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Heavily investing in digitalisation

Interview - August 2, 2017

In this interview with The Worldfolio, Mr. John Awuah, CEO of Universal Merchant Bank, discusses the positive outlook of Ghana’s economic performance, how the bank is supporting the government plans and the importance of digitalization for the future growth of the bank.


Like the rest of the world, Africa remains uncertain about what is to come after global geopolitical shifts like Trump’s election in the US or the Brexit win in the UK. Investors are now turning their eye to other regions and Africa is becoming a key part of their global portfolio. How can the finance sector take advantage of this momentum?

I think it’s critical, not just for the development of Africa but also for our own survival. You cannot take yourself out of the wind of globalization; it’s a phenomenon that has come to stay. I do not subscribe to any theory that says that global economics is going to disintegrate by whatever means or by whatever happens on the other side of the Atlantic.

Africa cannot allow itself to be left aside. We are a continent with a fast-growing young population and therefore the future is in the hands of the youth. It is imperative that people who hold the keys to power take the right steps towards aligning Africa properly into an era of continuous growth among the different regions of the continent. We must work together, build synergies and partner. That is why I am also very happy that West Africa, through the ECOWAS is already going back to the drawing board, to better understand how we can properly integrate our economies so we can grow together.

In the global world if you are little you suffer, you need to build capacity and ensure that you can integrate with your border towns and countries and ensure you are a voice bigger than a single country. I think Ghana has played a pivotal role in our region to take an active part in leading that fight into the landline of globalization.


High inflation, a weakening currency and a large public deficit led to an economic crisis, forcing Ghana to seek a $920 million bailout from the IMF. 2017 marks a new journey for Ghana under Akufo Addos’ administration, which has pledged to put Ghana back on track. How would you assess the performance of the Ghanaian economy and what is your outlook for 2017?

We have had sustained stability in terms of macro indicators for long periods, which is what every country needs to attract the outside world to invest in your environment. We have a track record of doing well as a country in many variables.

Inflation is one key macro factor that inhibits our ability to improve our productive capacity. There is one thing that is certain in this country and that is the fact that the currency depreciates, but to what extent must it depreciate? In single digits, we can say we have done very well. But I don’t think that is good enough. There are countries that are able to stabilize their currencies to levels where you can predict for the next five years and will not move below or above five percentage points, which is something that a country that is in the path of growth should aim for.

We are very happy that at some point we should be able to draw a line and see how we can put our acts together to move the country to the next level, and drive development. Our association with the government, on what has become known as “One District – One Factory”, is basically a testament to our beliefs in the fact that for the first time in many years the country has an agenda that we can work towards.

We are very excited because it fits into our long-term plans. We are already known for having helped many companies in our history. We see this as an opportunity to also work with the state and see how well, as a private financial institution, we can steer the political arena and the discussion around the political boardrooms into an area that will create growth and drive development.


The “One District – One Factory” will further diversify the economy and generate added value to the production chain. How is the bank supporting this initiative?

Our currency is volatile due to our import dependency. We import everything, from toothpicks to pens. If you import, you have to pay for it. How do you pay for it? You don’t spend Ghana cedis; you have to exchange your money and use hard currency like dollars or pounds, and so you need an international tradable currency to settle your import bill.

For the first time, I am seeing an attempt at a solution through industrialization. The concern is how to execute these plans. The government is focusing their strategy on the private sector. This is not a presidential special initiative, it is an initiative that government began, but it is private sector led. The banks and the Association of Ghana Industries made the negotiations in China; no politician was involved. I have a lot of faith that with this agenda we will set our eyes straight on the ball.


As Ghana aims to become a middle-income country in the coming years, the inclusion of the population in the formal finance sector is critical. How are you working towards financial inclusion?

Financial inclusion is very much on our agenda, to enhance and improve our reach and distribution channels. Digital platforms are our priority, and the area where we want to place a lot of emphasis. We are heavily investing in digitalization and will be in the coming weeks launching one digital product on a weekly basis.

In Ghana, for instance, almost everybody owns a mobile phone, even though not everybody can afford to have three meals a day. Mobiles are now part of the banking environment, so if you want to support financial inclusion as a bank you have to buy into that.

If you are a financial institution and you want to exist in the next five years you must channel a minimum of 70 percent of your efforts into digital banking, making sure you are well placed for the future because brick and mortar will fast disappear. If you are a financial institution and you don’t plan for this future, you will be out of the market.


How is UMB Bank supporting SME development in Ghana and enabling adequate access to finance?

If you are a financial institution in Ghana and you lose your strategy on SMEs, you have lost the market, because statistics show that around 90 percent of our corporates are small or medium enterprises. We have an elaborate plan for that segment. We have set up an SME center which acts as a one-stop shop.

There is no back and forth in terms of having to deliver documents to our head office or other situations. The SME center acts as if you had walked into the head office and seen the head of SMEs. Another thing is that sometimes what SMEs need is actually not finance, but advisory services, so is not necessarily a case of throwing money at them but advising them on basic issues that bigger institutions may take for granted. We take an interest in developing their knowledge base, teaching them basic financial planning, basic book keeping, business entity concepts, and educating them on how to run their business.

We don’t do this only for our customers but also even for people who are not our customers. We do this to enrich the market; if the market is rich and people have the basic knowledge then you know that whatever customer you touch you are most likely to succeed.


Customer experience is key in a highly competitive market like the banking industry. What efforts is UMB making to provide a unique customer experience?

Our mantra here is “you first”, because we place our customer at the pinnacle of the activities that we undertake. The setup of the SME center was a result of a customer focus group feedback, where they addressed their difficulties. For example, many SME leaders are illiterate, and when they come to an office and are spoken to in complicated English they sometimes find it hard to understand, so they are not able to properly explain their financial needs, and in return we may end up giving them the wrong products. We listened to our customer and created the SME center. We have our customers at the center of all our decision-making. We occasionally commission external people to give us assessments on how our brand is going, because we take very seriously the feedback that comes from the activities we embark on.


Remittances in 2016 amounted to $2 billion USD. Taking into account that the UK has one of the largest Ghanaian diaspora populations, what can UMB bank do to harness their potential?

We are very active in the money transfer business. We actually have more partners than any other bank in the country in terms of money transfer. We have over 13 money transfer organizations that we have a relationship with. If we talk about financial inclusion, most of the recipients of remittances are people that otherwise would have not even entered a bank, so it is an opportunity for us when they walk into a branch to talk to them about opening an account or having one financial product or the other, so it fits into the financial inclusion strategy and we are very active in that area.


Why would you encourage UK investors to come to Ghana?

I think one of the key factors that any investor who wants to move overseas is interested in, is stability. It is important when entering a country to have a good view of the political environment and other social factors which are also very important. The standards of education are also very important in order to ensure a skilled human resource that you may need in the kind of business you want to run.

Ghana ticks most of these boxes in a very nice way. In fact, if you compare us to sub-Saharan Africa, there are not many countries which can tick all the boxes like Ghana does. This country is small but the country is educated, most people speak multiple languages, we are hardworking, we are friendly, the political environment is stable, we have had since 1992 a stable democracy. Governments have come and gone; some of them have only lasted one term and these are not stories that you hear in Africa every day. But we have taken it for granted because we are different in some way.


In this same context, what makes UMB a reliable partner of choice for foreign investors?

Whenever I talk about the age of this bank sometimes people are surprised. We are 45 years old and the country is 60 years old. This bank was born 15 years after independence and at that time there were no more than four banks in the country. This tells you how robust we have been. If you are an investor and you are looking for a bank that you can trust then you need track record. You need a bank that is established, with a track record of performance. Today we are a refreshed bank with strong capacity and all the technology you need. Whatever a bank in the UK can do, this bank can do it.

If you come to UMB you almost have a mirror of the financial services and arrangements that you have in the UK. So, UMB is the bank of choice for any investor that decides to settle their activities in Ghana or have a business relationship here. We have relations with many international correspondent banks like Citibank or Deutsche Bank and we have not had a single complaint from any of our correspondent banks in 45 years. This is rare in the market.


You have mentioned how the banking industry is evolving and how digitalization is taking over in many aspects. How do you envision the bank by 2020?

We have a five-year plan that has three years to go. Our agenda for 2020 is to be a tier 1 bank, and we are very much on course to achieving our goal. We have the key pillars to get us there.


What makes Zenith Bank a reliable and trustworthy partner of choice for UK companies seeking to invest in Ghana?

First and foremost, our international spread must be recognized. We are listed on the London Stock Exchange (LSE), which gives us a global exposure. We are also listed in other versatile markets like Nigeria which gives us a pass mark in governance. As an organization, when you are listed or quoted on the stock exchanges of some markets, it only attests to the fact that you are an institution in good standing and we are recognized as a bank that is well positioned.

What will be attractive for an investor from the UK to choose Zenith Bank Ghana Limited is the fact that we have a great story to tell. Our success story for the past 12 years is unrivalled. We have always done what is right and is expected of us by our regulators. Corporate governance is also very key to us.  As a Bank, we would rather lose a profit of $1 million than pay a $1 fine, and that has and will always be our philosophy. Most foreign investors look at compliance and corporate governance and so far, we have done very well in these aspects. Zenith will continue to provide support to foreign investors.


Why would you encourage investors to come to Ghana at this point in time?

The very presence of Zenith Bank in Ghana is testament to the fact that the country has a promising future in terms of its economic growth.  Over the years, this country has been tested and it has shown so much resilience. The economy has a great diversity of opportunities apart from the traditional commodities we are known for. I would encourage investors to come here because Ghana is on its way to being the gateway to Africa.