Bulls n Bears Entrepreneurship Zone :: Leadership lessons from Africa’s trailblazers

Mon Jan 21 09:31:18 CAT 2019

 <http://www.nedbank.co.zw/> 

Africa offers growth-minded companies exciting opportunities. Its
population is young, fast growing, and increasingly urbanised. The rapid
adoption of technology, meanwhile, makes the continent a fertile arena for
innovation.

In an article first published in the January 2019 McKinsey Quarterly, the
reflections on leadership from well-known African leaders are summarised.
Together, their insights illustrate what is needed to thrive on the
continent. These interviews was part of the research for Africa’s Business
Revolution: How to Succeed in the World’s Next Big Growth Market (Harvard
Business Press, 2018) and is shortened and adapted for publication here.

Nadia Fettah, CEO, Saham Finances

Nadia Fettah

Map your strategy: Building a pan-African insurance company

Nadia Fettah, CEO of Morocco-based Saham Finances, has overseen the
company’s expansion from a small local firm into a leading African insurance
company operating in 23 countries across the continent. In 2016, Saham took
its African expansion strategy to the next level: it partnered with
<https://www.howwemadeitinafrica.com/tag/sanlam/> Sanlam, a long-established
South African insurance company that had also made Africa its major growth
focus. This partnership became a merger in 2018, when Sanlam fully acquired
Saham in a US$1.1bn transaction, purchasing the remaining stake in the
company it didn’t already possess.

Nadia Fettah: Our goal was simple: to become the best insurance company in
Africa. Our first step was to become a major player in Morocco, which we
succeeded in doing over three or four years. But our ambition was big and
our market was small, so we looked for the next countries into which we
could expand. We considered North Africa and Europe, but when we started
traveling in sub-Saharan Africa we realised that we could have a major
impact there. Most countries had very low insurance penetration, so there
was great potential to serve clients who had very little access to
insurance.

That led us to expand quickly across different regions of Africa. Of
course, that rapid expansion came with challenges, as the example of our
entry into Angola illustrates. We bought a fast-growing local insurance
company in 2015, but just as the deal closed, the oil price collapsed,
putting Angola’s oil-dependent economy into a tailspin. Suddenly, everything
went wrong, and we were facing a crisis.

But we took a long-term view, and our local management team quickly came up
with a strategy to save the business. Rather than scaling back, that
strategy focused on ramping up sales to business customers, including
thousands of smaller enterprises. Within a year, our Angolan business had
returned to profitability and built a real beachhead for us. As we were
growing, our competitors were halting their investments. That will give us a
strong competitive advantage as Angola’s economy recovers.

Today, we have a large portfolio of businesses in smaller countries, so we
at headquarters can’t micromanage. Instead, we give our country managers a
lot of freedom and make sure the people we appoint to those roles are real
entrepreneurs. We issue guidelines on topics such as asset management, and
we provide our country operations with technology-driven back-office
support. Beyond that, we let our local operations decide what to do and how
to do it.

Talent is an essential component of our success. I personally spend one
third of my time on talent management and development. One key component of
our talent strategy is to make geographic mobility a requirement for career
advancement at senior levels – a key step in building a pan-African business
with shared values and practices.

James Mwangi, managing director and CEO, Equity Group Holdings

James Mwangi

Innovate your business model: Fulfilling a societal need for financial
inclusion

James Mwangi, CEO of Kenya-based Equity Bank, built the company with one
core purpose in mind: to solve the social problem of lack of access to
financial services. Equity Bank was born out of Mwangi’s turnaround of a
then-small Kenyan building society, which was converted into a commercial
bank in 2004. Today, it has more than 12 million clients in six countries
across East and Central Africa, as well as nearly $5bn in assets and
reported pre-tax profits of $270m.

James Mwangi: I grew up in a rural area of Kenya, and my own mother, Grace,
didn’t have a bank account. The nearest bank branch was 50 kilometres away,
and the minimum opening balance was equivalent to several years of her
earnings. My mother would also have been intimidated by banks, with their
granite floors, long queues, and formally dressed officials.

Fewer than one in 10 Kenyan adults had a bank account at the turn of the
21st century. Today, thanks in part to Equity Bank’s innovations, two thirds
of them do. We knew we had to address the needs of people like my mother. We
wanted to give banking a human face and create the concept of the bank as a
marketplace where people would feel at home. We did away with high minimum
balances, created affordable products, and, most importantly, delivered them
where people lived. One innovation was to introduce what we called “mobile
village banking”, or banking on wheels. Long before cellphone banking came
along, we created minibank branches that could fit in the back of a Land
Rover and drove them from village to village across rural Kenya.

Maybe our best-known innovation, though, is our agency banking model:
Equity Bank has accredited more than 30,000 small retail outlets across the
country as bank agents, able to accept deposits, dispense cash, open
accounts, apply for payment cards, pay bills like those for power or water,
and much more.

It took us six years to convince the Central Bank of Kenya that shopkeepers
could accept cash as banking agents. But once we did, we were able to
multiply our network 1,000-fold. That has really taken banking to the last
mile in every village. As a result, banking now competes with sugar and salt
as a product.

Our business model is high volume and low margin. Today, Equity Bank has
enabled true mobile banking via our Equitel mobile-banking application,
which we launched in 2015. Equitel uses SIM overlay technology to enable
easy access by customers of every mobile provider. Equitel has become very
big, very fast.

Today, our branches are doing 5,000 transactions a day, our agents are
doing 300,000 transactions a day, and Equitel is doing 900,000 transactions
a day. As customer preferences for channels of service continue to evolve to
self-service devices, the old brick-and-mortar branches are moving to become
service and advisory centres. The bank’s cost model is shifting from a
fixed-cost to a variable-cost model. This has helped us reduce our
cost-to-income ratio to an average of 49 to 50%, down from a high of 60 to
70% some years previously.

We are already looking ahead at future innovations. We see social media as
the next channel for banking, so our next big focus is channel innovation.
We are also looking beyond financial services and building a new business in
the healthcare space – a network of medical centres called Equity Afia.

Social impact is embedded in our DNA, and it is what has enabled Equity
Bank to scale: today it is the biggest bank, by market capitalisation, in
East and Central Africa. We see the bank not just as a company but as a
movement for socioeconomic transformation. People see themselves as part of
that movement. They say, “I joined, I became a member,” not “I opened an
account”. That concept of belonging has been central to Equity Bank’s
growth.

Fred Swaniker, founder, African Leadership University

Fred Swaniker

Unleash Africa’s talent: Imagining new approaches to shape the skills of
the future

Fred Swaniker is the founder of several innovative educational and
leadership institutions, including the African Leadership University (ALU),
whose campuses in Rwanda and Mauritius are based on a new model of higher
education. ALU students manage their own education, using technology,
peer-to-peer learning with classmates, and four-month work-experience
internships with partner companies. That enables ALU to provide a
world-class education at a fraction of the cost of traditional universities.

Fred Swaniker: I spend my life today looking for and developing Africa’s
future talent. What I can tell you is that there’s an abundant source of
talent in Africa: it has the youngest population in the world, with an
average age of 19.5, compared to 46 or 47 in Germany and Japan. And this
talent is driven, hungry, and willing to learn – all they need is an
opportunity. When we give them that opportunity, even though they may have
come with less preparation than you might find in other parts of the world,
they catch up fast. We’re able to get people who come from very
disadvantaged backgrounds with very weak foundations to perform at
world-class levels within two years.

Companies that succeed in Africa need to look beyond the rough edges that
they might see in a young African that they interview – someone who hasn’t
necessarily been to a fancy university and doesn’t speak English the way
they might expect. They need to really invest in that talent; that
investment will reap significant rewards for them as they grow.

You also have to take a strategic role in developing your own talent – to
look at talent development as part of your value chain, not as something
that is outsourced to the national university system. And to convert
Africa’s raw talent, you don’t necessarily need to put people through a full
four-year degree. A three-month or nine-month training programme could be
enough to unlock the skills that companies need. Compare Africa to India.
For years, companies in India used to complain, “The universities are not
producing the people we need.” So companies like Infosys created their own
corporate academies, and they started training and developing their own
people.

Technology is a game changer in talent development. Universities, for
example, were invented in a world where information was scarce, but today we
live in a world where knowledge is ubiquitous. Today’s technology enables an
African sitting in Kenya to get access to world-class curricula and attend
classes virtually from Harvard Business School, from Cambridge, from MIT.
That’s why we’ve been able to leapfrog and build the universities of the
future in Africa, driving significant improvements in human-capital
development with much less capital than would have been needed before.

Talent development is a critical part of the social mission of business in
Africa. Because when you’re in Africa, you’re not just doing business,
you’re touching lives, you’re creating meaning for your employees, you’re
transforming societies, and you’re really creating history.—
Howwemadeitinafrica 

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