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25 years of banking in Africa (Ecobank Supplement)

By Vision Reporter

Added 8th October 2013 01:44 PM

There are few banks that were established to create hope and turn great African dreams into reality. Also, a few banks such as Ecobank, have succeeded in impacting the lives of Africans.

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There are few banks that were established to create hope and turn great African dreams into reality. Also, a few banks such as Ecobank, have succeeded in impacting the lives of Africans.

There are few banks that were established to create hope and turn great African dreams into reality. Also, a few banks such as Ecobank, have succeeded in impacting the lives of Africans. While it is five years since January 19, 2009 when Ecobank opened to Ugandans, the bank – one of the biggest African success stories, has lived in the hearts and minds of many Africans for much longer.

It was on October 3, 1985 after close to 42 years of wide consultation that countries in the Economic Community of West African States (ECOWAS) finally garnered $100m and started the Ecobank Transnational Incorporated (ETI) bank.

The generosity of Gnassingbé Eyadéma, the late President of Togo is forever etched in the history of this great continent after he offered to host the bank’s headquarters in Lome, the Togolese Capital. October 5, 1985 is a landmark date in the Ecobank story.

This is when an agreement was reached with the Togolese government for the bank’s headquarters to be based in the country. Citibank joined the Ecobank cause in 1986 signing a two year technical assistance agreement to 1988. This marked the start of the ambitious expansion into Africa; the bank’s growth momentum has only increased since. Operations Within the first three years of its establishment, Ecobank opened in five countries, Togo, Nigeria, Côte d’Ivoire, Benin and Ghana.

The bank is currently present in 35countries in sub-Saharan Africa and four global business capitals Dubai, London, Paris and Beijing, asserting the banks credentials as a truly pan-African and increasingly global bank. At the end of June 2013, the bank’s assets had gone up 15% to $20.6b from June last year.

Customer deposits are a massive $15b; half year net revenues hit $947m, with pre-tax profit at $200 m. A simple calculation will reveal that that Ecobank’s Assets are 1.03 times the size of the Ugandan economy. Uganda’s economy is now estimated at $19.88b. “Our strong results for the first half of the year show continued progress and demonstrate the benefits of our diversified business model,” says Thierry Tanoh, the Ecobank Group CEO.

He explains that the 24% increase in net revenue they achieved is all organic growth and is testament to the hard work of their staff. This growth, combined with better cost control, has more than doubled net income for shareholders yearon- year. In the last three months, Ecobank provided additional credit of $792m to corporate clients. The bank is the biggest lender in Africa with over $9.9b in loans.

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A client transacting business at Ecobank Uganda main branch on Parliamentary Avenue. Photo by Joel Ogwang

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Role
Ecobank has remained committed to the original principles of financing business and trade. A core slogan in Ecobank’s policy is to connect with the informal sector markets. The bank has always been about transforming lives, creating hope and delivering positive change through facilitating trade not just for a few, but for all Africans.

It is a principle that has endured since the first meeting of Federations of West African Chambers of Commerce (FWACC) in Mali in 1972 to consider the creation of bank and subsequent ECOWAS meetings at the Conakry summit in 1983, the Lomé summit in November 1984.

It was with great hindsight that members of the FWACC began to debate the idea of a private sector institution that would facilitate trade in the sub-region.

Strong communities of traders in countries such as Togo and Benin and in the Sahel, voiced their frustrations at the continuing stranglehold of foreign business interests, especially in the banking sector. There was a clearly felt need in West Africa for a more prominent role for the region’s private sector, since state-driven economic models were apparently not robust enough and neglected the informal sector.

Feasibility studies for the creation of the bank commenced in 1983, and the naming process would soon start. Though some preferred to call the bank “the West African Bank of Commerce and Industry” and others “Banque d’Accord” the names were not as endearing as Ecobank – as we know it today. The bank has outlived great political upheaval, coups, civil wars and single party rule prevalent across a significant number of sub-Sahara African countries in the 1980s and bigger and better than ever.

Ecobank’s expansion in Europe and its strategic alliances with Nedbank South Africa and the Bank of China illustrates the banks global ambitions. Ecobank Uganda’s journey Ecobank Uganda opened its doors for business on January 19, 2009. The entry in Uganda was part of Ecobank’s strategic engagement of the East African market. Ecobank Uganda’s strategy is in tune with the Ecobank global strategy of harnessing strong retail banking capability within informal sector to complement its traditional wholesale market.

The bank continues to seek out the unbanked and the under-banked. Bank data shows that targeting a massive increase in the number of account holders has been pivotal to the group’s growth strategy over the past few years. An essential part of this strategy has been an increase in the number of branches and the quality and variety of services offered.

Ecobank has set-up branches at parliament avenue, Bombo Road, Wandegeya, Rwenzori Towers, Kikuubo,Mukono, Entebbe, Forest Mall,Oasis Mall, Ndeeba, Kyambogo University and Bugema University. Michael Monari, the Managing Director, Ecobank Uganda, reveals that new branches are soon opening in Jinja, Arua, Mbarara and Gulu.

The bank has offsite ATMs at he Sheraton Hotel Kampala and Ham shopping mall in Makerere University and many others. Branch expansion will facilitate its goal of engaging informal sector markets and facilitate the players with tailored solutions to hasten their economic development. Ecobank was named best bank in Africa 2012 by Euromoney, African Banker and Global Finance. It was also named the most innovative bank in Africa in the same year

Benedict Sekabira, the Director, Commercial Banking cuts a tape at the opening of the Bugema Branch

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A menu of tailor-made products
By Joel Ogwang
The banking industry is such a big consumer of new technology that, with this, comes new products being developed every day. As such, to stay in business, serving both wholesale and retail clientele, requires providing a wide range of existing products as well as new developments.

Business is more than just money At Ecobank Uganda, business success depends on much more than just access to money, but also the broader understanding of needs of enterprises, whether multinationals or entrepreneurial start-ups. Its unrivalled presence across Africa and experience in helping businesses grow means that the bank provides clients with practical financing solutions and ongoing support.

It is the knowledge, experience and local insights of its clients that distinguishes Ecobank Uganda from its rivals and place their considerable expertise at the client’s disposal. At the heart of our involvement is a client’s dedicated pan-African relationship manager who is committed to understanding the customer’s business needs and providing responsive, customised lending solutions, with a focus on local empowerment.

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What Ecobank offers
To its clients, Ecobank Uganda offers both wholesale/ corporate banking and retail/domestic banking. Wholesale banking targets multi-national companies with headquarters outside Africa, international organisations and bilateral/ multilateral development organisations as well as regional corporates that operate in more than one African country.

Retail banking targets largely local corporates, Small and Medium enterprises (SMEs) and consumer banking. “We also look after financial institutions like banks, credit institutions, fundmanagement companies and pension’s funds,” says FrancisOgwang, the head of corporate banking.


Products
Whether in need of a trade loan, working capital or longer-term project finance, Ecobank is uniquely positioned to deliver a truly pan- African service. Its internet banking service gives a client secure access to corporate banking 24/7. “Every business is unique, but we have different products for different businesses,” says to Johnson Galabuzi, the head of Local Corporates and SME Domestic Bank.

“We offer overdrafts, sortterm loans, guarantees, letters of credit (advance payments and performance payments) as well as bid securities.” Innovative and integrated cash management solutions galvanise business in Africa, settle transactions efficiently and mitigate payment risks as well as supply chain finance across Africa with proven solutions for both your suppliers and distributors.

Ecobank Uganda also offers a variety of products currently, including but not limited to; online/ internet banking, treasury services (by selling and buying forex and dealing in 25 currencies) and transaction banking services (cash in transit services, teller implants for big customers).

Others are funding solutions (short and long-term loans), over drafts and letters of credit. There is also supplier/ distributor financing, commodity financing (finance oil and gas, coffee, tobacco, tea and cement), invoice discounting and project finance.


New products
Ecobank Uganda has widened its array of products to include custodial services, leasing and asset finance. These have not only attracted more clients, but also offered the current ones a rich menu of new products. And, with the recent discovery of oil reserves worth 3.5 billion barrels in the Albertine Grabeen, Ecobank is also offering services in line with harnessing resource through financing solutions for the oil and gas value chain.

“The chain includes upstream (activities of exploration and production), mid-stream (refinery) and down-stream (distribution in stations),” says Ogwang. They also offer leasing equipment services for the oil and gas sector to finance the purchase of drilling rigs, trucks and oil tankers, among others.

With the liberalisation of the pension sector, Ecobank is looking at playing active role as fund custodians, offering custodial services. The bank also offers commodity financing solutions, inventory finance, warehouse expansion financing as well as import/ export finance

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Ecobank targets five more branches, 20 ATMs

Considering the high mortality rate of businesses in Uganda- where only two in five businesses celebrate their first birthday, five years, and still counting, can be a milestone.However, in an industry dubbed one of the world’s most expensive for a new competitor, just like aviation, and which is, also, dominated by local and international players, surviving in businessalone may not, after all, call for a toast. It is the ability to stay afloat and remain competitive, retain customer confidence as well as expand coverage, that are critical.

 

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A lady making transactions from one of Ecobank’s ATMs. Photos by Joel Ogwang  

Ecobank’s charm
For Ecobank Uganda, a member of Ecobank Transnational, the leading independent pan- African bank, the magic to surviving the storm that sweeps most businesses in Uganda into obscurity, lies in strong ethic and flexibility. This is because of stiff competition in the banking industry and a wealth of experience in providing quality services and products gathered from35 countries.

Worth noting, also, is the fact that on the occasion of celebrating its fifth anniversary since opening its doors to Ugandans in 2008, Ecobank has also withstood the tense competition provided by other players, both established andnew entrants, into the country’s informal and mainstream banking industry to stay afloat.

At the centre of Ecobank’s success, according to Johnson Galabuzi, the Head of Local Corporatesand SME Domestic Bank, is the customer. “Our products and services are tailor-made to suit our client’s needs,” he says.“We listen to their needs and structure something that suitsit. Our pricing is not cast in stone. We offer very competitive prices and experience spanning over the growth of our networks in 35 countries.”


Uniqueness
With $20b balance sheet businesses, Ecobank is able to structure and package deals of any size of transaction, a feature that sets it apart from most conventional banks, says Francis Ogwang,the Head of Corporate Banking. “One unique thing about Ecobank is having a presence in 35 African countries,” he says. “No other bank in the world has that big presence in
Africa. The other unique think about Ecobank is that no other bank has a presence in East Africa like us.” The bank is currently present in Uganda, Kenya, Rwanda, Burundi and Southern Sudan.


As well, the technology and expertise in terms of structuring deals can’t be underestimated, says Ogwang. “All businesses you can think about in Africa right from oil and gas to coffee, cement, tea,cocoa in Ghana and Nigeria, we have done,” he says. With a bureaucratic-free operation benchmarked on first-come-first-serve basis, a client who walks into Ecobank or conducts businessonline will not regret doing business with the bank. In fact, the client will find a trust-worthy and experienced partner capable of meeting all his/ her banking needs. “The turn-around time and availability of services
is a key focus at Ecobank,” says Galabuzi. “We believe in time-lag resolution of the client’s needs as a selling point because good feedback about the bank attracts more new businesses.”


Expansion plans
Growth and expansion are part and parcel of any thriving business akin to a human transforming from childhood to adulthood. In the banking industry, coverage of any bank or financial institution is measured by the numberof branches it has. In Uganda, Ecobank plans to open-up new branches in Arua, Mbarara, Gulu and Mbale.

The Jinjabranch is ready. This will help the bank recruit more unbankedUgandans into the formal banking system with a view to increasing their savings and investments culture, considered one of the lowest in the world. It will also offer them short and long-termloans to start and expand their business Ogwang says, every year, their plan is to grow organically and open three branches.

Within the first two quartres of 2014, Ecobank plans to open-up new branches to increase its coverage. “Currently, we have 18 Automated TellerMachines (ATMs). We plan additional 20 ATMs within the nex  six months. We also strategic working partnership with Centenary Bank for our clients to leverage on its presence especially upcountry,” Galabuzi says.

In the virgin market in Southern Sudan, Africa’s 54th and newest country, there are vast opportunities that Ecobank looks to tap into andexploit.And, with the Democratic Republic of Congobeing Uganda’s third largest trading partner afterKenya and Southern Sudan, the bank is alsolooking at increasing its presence from Bunia,Bukavu and Goma.“We have plans of going to Beni and Butembo which are very serious business areas in eastern DR Congo,” says Ogwang. “When we open-up more branches in those areas, the sky will be the limit for us.”

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25 years of banking in Africa

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