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KPIs rise as banking access widens

Interview - February 26, 2016

Bank of Abyssinia (BoA) is expanding banking access in Ethiopia through its sharper focus on new products and innovation. With its key performance indicators on the rise, President Mulugeta Asmare explains how BoA will continue expanding and introduce new ways of banking to become “a bank of choice for customers, employees and its shareholders”.



Africa is becoming a growing investment destination for both advanced and emerging economies. Could you please discuss the prominence the continent is gaining in the international arena?

That’s true. Africa is becoming a new destination for investment for a number of reasons. There was disorder in the world economy due to the 2007/2008 financial crisis. Following that, investors are looking for new destinations for investment. And there are ample opportunities for investment in Africa, particularly in Ethiopia. Now we see new investors coming with capital, knowledge and technology. Of course we are saying: “Welcome to Africa!” – and particularly to Ethiopia. We are looking for more investors to come to Ethiopia because there are a number of potential areas to be harnessed. Besides, we have a young workforce, vast tracts of agricultural land, a conducive investment climate, and opportunities.


What human resources challenges you are facing?

We at the Bank of Abyssinia (BoA) are trying to develop and position ourselves in this new global working environment. Banking as a business is a relatively new concept in Ethiopia. Private banks came into the banking sector very recently. Of course we have been practicing the banking business for the past two decades, but it is still in an initial stage. We want to position ourselves at a better place so that we can compete with the rest of the world. We would like to bring new ways of doing banking business. For that reason, we want to build the capacity of our work force.

The BoA is very young. By the end of June 2016, we will be celebrating our 20th year anniversary. During this time, three five-year strategic plans were implemented. The fourth five-year strategic plan, which will serve for the coming five years and is being crafted by an international consultant known as Deloitte Consulting Plc, is being finalized. To this end, we are trying to build the capacity of our management and employees by offering various training activities to ensure the proper implementation of this new strategic plan. Upon fully implementing this strategic plan during this period, we hope we will be one of the top competitors in the banking industry in Ethiopia.


You recently stressed that in a bid to emerge victorious in the prevailing cut-throat competition in the banking industry and also sustain the growth of the bank, crafting a strategic plan that takes local and international scenario into account is mandatory, and this is why you employed Deloitte.

Yes, unless we bring new ways of doing things and become innovative enough, we know that we cannot compete in the banking industry. That is because the banking industry is somewhat progressing at a fast pace. This is the fourth five-year strategic plan in the history of the BoA. With this strategic plan, we are desirous to see the bank transformed and position ourselves within the global competition.


In the bank’s last annual report, its total assets and capital went up by 21.2% and 18.4%. Gross profit before tax increased 6.4%. What were the reasons for this impressive performance and what do you expect from this fiscal year?

First of all we looked into the past trends and realized that we are not doing business as it had to be done. Therefore, we have tried to fully utilize our workforce and material resources and tried to improve our performance.

We also attempted to look into new opportunities in the banking sector and made efforts to exploit these opportunities in the market. The major sources of funds for the banking sector in Ethiopia are deposits mobilized from the public and capital contributed by shareholders. To take advantage of this, we had to open branches outside cities in rural areas where we find large unbanked society. To this end, we managed to open about 32 new branches just last year. Through these branches, we mobilized significant amount of deposits. By doing this, we attempted to scale up our market share. Of course, we also have a new management and board of directors.

Combining all these, we put forth our utmost efforts in order to create a new working environment. That is why you can now see changes in the key performance indicators as compared to the previous year.


How would you say you are contributing to increasing the population covered by financial services?

Last year we introduced new banking services such as mobile banking, card banking, ATMs and PoS services. These additional service outlets contributed significantly to the advancement of the bank. Reaching unbanked societies in the country by opening branches is very expensive. For this purpose we introduced ATMs, PoS and mobile banking. So last year we installed about 50 ATMs and over 200 PoS machines.

Mobile banking will become a prominent means to reach the public as there is a huge number of telecom users here in our country. But we are still aggressively working to scale up the number of branches, as there is a large unbanked population. Of course, the size of branches to be launched in remote parts of the country will be smaller.

On top of these, we will keep on introducing new banking services like internet banking and agent banking services, which will come very soon. For instance, we will begin catering agent-banking services by April 2016. Agent banking is an efficient way of delivering banking services to remote areas and we will have agents in small towns and villages.


The Bank of Abyssinia is a pioneer bank in Ethiopia and has a vision towards continuous innovation and provision of world-class banking services. What innovations are you more proud of?

In the early days, we were the ones who introduced new banking products, for instance for students and the youth. We were also trying to reach farmers, the diaspora, and women, among others, through various banking services. For example, in collaboration with the USAID, we were extending support to people who have no collateral to get loans. We were also the first bank to give services to coffee suppliers who are deprived of collateral and who supply from the very source of the value chain. Even we are still desirous to be more innovative in order to complete with other banks.


You are part of Grow Africa, an African-owned, country-led and market-based partnership tool for making agriculture the engine for economic growth. How are you boosting Ethiopia’s SMEs in the sector?

Micro and small-scale enterprises (MSEs) is a sector which is being highly supported by the government. We also realize that we have to contribute to the betterment of this sector. These enterprises have great ambition and readiness to boost their business, but they lack the required amount of capital. Hence, banks are required to avail sufficient amount of capital for this sector. For this purpose, we will develop policies and procedures in the near future.


What is the role of the banking sector regarding financing the ambitious projects the country is embarking on and catalyzing the FDI entering the country?

The size of banks operating here in Ethiopia is very small unlike the giant global banks. So I am not sure that we are capable of financing such mammoth projects. However, as long as the size of the loan is not too much, we are ready to finance them. We will try to serve the public as long as it is in our capacity. There are of course some foreign investors from Lebanon, China and India who are being financed by the BoA. However, local commercial banks are indirectly involved in financing of such government priority projects.


Bank of Abyssinia is a responsible bank giving back to society though a CSR program involved in youth, education and health projects, among others. Which program do you personally feel the most proud of?

We are proud of serving the public and currently we are financing different sectors. For instance, we are financing the agriculture and health sectors. We are financing the health sector through two different ways. One is in collaboration with USAID by working with those who are working in the fight against malaria, HIV/AIDS and other similar epidemic diseases. The other way is financing physical projects. In this regard, there are health institutions that are being financed by the BoA.

With regard to the agriculture sector, we are financing those who are engaged in the export of agricultural commodities, such as coffee, sesame seeds, pulses, etc. In short, most of our finance goes to the export sector and domestic trade.


Assisting the business community to access loan facilities and expand their business, and promoting investment in the country, are a niche of the bank. What opportunities do you want to highlight to UK’s private sector?

The country’s economy is developing and there are opportunities here. So we are ready to serve these people as much as we can. We will definitely develop our capacity so that we can serve foreign investors in the coming years.


How are you trying to target the diaspora in the UK so that they come through your bank?

In collaboration with USAID, we are encouraging the diaspora to come and invest here in Ethiopia. As they may not have a fixed investment in Ethiopia, we will try to offer them special privileges. In this case, they may not be required to present sufficient amount of collateral. Previously we had a special program to serve these people, but now it has phased out. We encourage the diaspora to come here not only for their benefit, but also to contribute their share by investing in different areas. There are endless investment opportunities and we are ready to deliver financial as well as consulting services.


The Bank of Abyssinia 20th anniversary is coming up. Where would you like to see the Bank of Abyssinia in 10 years’ time?

This is a difficult question. Of course, I want to see the BoA as one of the top banks in Ethiopia. It is with this vision we are presently working aggressively to make our bank the most competitive bank in the industry, i.e. “a bank of choice for customers, employees and its shareholders”. We are desirous to be customers’ first choice. We are eager to see the Bank of Abyssinia advancing and prospering in all its endeavors. That is our vision.