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African ambitions: prince Kofi Amoabeng, FCMA, CGMA, founder and chief executive of UT Bank, Ghana.

What is UT Bank?

It started out as non-bank financial lender Unique Trust Financial Services in 1997, lending to the informal and SME sectors. It served companies that don't prepare full accounts, which made it harder for banks to agree to finance them. We were able to deliver a fast service to borrowers that banks normally shy away from. If it takes between three and six months for companies to raise capital it is often too late--we committed ourselves to delivering cash in a faster time. We said we'd deliver in 48 hours. It required monitoring, advice, partnering and making sure we were there for our customers. We changed the system of banking in Ghana by tailoring lending to individual needs.

We started with $20,000 in 1997 and in 2008 went public with a market cap of $84m because we believed we could compete with the banks--raising $27m in return for around 30 per cent of the equity in order to buy a foreign bank.

You led one of Africa's first reverse takeovers when UT Bank acquired BPI Bank in 2010. How difficult was that to achieve?

We were the first non-bank to buy a bank in Ghana and the first Ghanaian bank to buy a foreign institution when we acquired BPI Bank from its Malaysian owners. We wanted to keep the bank separate and keep UT operating as it was. But the Bank of Ghana wanted us to recapitalise the combined bank to the amount of $60m when at the time its bank's ability to capitalise was only $10m.

So we had to bring together two very different institutions to form UT Bank. We had the challenge of bringing together two cultures and developing a new institution. Staff at BPI were not motivated, there were accusations that some took bribes, and many had inflexible working arrangements as a result of membership of a union that we were able to mediate with. I became managing director of the bank, introduced new software and wrote off some toxic assets on the balance sheet. It has taken a couple of years to get to where we are now, which I would say is at the bottom of the leading group of banks in Ghana.

We listed the new entity on the Ghana Stock Exchange. Roll on three years and the most recent bank to be formed in Ghana was named Bank of the Year in 2011.

How is UT Bank, trading at the moment and what are your plans, particularly regarding expansion, in the medium and long term?

The two largest investors--IFC and DEG--invested $2.0m in the bank in the first half of bon to strengthen credit lines and the long-term credit we can offer clients. In the medium term we expect to be able to offer more and cheaper credit to SMEs and trade lines for imports. Many of our clients are in the manufacturing sector so they need longer term lines.

We are looking to grow the bank from its current size of 26 branches and expect that, in time, it will become pan-African. It will then be possible to target countries in West Africa, such as Sierra Leone and Liberia. We are developing a banking presence in Nigeria and South Africa through the bank's holding company. We have two banks in Lagos, Nigeria, and intend to open a third in Abuja by the middle of the year. In South Africa, we have a branch in Johannesburg and are opening another in Pretoria. Once we are able to grow in those two countries--the largest economies in Africa--it will be easier to roll out to other countries.

Zambia, which is surrounded by eight other countries, is being looked at as a location in which to open another branch later this year. A foothold in the Zambian economy will help us set up other branches on the other side of its borders.

What have been the challenges for banks to grow in Ghana and Africa as a whole?

There is plenty of opportunity for UT Bank to grow because, on the whole, there has been a lack of appetite for risk. Many African banks have moved away from lending. They'll only offer banking to reputable corporates, governments and respectable institutions.

There is little enthusiasm for lending to the informal sector. Even if an SME is 100 years old it will find it almost impossible to raise $1m in a week.

Some institutions, such as Ecobank (initially backed by the Federation of West African Chambers of Commerce and now in 32 countries), have established a pan-African presence quite rapidly. But I think the problem is that the banking sector in Africa is dominated by foreign banks.

Banking is a conservative industry and there is not a lot of demand to change banks. In South Africa, banks such as Standard and Barclays have dominated for the past 150 years.

In Ghana, most banks are state-owned and because they are controlled by politicians they do not have what it takes to change.

There is also the issue that banks need a lot of capital to set up. In Ghana, they require $60m, whereas in Nigeria they need around $250m. This is partly because institutions such as the IMF and the World Bank want banks to be more robust. But the consequence is that it becomes difficult for Africans to set up a bank.

What are your expectations for Africa in the next few years, given the enormous potential of the continent?

I pray for the day when African countries can realise their potential, but I am not optimistic. I often ask myself: Why is it that Africa is always able to get it wrong? I think there is too much corruption in government, because we don't respect ourselves and are not doing enough to raise the living standards of our own people. Instead of building institutions we are actually knocking them down. The one African country that isn't beset with these issues is South Africa, but its institutions weren't developed by Africans.

What are the roadblocks to building strong governance structures across African government, finance and corporates in achieving that development?

Despite the legal structures in place across Africa, too many people seem to operate above the law. They act as though they are untouchables. We need a government that will say that we're all equal under the law. That ethos must encompass the law and the police, with the result that everyone pays tax and those that transgress should pay fines.

We have all these ideas when people come into power, but it costs so much to win elections that they have to make deals. By the time they come into power they have to look after these vested interests, rather than the people who elected them. If you want to do the right thing you are in the minority. In Ghana, we have Kofi Annan, but he can't do anything about national politics.

We have the third-fastest growing country [in the world] but we are always missing out on the opportunities that are available. Foreigners who see the opportunity come in, make money and get out again. One of the problems is that in many places here there are no street names or house numbers, so how do you collect taxes from people? Ghanaian institutions are worse now than they were when the country gained independence 55 years ago.

With what I am doing I can put money into the hands of people who wouldn't have it otherwise. By doing this we can create employment and ensure people can put food on the table for their families.

Can CIMA play an important role in developing a cadre across Africa capable of implementing those governance structures?

CIMA is a great qualification. We have plenty of CMA-qualified people in Ghana. But how effective they can be depends on where they work. If you take the CIMA qualification and go into government you can't tell politicians what to do. The qualification is great, but its effectiveness also depends on how you apply it. There is a strong possibility that CIMA people in government are not really raising their voices as they are afraid of losing their jobs. They keep quiet or they quit.

In business, conditions are also different in Africa compared to elsewhere. You have to be pragmatic. We have had to create structures to be able to grow our company into a bank. In this respect CIMA helps you to be quite realistic and to see what applies best, rather than just taking the methodology of the Western world.

Advanced country solutions do not necessarily apply. For example, we do not have structures and systems that are as well developed as they are in the West. It calls for more ingenuity and better management of risk. I think that CIMA really helps in this environment in understanding the issues. The growth of UT Bank had been achieved, in part, by the recruitment of CIMA graduates to key positions in the bank.

Why was CIMA the right choice for you?

I chose to study CIMA simply because it was the only accountancy qualification then available in the capital, Accra, and qualified in 1977. Unlike the post-mortem type of work that you have with other accounting bodies, with CIMA you actually make things happen before the results are captured. I didn't want to be a number-crunching accountant at the end of the year, I wanted to be in a management position, where the figures are the means of informing me what to do.

CIMA training has stood me in good stead throughout my professional life. The CFO position is generally a sound qualification for the CEO slot, where the final decisions are made. Running a business means that you should be on top of the computations that have gone into the options on which you have to decide. This is where CIMA comes into its own, because it enables you to understand the options and the choices that you have to make. So I think CIMA should be bringing out a lot more CEOs than other accountancy qualifications.

Photography by Nyani Quarmyne


2010: Became chief executive of UT Bank (following takeover of BPI Bank).

1997: Launched Unique Trust Financial Services.

1992-2003: Lectured at Ghanaian Stock Exchange.

1982-1992: Financial director, Jam haus, Opeyesco Wood Processing Ltd; local rep at Elf Aquitaine of France; investment consultant at KK Power; financial director at Schiewe Ltd.

1982: Left the army having achieved the rank of captain after the return of the country to military rule.

1975: Commissioned as a lieutenant in Ghanian army. While in the army, won a scholarship from the Ministry of Defence to study the Royal Army Pay Corps course in cost and management accountancy at Winchester in the UK.

1975 Graduated from the University of Ghana Business School with a BSc admin (accounting).

Interview by Lawrie Holmes
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Author:Holmes, Lawrie
Publication:Financial Management (UK)
Article Type:Interview
Geographic Code:6GHAN
Date:Mar 1, 2013
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