the major wholesalers,” says Maduka.
He used his relationship with large wholesalers to get his supplies at a competitive rate. Within a week, Maduka was selling enough components to get himself a three-bedroom apartment – by the age of 17. With the apartment secured, Maduka set the groundwork to achieve his first goal. At the age of 18, he met a woman who would become integral to the Coscharis empire.
“Her name was Charity and we met in church. I immediately knew she was the one. I asked for her hand in marriage and, after thinking about it for some time, she accepted.”
Maduka got married at the age of 19 and made his first million, as predicted, by the age of 24. The name of his company, Coscharis, was born by combining his name, Cosmas, and the name of the second woman he credits with all his success, Charity. Today, the group has more than 26 branches nationwide, with a presence in Ghana, Gabon and Côte d’Ivoire.
The automobile business of Coscharis Group started in 1983 when the company was incorporated with the business of importation and distribution of automotive parts and accessories of Japanese vehicles. The decision to incorporate the car business provided the breakthrough Coscharis Group needed. At a time where many businesses were choosing to remain sole proprietorships to avoid the bureaucracy and complex framework of a limited company, Maduka decided to break convention. That decision paid off.
“In 1983, the federal government of Nigeria decided to give import licenses only to motor companies and, because I had incorporated Coscharis, they placed me among multinationals like Leventis, even though it was only me and my wife,” says Maduka.
The import licenses granted to Coscharis was crucial. The Nigerian economy back then was dependent on external sources. By 1980, imports had reached a level equivalent to a quarter of the GDP. The federal government deficits had increased from $1.5 million in 1970 to $17.6 million in 1978. Nigeria’s total outstanding debt had reached the $2 billion mark by 1980. These dire economic conditions presented an opportunity for Maduka in a climate where other businesses were closing.
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“It was a seller’s market then because there was scarcity of products. In every difficult situation, an entrepreneur knows that his destiny is not in the hands of his state but in his own hands, he creates his own opportunities,” he says.
Maduka was making margins as high as 200% during this time. The import license gave him protection against the military-run government’s scrutiny and he was able to capitalize on this to grow his business. Maduka had a clear vision for his company from the onset. In the early seventies, the Nigerian motor industry had a lot of major players. Coscharis had to find a way to differentiate itself.
“Leventis was one of the foremost automobile sellers, followed by Mandilas, who were known for their excellent service. We also had some Peugeot dealers&#8230; By the eighties, almost all these companies collapsed and cars were being sold under trees with no service centers.”
Coscharis was responsible for revolutionizing the automobile industry in Nigeria by building showrooms fully equipped with in-house service centers. A second factor for Coscharis was its philosophy towards its employees. Being an entrepreneur at heart, Maduka only hired individuals with strong business acumen to ensure that the culture of innovation and competitiveness continued with the group. Maduka credits this strategy for the success of the group. The company currently has more than N50 billion ($250 million) in shareholder funds, generated in just under 40 years.
Overcoming adversity has always been one of Maduka’s strengths. Four years ago, he was faced with a scandal that threatened to scupper everything he had worked so hard for. In what he considers his worst day in business, Maduka was left with a devastating financial burden of N22.4 billion ($113 million) when he secured a loan for a business associate. At the time, Maduka was on the board, and owned a 25% equity stake, of Access Bank. He was approached by Ifeanyi Uba, the CEO of Capital Oil, for a loan to import petroleum premium spirit. After sympathizing with Ifeanyi’s inability to raise capital to save his business, Maduka took a calculated risk.
“I have never defaulted on any loans. Every bank works with Coscharis at an open credit and we are one of the few companies in Nigeria who have that relationship due to our strong financial position,” says Maduka.
He guaranteed the loan of $278 million for Ifeanyi to secure his goods, which was never repaid. In what was a huge scandal at the time, Coscharis had to repay the debt.
“I don’t think even Bill Gates can walk away from $150 million without it having an effect on him,” says Maduka.
Fortunately, the investments the organization had already made were enough to absorb the heavy shock.
Today, there is a new strategy in place. Maduka has set his organization the target of turning over a billion dollars in the next five years. Ever the entrepreneur, he has identified key sectors to help him achieve this goal. One of these is agriculture.
“Nigeria spent over $3 billion to import rice; almost 90 percent of Nigerians eat rice and we see an opportunity to create a billion-dollar business in rice over the next three years,” he says.
The current government supports Maduka’s decision and has made attempts to curb the importation of rice by raising the duty of the crop to 100%. Coscharis has acquired more than 3,000 hectares of land in Anambra State and is due to harvest the first batch.
These days, life is very different for Maduka. He has six children, two of whom are involved in the Coscharis Group. His family might not exist, however, if it was up to Charity’s uncle.
“When I told her family about my intentions to marry Charity, her uncle was so annoyed he got his gun and shot at me,” says Maduka. Luckily, he missed.
He is a firm believer in each one of his children receiving a Nigerian education before progressing to the classrooms of the United States. This way none of the children will forget their roots.
Maduka is passionate about the potential in Africa’s largest economy.
“Ten years ago, the Dangote you see today was not the same back then. The government showed goodwill and supported Dangote and today Nigeria will be a net exporter of cement instead of being an importer. Vodacom came into Nigeria and left, and now they are trying hard to return to the market without any success. A subsidiary company of a South African independent company, MTN Nigeria, has more turnover than its parent company. The potential in the Nigerian market is untapped. Saudi Arabia is selling over 150,000 units of Ford with a small population.”
“If we unleash the potential of this industry, and the government handles corruption, the true potential of this market will be unmatched anywhere in the world.”
If Nigeria does reach this potential, Maduka will be on hand to make the most out of it.

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The $500-Million Survivor

It was a sunny southern hemisphere spring day in October 1931 when businessman Max Sonnenberg and his son, Richard, opened the doors of a small shop in Cape Town&#8217;s city center. Allegedly housed in the dining room of the old Royal Hotel on Plein Street, within spitting distance from parliament&#8217;s back entrance, the store promised to bring value and affordability to South Africa&#8217;s white middle class.
Timing was far from ideal. The Wall Street Crash two years before had submerged the world in a frothing whirlpool of economic turmoil. South Africa too, was affected. Despite hardship dominated by poor economic growth, tumbling exports, and mass retrenchments, the store was a success. It did so well that it captured the entrepreneurial imagination of serial businessman Elie Susman who had made his fortune from cattle, banking, and retail.
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Having a genuine eye for business opportunities, Susman was taken aback by the success he saw, prompting him to financially back the opening of a second store in Durban. More branches followed suit and soon Woolworths was deeply embedded in South Africans’ day-to-day shopping lexicon.
Since the 1930s, Woolworths has morphed into a multi-billion-dollar holding company, comprising the familiar Woolworths food and clothing brand, as well as Australian brands Country Road and David Jones. The latter, a denim retailer, was bought last year for $2 billion. The acquisition proved to be a massive boost for Woolworths Holdings Limited (WHL), which saw its profit over the first six months to December 28, 2014, jump by 29%. Sales increased by 55%, to $2.56 billion. Without the David Jones business, sales would have grown by only 12.5%.
The David Jones acquisition also led to an expansion of WHL’s footprint, to 1,200 stores in 15 countries worldwide, including Australia. The 633 Woolies branches in 12 African nations, including Botswana, Namibia, and Kenya, however remain the company’s backbone. This number is likely to increase.
“We want to grow our footprint by some 10% per annum for the next three or four years,” says Group CEO, Ian Moir, adding that a lot of attention will go to the food side of the business. “Our food footprint has more than doubled since 2010.”
While WHL has been doing well, things have not always looked bright. The retailer was badly affected by the economic crisis of 2008/2009, which sank South Africa into its first recession in 17 years. Moir says the attitude of the company, which only comprised food and clothing at the time, towards its customers, was one of the culprits.
“We had become complacent, arrogant, and too expensive, and we were not listening to our customers. As a result, our sales plummeted during the recession,” he says.
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The downturn forced Woolworths to rethink its strategy.
“Someone once said that one should never let the benefits of a good recession pass by,” says Moir. “The Woolworths of today sees the customer as king, not the product. That is the big difference. If the customer thinks we are wrong, then we are wrong. If the customer thinks our prices are too high, then the prices are too high. That has been the biggest transformation since the recession.”
Complaints are taken seriously, says Moir.
“We used to be known as arrogant and not wanting to listen. Today, we reply to all complaints, queries, and criticism through our customer communications and social media teams. I even get some of them.”
The Woolworths approach has been well received in South Africa, as well as in other African countries such as Botswana and Namibia. Here the brand is still growing substantially. In some countries however, Woolworths didn’t manage to get off the ground. Nigeria is one of them. Last year the company decided to pull out of Africa’s largest economy for the second time.
“We were losing money hand over fist. Nigeria is a very difficult market for any apparel retailer to make money in. Firstly, the Nigerian retail market is largely informal, with very few shopping malls. The rental of the shopping malls that do exist, is very high,” says Moir.
“Doing business is very difficult, generally speaking, from traveling around to getting goods in the country,” he says, adding that Woolworths uses the same suppliers regardless of the location.
“We made a mistake by going into Nigeria, despite having the right partner,” Moir confesses. “It was the second time we tried it, and we won’t be trying it for a third time. Nigeria just doesn&#8217;t work for us.”
Moir doesn’t see Woolworths’ Nigeria adventure as wasted time. Making mistakes, he says, makes you grow.
“You, as a business, can always get better, and you will always make mistakes and there are always things to learn. My biggest fear is complacency in a business. If you think you won’t make mistakes, then you will fail.”
In other countries, business is going well. Moir says this is a result of the way Woolworths treats its employees.
“Our salaries are competitive and our benefits are better than elsewhere.”
Based on feedback from employees, the jobs portal, Indeed.co.za, gives Woolworths four out of five stars as an employer with staff discounts and incentives lauded. It, however, says salaries are too low and work hours too long.
The brand’s strength, according to Moir, is associated with value, principles, integrity, and sustainability.
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The company donates $79,000 to educational causes every week. Moir also says the company is committed to environmental sustainability, such as minimizing water consumption and reducing the use of genetically modified organisms (GMOs).
Despite its good intentions, Woolworths has faced the wrath of environmental activists more than once, and for a multitude of issues, including the treatment of pigs, the use of GMOs and claims the company’s free-range milk was not free-range at all.
“That type of activism is good for us as it forces us to do the right thing,” says Moir.
“That is why we, apart from selling free-range eggs, want to ensure that free-range eggs are used in all Woolworths branded products, down to the cake mix. This was a tough process. You are, after all, dealing with large suppliers of which you are not the only customer. As a result, you can’t do things as fast as activists would want you to. It takes years sometimes.”
Environmental activist, Caroline Hurry, however, claims the company won’t speak to her.
“They refused to answer any of my questions in writing. In the beginning, when I started investigating their practices in relation to animal cruelty, they suggested I call them for ‘a little chat’. But being a journalist, I insist on answers in writing. I have also found that the soy in their bread had the second-highest GMO content in the country&#8230; Woolworths doesn’t label all their GM food. At best, the label says ‘may contain GMO’. I have now been blocked on Twitter, by the very account that told us to ask questions,” says Hurry.
While he has sympathy for environmental activists, Moir is no fan of the Boycott, Divestment and Sanctions (BDS) campaign, which calls for the active isolation of Israel and for the country to end its occupation of Palestine. In South Africa, BDS has its teeth firmly sunk into Woolworths. Their objective is to force the retailer to stop selling Israeli products – 0.4% of its total offer.
“These protests were very unpleasant for our staff and customers, with pig heads being left on our shelves and people charging through stores, knocking over our goods, destroying them even. We have had protestors lying on the floor, pouring blood over themselves. A court order has stopped this.”
Despite the court order, the protesters claim their actions were costly for the retailer.
“The campaign is successful and growing. An independent report, released by Wits University, states that WHL has lost close to $3 million, since the start of the #BoycottWoolworths campaign in August last year. A survey among 300 people has shown that 84% of respondents said they stopped shopping at Woolworths shortly after we called for boycott,” says BDS coordinator, Muhammed Desai.
Despite a few setbacks, Woolworths has grown from a small store in Cape Town to an international retailer – a story of shopping bags
to riches.

How David Became A Goliath

It’s an interesting time for philanthropy in South Africa. Mining magnate Patrice Motsepe made news in 2013 when he pledged half the income of his family’s assets to his foundation.
Examples abound of similar financial contributions by prominent South Africans, but most of them go under the radar.
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Nedbank Private Wealth’s Giving Report tracks the giving activity of high-net-worth (HNW) individuals in South Africa, and for the person at the helm of its dedicated philanthropy unit, there is nothing more satisfactory than helping these individuals help others.
Noxolo Hlongwane spent a number of years in the banking industry before deciding to take a year off to find something more meaningful to do. Finally, she did.
“We all have ubuntu [a South African word for compassion and humanity] inherent in us,” says this Head of Philanthropy at Nedbank Private Wealth.
“We are creating a culture of professionalized giving…The philanthropy business at Nedbank Private Wealth doesn’t just help our clients create their wealth; it also helps them create a legacy in a meaningful manner, I think that’s why it’s such an important offering,” says Hlongwane.
Hlongwane gives advice to just about anyone who wants to give back to society, but for those ultra-wealthy individuals who meet the requirements to start a portfolio, the company’s philanthropy business offers an end-to-end service.
“We advise anyone, we do not charge. Although to become a client, you must be earning an annual income of R1.5 million [$127,000] or have R5 million [$422,000] minimum investable assets which excludes your primary home,” says Hlongwane.
According to a study by them, there are only 300,000 HNW individuals in South Africa, a country of over 52 million people.
Philanthropy is not just a job for Hlongwane. You can tell it holds a lot of meaning in her life, as she brings a lot of passion to her role.
“For me personally, especially as a South African, I think it’s a part of who we are. The definition of philanthropy is taken from a Greek word, meaning love thy neighbor, and it is for everyone, not just for the elitist, it is not just for the select few. Everyone can make a contribution and can make a difference.”
Despite the good in philanthropy, many have misconstrued ‘western’ perceptions of the term, she says.
“The perception is that it is for the Bill Gates’, people who can pledge billions. If we continue to think that it is for the elitist, then it becomes difficult to get people to give more and professionalize their giving. Even if you are giving R100,000 [$8,450] per annum, you can do it in a structured way, you can be strategic about it, that’s what we are trying to encourage strategic giving because we want long-term impact and benefits,” says the articulate Hlongwane.
For Hlongwane, the most important aspect for philanthropy is values – and not the monetary kind alone. You have to be able to care enough for the cause.
“Philanthropy speaks to personal value, in a large way it dictates the sectors that you support. It can be a very personal journey driven by personal values,” says Hlongwane, who says her unit is doing more than motivating big players in the economy to invest; they are currently working on getting better tax incentives as well for donors in the country.
And the year looks positive for philanthropy in general.

Philanthropy Is Not Just For The Bill Gates’

United States (US) President Barack Obama announced that private companies are providing $12 billion to his Power Africa program, while US firms will invest more than $14 billion towards banking, construction and information technology on the continent.
The US-Africa Summit held in Washington in August focused on sustainable development, trade, collaboration, investment, and America’s commitment to Africa’s security, its democratic development, and its people.
Obama assured Africa’s head of states, gathered in the Mandarin Oriental Hotel, that the US wanted to help Africa grow; nothing else. With his charming voice, he dismissed the notion that the US wanted something in return. Those who are not gullible know the US doesn’t do anything for free.
The African Union has 54 member countries. If the US really cares, it should help Africa in its entirety. It came as no surprise that Zimbabwe’s President Robert Mugabe didn’t get an invite. Other black sheep were Isaias Afewerki of Eritrea, Omar al-Bashir of Sudan and Catherine Samba-Panza of the Central African Republic.
Some African nations declined to join the global superpower. Sierra Leone and Liberia focused on domestic issues rather than sucking up to the US, while Ebola kept West African countries busy.
Africa is not a charity case and progress can be made on our own terms. Foreign partnerships are vital, but the US is not the only option. China is currently forging trade agreements with several African countries.
Now more than ever, Africa needs education to exploit its resources. Academics Nkem Khumbah and Melvin Foote see this as a more viable option than pumping aid into the hands of corrupt officials.
“There’s a way to make a lasting and low cost investment in Africa’s next generation: Obama must bring education – science and technology in particular – to the forefront of the debate about African development,” wrote Khumbah and Foote in The New York Times.
Africa is experiencing an economic upswing, but its growth is predominantly based on extracting natural resources rather than increasing industrial productivity. Most African nations are far away from making any significant international breakthrough.
This is not rocket science. Power-obsessed African leaders need to understand and implement measures to help their countries grow.
Dambisa Moyo, a Zambian-born economist and author of Dead Aid: Why Aid Is Not Working And How There Is a Better Way for Africa, says donations to Africa provide many points to debate – millions march for it, governments are judged by it and celebrities promote the need for it. Calls for more aid to Africa are growing louder, with advocates pushing for the roughly $50 billion of international assistance that goes to Africa each year to be doubled.
Some, however, argue that aid has made the continent poorer and economic growth slower. The aid culture has left countries more debt-laden and vulnerable to the vagaries of currency markets. This leads to Africa being an unattractive destination for investment.
According to Moyo, despite the aggressive debt-relief campaigns in the 1990s, African countries still pay nearly $20 billion in debt per annum, a stark reminder that aid is not free. In order to keep systems going, debt is repaid at the expense of education and health care. Calls to write off the debt are hollow when it is met with a fresh infusion of aid. We are trapped in a vicious cycle.
“In 2005, just weeks ahead the G8 conference that had Africa at the top of its agenda, the International Monetary Fund published a report entitled ‘Aid Will Not Lift Growth in Africa’. The report cautioned that governments, donors and campaigners should be more modest in their claims that increased aid will solve Africa’s problems. Despite such comments, no serious efforts have been made to wean Africa off this debilitating drug,” Moyo points out.
Obama might have good intentions but Africa, the sleeping giant of the world, needs to wake up and guard its assets: both human and natural resources. It needs to protect itself from the toxicity of foreign aid.

Why Aid Is Bad For Africa

By 1993, Uganda’s economic indicators were a far cry from what they are today. The East African state was, by then, just emerging from a string of civil wars. The infrastructure lay in ruins and unemployment was startlingly high. The banking sector was one of the few that offered enviable job opportunities. But here was Regina Mukiibi Mugongo, who had diligently worked with the now defunct Uganda Commercial Bank for 15 years, desperate to throw in the towel so as to become an entrepreneur.
Mukiibi rose through the ranks from a banking assistant to an accountant. She sought early retirement to enter into the travel business. But her request was turned down by her employers, who increased her salary, for they thought it was all about the money. Barely a year later, they learned that they were wrong when she submitted a second retirement request, this one was granted.
Mukiibi joined her brother’s travel bureau and it was on one of her numerous trips abroad that she discovered a business idea that would see her forge a new way.
“It was during these many trips to Europe that me and my brother [Frederick Katamba Mukiibi] thought about starting a funeral service company to offer professional send-offs for the deceased, just like we had witnessed,” she recalls.
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Little did she know that it would take years before they would see a cent. In 1994, they registered the Uganda Funeral Services (UFS) and pioneered its service across the African Great Lakes region. It took three years before operations kicked off in 1997, mainly due to differing cultural beliefs and practices within the region. Traditionally, nobody left the responsibility to handle and prepare the dead for burial to people not from the deceased’s clan and family.
“We risked the wrath of society and indeed they called us all sorts of names for our innovation. Most people interpreted our venture as taboo,” says Mukiibi.
Sadly, things would become harder before they became easier. Her brother, who was also a renowned lawyer in Kampala, passed away on a year after the company started operations, leaving her the mantle to carry on with the challenge of undertaking.
“For two months, I didn’t think I would be able to carry forward the business. Society was vehemently against what we had initiated that I even thought about going back to the bank to plead for my former job,” Mukiibi notes.
At the time, the communities around Bweyogerere, a Kampala city suburb on the eastern flank, were up in arms against the new funeral home she had established using part of her retirement package. It was the first of its kind in the country and a cultural shock to most. Nothing seemed to petrify residents more than learning that the funeral parlor was used for the embalmment of bodies, keeping vigil for the deceased and as a preservation room for cadavers.
She sought refuge by joining numerous national investor networks. Besides the support and protection the organizations offered her, they also held several events during which Mukibi created awareness for and marketed her services.
Mukiibi was forced to take on several jobs at no cost for demonstrational purposes and as a survival tactic. It was with relief that Mukiibi learned that similar services were being introduced by the Catholic Church in Uganda. Church leaders gave her hope and counseled her against giving up. When a priest passed on, the church enlisted her services. Soon after, elite citizens and the state also joined her list of clientele, as did foreign embassies in Kampala that need to repatriate bodies of the deceased.
Soon her business took off and she applied for a credit facility from a local commercial bank to boost it. This came easily given her good track record in the banking service. The funds helped her procure a permanent home within the precincts of Kampala.
Today, UFS’s offices are abuzz. Clients are constantly seen walking in and out. On the day that I conduct this interview, six families are processing a dignified goodbye for their departed. Mukiibi juggles between responding to my questions and playing her part as director in approving clients’ paperwork. She has to interrupt our interview to answer a few telephone calls with pathologists, clients and her team. It is then that I reflect on how Mukiibi has successfully transitioned from being a seasoned banker to an individual who stands side-by-side with bereaved families.
“When a departed family member is sent off in a dignified manner, in a way it reduces the trauma and agony that the bereaved family suffers,” she says.
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It was at Salisbury College of Funeral Sciences and Embalming in London that Mukiibi undertook professional training. Today, she is the proud proprietor of the only company in the African Great Lakes region to be a member of the National Funeral Directors Association based in Brookfield, Wisconsin, in the United States. She is also a council member of the International Federation of Thanatologists Association (IFTA) and FIAT-IFTA – the world organization of funeral operators headquartered in the Netherlands.
To date, she has won various international and local accolades in recognition of her outstanding service, the latest being the 2013 Phenomenal Woman of Funeral Services Trailblazer Award, which she picked up from the US-based 100 Black Women of Funeral Service, during their convention in Austin, Texas in October. Other accolades include the Best Ugandan Innovator in the senior category for the year 2004, Best Woman Entrepreneur 2007 and Regional Entrepreneur. She was also recognized as one of the top 50 brands when Uganda celebrated 50 years of independence in 2012.
With a fleet of over 30 hearses and a large team, Mukiibi stands out as a preferred service provider in a field that has since attracted about a dozen similar entities.
An expatriate from Thailand helps make customized coffin designs and other high-end furniture in the carpentry workshop she has established. Because Mukiibi understands the value of skills, she occasionally flies in professionals to train her staff in handling funeral services.
Her venture into neighboring Rwanda was short-lived due to what she describes as “non-commercial viability and unfriendly investment environment”. Regardless, she is happy with the breakthrough made in her home country.
Although in Uganda, like in many other African countries, most people rush into funeral arrangements after losing a person, Mukiibi says there is a growing trend to plan ahead for terminally-ill clients. Others have walked into her office to plan their own funerals. Her business has even transcended religious barriers as she has handled funerals for Muslim clients.
“People come in when they are completely shattered but they leave with a smile. Some have given us awesome gifts in appreciation,” she adds.
Her 10-year goal includes establishing a one-stop funeral center with a well-equipped morgue, modern crematorium, a cemetery and a funeral service institute affiliated to the US-based Mount Aida Funeral Training Institute.
Mukiibi bore the death of her brother and opposition to her business, but from her conviction sprung new life in a services industry that was unexplored in Africa.

From Banker To  The Business Of Burial

What is it?
A set of reforms to improve regulation, supervision and risk management in the banking sector.
Why do we need it?
The financial system is regulated to protect investors, ensure the solvency and soundness of financial institutions, keep efficiency and transparency in the markets as well as ensure a stable financial system. Regulators are there to reduce the risk of failure and contain any situations that occur. Micro-prudential regulation aims to limit the risks within intermediaries in order to reduce the possibility of an individual institution’s failure. This is the traditional regulation used before the 2007-2009 crisis, but failed to prevent systemic risks.
The financial crisis showed that not all institutions held sufficient capital and that the quality of the capital was sometimes poor and not available to absorb losses as they materialized.
Macro-prudential regulation aims to make institutions internalize the costs that their behavior imposes on others. It is now the focus of global regulators. Capital requirements may vary according to the intermediary’s contribution to systemic risk or with the business cycle—with a higher requirement in upswings to create a capital buffer against shocks. Institutions may also be required to take out extra insurance or to issue contingent convertible bonds. Due to macro-prudential regulation, some progress has been made in moving the world’s over the counter (OTC) derivatives markets to a centralized infrastructure.
Where does it come from? Capital requirements monitor a bank’s balance sheet by requiring that they hold a minimum level of capital and restricting the types of assets a bank can hold. The idea is that the capital buffer will help institutions absorb shocks and losses without going insolvent. Under the risk-based capital requirements of the Basel accord of 1988, minimum capital standards were linked to off-balance-sheet activities such as loan commitments and trading positions in futures and options. The Basel accord required that banks hold capital of at least 8% of their risk-weighted assets (RWA). Basel II tweaked the capital requirement to be based on the assets held by the individual bank. It however didn’t place enough importance on macro-prudential and systemic risk.
What changes does it bring?
The reforms in Basel III include a new definition of capital. The revisions made to raise Tier 1 capital’s quality and quantity (now 6%) should help prevent financial institution insolvency. Those in Tier 2, simplifying and reducing it to 2% of RWA, will help make sure depositors and senior creditors are repaid should failure occur. Tier 3 capital was removed all together. Aside from increased capital requirements, Basel III introduces stressed value-at-risk capital requirements for re-securitization; the introduction of a capital charge for potential mark-to-market losses and higher capital requirements for OTC derivatives.
The introduction of a leverage ratio, to be used in addition to the risk-based capital framework of Basel II, will be up to individual regulatory bodies to apply at their discretion.  The proposed new global liquidity standard entails a liquidity coverage ratio that requires the availability of high-quality and highly-liquid assets to exceed the net cash outflows of the next 30 days. This is to ensure that institutions can survive strain that may last up to 30 days. The other component of the new standard is the net stable funding ratio, requiring long-term financial resources to exceed long-term commitments.
Instability arises when banks have used short-term liabilities to finance long-term assets—resulting in what we call a liquidity and maturity mismatch—and market liquidity dries up due to a shock, such as a sudden reversal in capital flow. Banks will then be forced to sell off assets, leading to downward movements in prices. This places the entire system at risk.
Basel III will also introduce two new capital buffers: a 2.5% capital conservation buffer and a countercyclical buffer of 0-2.5%.
What happens next?
Global regulators have yet to agree on a way to deal with the “too big to fail” institutions. The “too big to fail” concept refers to the largest institutions, who’s failure would surely lead to the entire financial system crumbling. After the recent crisis, some of these banks consolidated to create even bigger ones. Since they know that they will not be allowed to fail they feel like they can take greater risks.
The implementation deadline for Basel III is 2019.   FL

Tag: Banking

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