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I&M eases cross-border banking in East Africa

Interview - November 7, 2016

I&M Bank’s footprint in the East African region currently covers Kenya, Tanzania, and Rwanda, with a presence in Uganda also on the horizon. Its customers are drawn to its technology, capacity building, and knowledge sharing across the region. Managing Director Robin C. Bairstow discusses the bank’s upcoming IPO, its focus on building up local expertise, and its wider view of how to provide support for SMEs.



As Africa is transforming into a growing investment destination, what do you think nowadays is drawing this attention toward the continent?

I think outside of the commodity growth that we have seen in a number of countries and the whole boom-bust scenario that we have had across Africa, the reason why it is seeing more and more importance is the fact that we have seen increased governance across the continent, and that is making Africa a far more attractive area for investment. If you look to the past, seven of the world’s top 10 performing economies are all in Africa. There is this emerging middle class, which is consumer led and has been starved of support in the past in terms of their access to markets and availability, etc. So that is a huge attraction to the outside world.


One of the priorities of the continent, to also tap these growing markets, is regional integration. How would you assess Rwanda’s regional integration efforts and what is I&M Bank’s footprint in the region?

Regarding I&M Bank’s footprint in the region, we currently have presence in Kenya, Tanzania, and Rwanda through the I&M brand, and we are represented in Mauritius through Bank One. We have our eyes firmly set on expanding our regional presence into Uganda, so watch this space in that regard.

From Rwanda being integrated into East Africa, one of the major areas where we have seen Rwanda playing an important role has been the freedom of movement within East Africa; Rwanda has been at the forefront of promoting the freedom of movement. Rwanda has also been promoting and supporting the use of the single East African visa within the region.

In terms of the African Union (AU), Rwanda is now responsible for supervision of the reforms at the AU level. Rwanda is a strong supporter of the corridors that exist, either via Mombasa or through Dar es Salaam, the Kenyan and Tanzanian corridors. I think that the region will grow and become more and more integrated as we see support, and this support is coming at the highest level, especially through the president’s office.


Rwanda has been named the second-easiest country to do business in Africa. Why did I&M Bank decide to enter the Rwandan market and how would you describe the business environment here in the country?

From a business footprint point of view, the investment was a great opportunity for the bank to increase its footprint across East Africa, especially to create connectivity. And then we look at the trade flows across East Africa: Kenya-Tanzania, Tanzania-Rwanda, Rwanda-Tanzania, Rwanda-Kenya. We have been able to follow a number of clients across the border, from Rwanda into Kenya-Tanzania and then also from Tanzania and Kenya as well as Mauritius, and that interconnectivity was seen as a major synergy within the group, from a growth perspective, and provided the welcoming environment that the bank received.

It’s now been three years, and we feel fully embedded, outside of the fact that Banque Commerciale du Rwanda (BCR) was a leading bank at the time we took over. It had a great reputation and enjoyed significant market share, primarily in the corporate banking space—business banking, mass affluent, and sector blanket.


How would you describe the Rwandan financial sector?

We are well established and well governed. The industry has grown and, in fact, outstripped its peers within the East African region and across Africa. It has not suffered the contagion of some of the fallout that has been experienced. The currency has remained resilient to external factors, even though there has been high demand, which is testament to a well-controlled financial environment. The sector is liquid, well capitalized, and, for lack of a better phrase, in really great shape.


What are the synergies you are exploiting as part of I&M Holdings?

The key areas are technology, capacity building, knowledge sharing throughout the region, and then the customer-synergies banking. We have been able to bank our customers across borders, attracting customers from Kenya and Tanzania coming into Rwanda, and from Mauritius as well, as we have seen a lot of business coming from Bank One.


Migration to a more sophisticated core banking system will be implemented in 2017. What are the innovations that the bank is bringing to Rwanda?

The bank focuses on delivering reliable and robust alternative channels, and to be able to do this we need to create an enabling environment within the organization. And to do that, we will look to replace and upgrade our current core banking system. That operation will commence in 2016. The phase one rollout will be at the end of Q2, beginning Q3 2017. And then the enhancements that go on that platform are products like enhanced mobile banking, electronic banking, and supporting the infrastructure for the rollout of our financial inclusion model, which includes agency banking and other alternative banking channels.


Speaking about financial inclusion, in a recent interview you said, “At I&M Bank, we are committed to being part of our country’s movement into a cashless economy, and to achieving 80% financial inclusion by 2017.” How are you working in order to achieve this government’s vision?

As part of our plans, I mentioned the rollout of alternative banking channels, working closer with the telecoms companies, and creating connectivity through the telecoms. Looking at mobile banking, we are collaborating with Visa in rolling out our own agency banking, and promoting the use of cards, point-of-sale, and alternative channels outside of using cash.

But it is not just looking at banking the unbanked; it is giving the current banked market alternative opportunities and alternative banking channels themselves. So instead of coming into the bank and cashing your cheque and drawing cash out, it’s moving to a cashless society. So you can’t do that if your products don’t work properly or they are too expensive, which is not going to promote use within the country.


You were part of a government program called “Hanga Umurimo” that targeted the country’s SMEs. How are you collaborating in this sense to increase and support the SMEs in Rwanda?

We had quite a successful run on the “Hanga Umurimo” when it was available, as it has now evolved into a new guarantee scheme. There is a government guarantee scheme in place that has been rolled up through the Rwanda Development Board. “Hanga Umurimo” has stopped, but we saw a significant amount of growth.

As a matter of fact, the area that we focused on more was not actually the making available of finance to SMEs, but capacity building within SMEs. We focused heavily on that because the problem that we had was not the access to capital, it was the ability for new entrepreneurs to articulate their requirements, put a business plan together, create full costs, look at payback periods, the type of funding they require, teaching them how to get access to capital, and how to deal with their banks. So in some of the courses that we have run, to both customers and non-customers, we have included areas like writing a business plan, basic bookkeeping to trial balance and balance sheets and then taking it to balance sheet, how to make a market assessment or a market study, and market sizing.

And then finally, once you have got all of that together and you have put your business plan together, how to effectively approach the bank and anticipating what type of questions the banks are going to ask. What are the things that they are going to be looking for within your plan? What are the areas that are going to give them comfort outside of just looking at collateral?

I think the capacity building is where we should be focusing our attention at the moment.


Speaking about capacity building, human resource development is also a focal point of your strategy. How are you building capacity within the bank?

There is collaboration within the group looking at specific functions—from risk management to anti money laundering through to auditing our ICT support—and we have some verticals within the organization where we can lean on the group. And it’s not a one-way flow, because Rwanda has been part of a collaborative effort to homogenize the group, and we have made our own contributions from the Rwandan side, from the capacity, leaning into providing expertise in certain areas where we have done better.

So it hasn’t been a wholesale adoption of one point of view. It has been a collaboration between the four entities, the four subsidiaries, within the group.  We also have a planned process of training, both internal and external trainings. We have actually just gone through a process where we have trained 300 staff focusing on customer service. We have also trained 50 staff in credit assessment. We have looked at areas like sales, understanding customer needs, wallet sizing and identifying, which makes it a lot easier for our staff to deliver on customer needs. That capacity building is ongoing; it’s one of our major focuses, continuous education of the staff.


I&M Bank is a responsible bank giving back to society through a very comprehensive CSR program. What is the responsibility of companies such as I&M Bank towards the societies they work with?

I think it is important to have a responsibility for sharing of knowledge and advocacy in various areas. The key areas I&M Bank focuses on are health, education, environment, and capacity building, which is part of education. We have seen that we can communicate within our own staff and then share in the communities, getting involved in the Umuganda discussions at the district level. We have been able not only to use our financial strength but use the skills that the staff has available to promote wellness within the society as a major stakeholder in our organization.


I&M Bank is expected to launch an IPO early 2017 at the Rwanda Stock Exchange. Tell us more about this plan and how do you expect the listing of this blue chip company will affect the market?

The listing is an offer for sale. It forms part of the government’s privatization scheme, they will be disposing of the 19.8% shareholding within I&M Bank. We want to treat it as an opportunity to open up investment opportunities within the market and for development of the capital market. But our main aim in this listing is going to be to ensure that the shares land in the hands of the citizens of Rwanda; it is not a wholesale play to bring in institutional investments. That is going to be the primary focus. It also expands investment opportunities and creates more awareness of our stock exchange. We are in our infancy, and we are proud to be part of the process.


How would you assess the investments of the US here in Rwanda?

The key area that we have seen recently has been within the hospitality industry, where we witnessed the opening of the Marriott Hotel, which is a major US brand. And at the same time, we have seen support from the US in the power sector, in the health sector, and empowerment in terms of school development.


As President Kagame said, “In Africa today, we recognize that trade and investment, and not aid, are pillars of development.” What other investment opportunities would you like to highlight to the international community?

The main area of focus now has been in the IT sector, and the development of the IT sector in the investment environment that is being created. The fact that Rwanda bridges East and West Africa—and combines access to markets in both Francophone and Anglophone Africa—and that it is one of the few countries that are poised straddling both Francophone and Anglophone Africa, with capacity in both languages, puts it in a unique position. We will see the rollout of and enhancement of IT skills, promoting them within the formal education of skilled workers coming into that sector.

And outside of the IT sector, we are looking at manufacturing or reassembly within this market for distribution, both to the rest of East Africa but also into the Eastern DRC as a major market. And infrastructure is attractive too; the government’s support of the buildout of infrastructure within the region remains key, and that includes housing.


Prior to your appointment in Rwanda, you held senior positions at Standard Chartered Bank across Central Africa, East Africa and Southeast Asia. What is motivating you to excel here in Rwanda and what would you like to leave behind once you leave office?

One of the major attractions that drew me to Rwanda was the development, the pace of development that is taking place, the strong focus on governance, the enabling environment that is being created by the government and government institutions, and then at the same time the people that we get to work with that have this overwhelmingly positive work ethic that we have in Rwanda. From a parting or legacy position, we want to be in a position where we are exporting talent from Rwanda into the region and into the rest of the diaspora, and we want to see skilled bankers or financiers, engineers, etc. leaving Rwanda and going to work abroad and at the same time extolling the virtues of the country.