Albert Essien: “We will continue to build first-class banks”

Strong fundamentals
Has the bank suffered as a result of this dust-up? “What was primarily impacted was confidence and trust.” These effects were noticed primarily in Nigeria where the wrangling attracted the most coverage and in that respect it was ‘localised’.

The saying goes that money does not like noise and the bank was making too much noise for some. Nevertheless, he says, in large their clients stuck with them because they believe in the Ecobank story, which they viewed as an African success story, and they saw that the bank was still fundamentally strong.

“The business model is something unique, based on the fact that the group is much stronger than its individual parts. We have a model which I call the hub-and-spoke. We operate in clusters and within each cluster it is important to have a strong central unit, a growth pole which can pull the others together.”

He expounds on the model using the CEMAC region as an example. “You need to make sure that your operations in Cameroon are strong; when you have a very strong Cameroon you realise that you have a strong cluster in the region.”

Similarly, he says, if your operations in Ghana are strong, they tend to pull in Sierra Leone, Gambia and Liberia. “A strong hub will ensure the whole region is doing well. Once you have a strong hub, it acts as a magnet. Ecobank’s main attraction is that we provide a distribution partner and a wide distribution network to multinationals, regional business, international organisations and governments. The smaller countries, if we can call them that, serve as a link.”

While he feels the profitability of perhaps some of the subsidiaries can be improved by “extracting more efficiencies” from individual country operations, the regional strategy on which Ecobank Transnational is built makes perfect sense.

“It allows the group to be more flexible and in some cases to benefit from economies of scale and regional agreements. For example, the Zambian authorities now require higher capital thresholds; we can fulfil this condition because ultimately the capital can be deployed not only in Zambia but also in other countries within the regional free trade area – we can make it work in DRC, in Zimbabwe, in Malawi.”

Continuing on the theme, he explains why the bank is interested in Mozambique. “Mozambique provides sea access to all these landlocked countries. We create linkages. Our task is to extract more efficiencies from these operations to give our shareholders the returns they expect.”

In addition, he argues, a wide footprint diversifies risks to the bank making it less prone to shocks in individual countries. “Another unique advantage is that we serve large multinational clients across different jurisdictions. With intra-African trade still lingering in the 10-15% mark, there is considerable room for growth.”