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Ecobank: we are very positive on Africa.

The Ecobank Group has become today one of Africa's biggest success stories. It is now operating in 16 countries and intends to expand in five other ones next year as it pursues its panAfrican strategy. The group has total assets of over $3bn and a workforce of 5,200. Omar Ben Yedder, Stephane Vigouroux and Gerard Choisnet talked to Arnold Ekpe, Ecobank's group chief executive officer.


With the opening of its latest subsidiaries, in Sierra Leone and Guinea Bissau, the Ecobank Group is now present in 16 countries. What are your plans for 2007?


Our strategy is to be a pan-African bank and to continue to grow. We plan to add five other countries in 2007 and therefore we will be operating in 21 countries. In the coming years, our growth will be in Central, Eastern and Southern Africa. Central Africa is becoming very important in the continent because of its huge natural resources, such as the oil and gas in Chad, Cameroon, Congo Brazzaville, Angola, DRC and Gabon. Our objective, as part of this expansion, is to be the leading bank in "Middle Africa", the area between North Africa and South Africa where we think we have a competitive advantage.

You mentioned last year Equatorial Guinea among the countries where the group intends to expand. What about that?

It hasn't happened yet. We are waiting for approval from the authorities.

Where do you stand on your plans to merge with First Bank?

Everyone asks us about this. It's a very complex deal, a cross-border transaction and it's the first of its kind. We found that we had to deal with a lot of issues. The discussions are still on course. We hope to arrive at a decision by the end of this year. You have to understand that for us it's a strategic decision. We're not very big in Nigeria and First Bank gives us a great opportunity to be in that market. First Bank is not big in West Africa and we give them a great opportunity to be there. Our ambition was to combine our operations in Nigeria and create a large bank to be called First Ecobank. The shareholders of First Ecobank would become shareholders of Ecobank Transnational Inc (ETI). The deal was complicated as it involved First Bank, Ecobank and ETI.

Was the merger with First Bank to add financial clout to Ecobank or to make it a bigger player?

Clearly it was a strategic decision to add financial clout and to benefit from economies of scale. It was to strengthen our presence in Nigeria and to allow us to move faster in terms of implementing a pan-African strategy.

If the merger deal with First Bank does not happen, do you see any other strategic alliances?

We are doing our very best for the deal to happen. It is such a compelling transaction not just regionally but for Africa and banking in Africa in general. But clearly the logic will remain even if this deal does not happen. We have a strategy to be in the top three in all the markets we serve. And in Nigeria we are not in the top three. We can make up some ground by organic growth, but other banks will not be standing still. Therefore some solutions involving our Nigerian subsidiary will be found. But right now, we are hoping that the merger will happen.


You spoke of cross-border merger problems and complications?

They are not problems, they are complications. You have to look at many difficult and sensitive issues like integration, regulations or governance. You have also to look at the culture of the two institutions. All this is important for the success of the transaction. These are some of the important issues you have at any large scale merger. As you know, Ecobank has assets of about $3bn and First Bank has assets of about $4bn. In total, you are talking about $7bn and that is a big challenge. Ecobank has always been a pioneer and we're not afraid of challenges. We are going ahead and we try very hard to make it work.

Your ambition is to create a big pan-African bank. How are you going to challenge the South African banks?

We have no plans to challenge them. We know Africa quite well and we have been in this market for some time. The South African banks bring some complementarities but we're not planning to get into South Africa. Our idea is to cover "Middle Africa" from the Atlantic to the Indian Ocean. It's a very defined pan-African area.

The Central Bank of Nigeria allocated $7bn of foreign reserves to 14 banks to manage. Is Ecobank involved?

First, I believe that the CBN has done a remarkable job in restructuring the Nigerian banking sector. The consolidation and its effects have been quite significant in the development of the Nigerian financial industry and in supporting economic growth. Significantly, the amounts of capital can now be raised locally. For example, the $750m Nitel transaction was largely financed locally. These are some of the benefits which have come through having scale, and the financial industry is about scale. As far as the management of the reserves are concerned, what the government is trying to do is to have Nigerian institutions play a greater role in managing its financial resources. But as the skills required are not entirely available locally, all the Nigerian banks had to pact with foreign banks. We partnered with ING Bank which is a leading international investment bank. We get our share of those reserves and we manage them. There are some skill transfers on the way and we all make money. The CBN wins by rapidly developing local talent. The foreign investors play a role in it and the local banks develop in the process, I think it's an excellent idea.

How much freedom have you got in managing these assets? Are there any restrictions?

The Central Bank has a prudent reserve management policy. We have an opportunity to participate in a fairly well established process. Previously the assets were managed entirely by foreign banks.

There is strong competition amongst banking groups in Africa with large groups in Francophone and Anglophone Africa as well as regional banks. There are also now sub-regional groups with strong ambitions. Has this influenced you in becoming a growing player reaching retail customers?

I would like to point out that Ecobank was the first regional bank. It was set up as a regional bank and our shareholders came from 15 different countries in the region. We are not like a Moroccan bank expanding into Sub-Saharan Africa, or a Cameroonian one into the rest of Central Africa. We were a regional bank from day one. As we grew into the West African region, which was our original base, we found that we could grow beyond that region. So we went into Cameroon in 2001. We found that we were equally successful there. Now, we are growing beyond and we are moving to Eastern and Southern Africa. The strategy to go beyond the wholesale bank is part of that evolution. We started off primarily as a wholesale bank meeting the needs of local and international companies. The prime movers behind the creation of Ecobank were the African Chambers of Commerce. At that time, the only banks across West Africa were state-owned or foreign banks. African businessmen needed to have a local bank that can support them and their businesses. Now, we find that there is a significant demand from small and medium-scale enterprises and from consumers to improve their standard of living. We are trying to play a role in winning the custom of more consumers.

Are you planning to explore other areas, like insurance?

Insurance is the next stage. We take it one step at a time. We want to get into the market, understand it and then add value to it. That's our next step.

What can you offer an Ecobank customer in Ghana wanting to do business in Togo?

The advantages are several and that is the uniqueness of the Ecobank group. We have the Ecobank Visa card and the Ecobank MasterCard which we are rolling out across the whole group. We have also our own Ecobank Card which can be used in all the eight UEMOA francophone countries. If you want to transfer money, you can do it very rapidly, without going from one bank to another. If you are a businessman, you deal with one of our banks and you cover 16 countries! These are some of the synergies and advantages from dealing with a regional bank.

As we become bigger, we will be able to offer an even better service on a regional basis. We are setting up a shared service centre in Accra, the first of its kind in West and Central Africa. When it is in place, we will have a seamless operation across all the 16 countries. It's nothing new; they are already doing it in Europe and in India. We are borrowing ideas and applying them here, translating them into Africa, and in doing so we move ahead of the competition.

You are listed on three exchanges since September. What are the advantages?

We were pioneers in the way we listed Ecobank. It was done on the same day on the three exchanges in Abidjan, Accra and Lagos. No other institution had done that before in Africa. The reason we had done it this way is because we are a regional institution. We were not going to list on just the Ghana or Nigeria stock exchanges or the BRVM. We had to list on all three to reflect our regional origins. So far, the market has received the shares very well.

The bank seems to have become more aggressive. Why?

We have always been pursuing aggresssively our stated objectives. Now, we are starting to talk more about ourselves so that people get to know Ecobank even better. This approach is good for the company, the shareholders and the market. One of our objectives which is not purely financial is to assist in the development of the African continent and the African people. By providing credit, we help governments to build infrastructure, companies to grow, and consumers to have a better life.

Do you find it difficult to balance development agendas and your obligations to shareholders?

We are Africa's leading independent regional banking group. We have to provide value to our shareholders, so we are a profit making company. But I don't believe that this means that you cannot also be a responsible citizen. We would like to make profits, provide a return to our shareholders and to be also socially responsible.


There are now huge investments coming from China, the Gulf and other countries. Are you taking part in these new business opportunities?

We have a programme of international development. We are very excited about the increasing presence of Asian institutions in Africa because that complements what the West, Europe and America, is doing. We don't see that as competing or replacing. We will be working together because Africa can do with all the help it can get. We are opening an office in Paris next year .We plan to have in the coming years offices in China and other major money markets around the world such as London, New York and Dubai. We will work with institutions and companies willing to come into Africa and work with African businesses, governments and institutions. We have a plan to be present in the major money centres to better serve our customers. But let me say that our focus is always Africa. Everything we do is based around trying to better serve the African markets, the African consumers, the African companies.

Would you help African corporations in these capitals?

We actually are one of the largest investment banks in West Africa. This is not very well known but the largest underwriter of debt security in the Francophone zone is Ecobank. We are building a very good investment bank in Nigeria as well as in Ghana. Our objective on the corporate finance and investment banking side is to be the leading investment bank and the leading commercial bank in our region, which is "Middle Africa".

In the past, Ecobank was quieter than other banks. Why?

Ecobank is a very humble institution. We prefer to be judged by what we do rather than what we say. We have managed to build a 16-country network very quietly. We're very much a team institution operating as a tight group, and we like to communicate a lot amongst ourselves. At the head office, there are only 30 of us of 10 different nationalities. Ecobank achievements have been very impressive until now. But being listed on three exchanges has, in a way, forced us to improve our communication externally and to provide the market with a lot more information.

What are your overall thoughts on Africa?

We have been very positive on Africa. We remain very positive about it because we take a long-term view. If you take a short term view you might misread the signs. I have been doing business in Africa for over 26 years. We have seen the good times and the bad times. But overall we have seen a considerable improvement.

The level of democracy in Africa today is the highest ever for the last 46 years. We've had successful elections in Liberia and DRC. Liberalisation of the economy is improving. We have seen a lot of money coming into Africa, not only from Asia but also from Europe and America. Fund managers and investors are coming to Africa and doing more deals and transactions than ever before. We raised a lot of money last year and a significant amount came from international capital.

We are very positive on Africa and we think that if the current trend continues, you will see a significant improvement in Africa's overall performance.

You seem to be from the Afro-optimistic school that has a positive view of the continent as opposed to many other people.

Not all is rosy, but there are important positive developments in Africa these last years. Take the governments in Africa. They are much more open to external investments than they used to be. For example, we bought a bank in Chad and we did so with the approval and full support of the government and the regulatory services. This has not been common in Africa and it is only in the last 10 years that South-South investments have started to increase. African governments are now more open and much more willing to accept foreign and South-South support. I think the AU, Nepad and other organisations are making African governments and institutions more willing to seek support from each other rather than externally. For example, we've invested close to $500m in the banking industry in West and Central Africa. Very few banking groups--local, regional or international--have done that.

In light of the success of the Nigerian banking reform, do you see this spreading to other African countries?

We would like to see more reforms but obviously this is up to the respective governments. I suspect that other authorities are studying the implications of the Nigerian consolidation and what they can learn from it. Financial services is a scale business, the bigger you are the more resources you can put into technology, into training people, into opening branches, into investing in products. Small banks find it difficult to do that. Smaller banks are also more prone to shock. A minor problem can bankrupt the bank. Bigger banks can handle the shock a little bit better.

In terms of African integration, what are your thoughts on the creation of a single currency being talked about in some circles these days?

It's not impossible but I think it's going to be a long journey. Its creation will only come from a real willingness to integrate African economies. The final word will be left to the political and regulatory authorities. However, we support and believe the move towards integration in Africa is a positive thing. It's in line with globalisation. And that has been done elsewhere. For instance in Europe where many countries use the euro between them.

A more specific question on Cameroon where there are some major mining and infrastructure projects. Are you involved in their financing?


We are quite involved in some of these but it takes a consortium of banks for the very large projects. We are active participants in financing local projects and we are involved in telecoms, infrastructure and government projects both directly and indirectly.

At the end of September, you declared profits of $50m. Do you expect the last quarter to be as positive and are you going to have a record-breaking year?

The trend you saw in September will continue. Ecobank is at the beginning of a period of significant improvements. Our performance this year is significantly better than last year. We will do better in the medium and long terms, by adding more countries and by delivering better services and solutions.

You are operating in Francophone and Anglophone Africa with different practices and environments and different ways of doing things. How do you manage to cope?

We don't see it as hard; we see it as a challenge. We know of other banks and other institutions that have done it. We have seen American, Dutch, and French companies do it, so we learn from them. We have common structures and we hope to have a culture where somebody from Ecobank Senegal can go to Ecobank somewhere else and instantly start work in an environment that is familiar to him. The computers and the systems are the same. We see the movement of people as something that enriches the institution.

We have people who have worked in Ghana, Mali and Senegal and they bring with them their experience in a very powerful way that enriches the institution. They can handle in their heads both cultures. It becomes a competitive advantage and as time moves on, it becomes increasingly difficult for other institutions to compete with us across countries.

If you take other banks, what I call our friendly competitors, I think they will all have to learn to manage cultures. I think ultimately that is one of the major challenges of being a regional institution. You have to manage the cultural sensitivities and diversities: you have to fly into a country and be able to feel at home. That is one of our challenges. In Europe, where you have different languages, they have done that already. We are going to try and replicate what they have done.

What is the bank doing about Corporate Social Responsibility (CSR) policy?

Last year, we decided that we are going to be reporting on CSR. We have been quietly doing a lot of things. We have created the Ecobank Foundation. It gets up to 1% of our profits after tax for CSR projects. It funded projects in Burkina Faso, Guinea, Chad, Togo and Mali to improve the conditions of women and children. It will be funding arts, like the cinema industry in Africa, and health projects, to contribute to the fight against poverty notably in the rural areas.


In addition, we have a diversity programme where for example we are consciously increasing the role of women in Ecobank group. Three of our country heads are women. One of our main executive board directors is a woman. In the group office, two out of five of our functional heads are women, and across the group we now have about 50% men and 50% women.

We also have recently signed a Memorandum of Understanding with Accion, one of the world's leading micro-finance institutions, to provide micro-finance to our customers. We are not experts in micro-finance but with our partnership with Accion we will make resources available to the less privileged customers so that they can move up the social ladder. We also engage the authorities in trying to see how we can help in regional integration projects. For example, we raised the point of regional convertibility with the single currency that allows easy movement of capital across the sub region. We think that CSR has to be an important part of any corporation in Africa.

What can the media do to assist businesses and African regional growth?

The most important thing is to put a positive slant on Africa. Africa is almost becoming a brand for poverty, disease, and all things negative. In fact the story on Africa is very positive. For the first time, we don't have several countries at war in the continent. The economy is growing and business is prospering. The telecoms and banking sectors are very successful. That positive approach, in a balanced way, is somewhat missing.

A final question: what is the secret of Ecobank?

We hold several things very important to Ecobank: teamwork--Ecobank is a bunch of Africans from many African countries working together as a team. We are the only ones who have done this successfully in the private sector. We favour a certain diversity that enriches Ecobank.

Sometimes in a meeting I'm speaking in French and the Francophone person is speaking in English. Sometimes I start off in English and finish in French; it's very exciting because from that standpoint I think that is the Africa of the future.

In terms of corporate governance, we are committed to the IFC standards. We have increasingly committed resources to institution building, ensuring that a regional identity is preserved within the group.

We continue to invest in good quality people as people are very important assets in banking. We invest a lot in systems and processes--the soft side of banking.

The numbers are one thing but behind those numbers, you have to have the structures and processes to ensure you are a player for the long term. We want to build a long-term world-class African banking institution.

That is our final goal and we hope to achieve it by doing the right things day after day.


What is your typical day?


I don't have a typical working day. I usually travel twice a week. We have a very small head office running the whole group.

I spend a lot of time on the road and on the phone. So a typical working day doesn't really exist for me.

I focus on issues of strategy, controls and regulations, education and training, shareholders and issues relating to the Ecobank brand and image.

Always on the move, what would make your life easier?

Better air networks. How do you get from Ghana to Chad? Best way is to go via Paris!

Favourite music

I listen to all sorts of music

Last book you have read

The Spanish Civil War. I read three books at a time. I like biographies, historical books, and business books.

Favourite film

Dr Zhivago

To relax?

Ecobank is a passion for all of us. Relaxation is when you have the time. Holidays and time with my family.


Reading and travelling

Last holiday

Latin America, which by the way, has a great banking and micro-finance sectors.

Even on holiday you are working?

When you see a good bank branch, you want to see how they're doing it!

Last question on your background

I am a Nigerian who grew up in Cameroon.

I went to school in Manchester and as a result I support Manchester United.

I have a degree in Mechanical Engineering and my first job was with Schlumberger.

I then moved into banking where I have been for 26 years.
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Author:Ekpe, Arnold
Publication:New African
Article Type:Interview
Date:Jan 1, 2007
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