Interview with Ms. Mesenbet Shenkute - President ABAY BANK, Ethiopia

BUSINESS FOCUS (BF):What kind of country do you think Ethiopia will be for the next generation once the Growth and Transformation Plan (GTP) is completed?

Ms. Mesenbet Shenkute (MS): It is better to start with the country’s progress to date. Ethiopia was previously known for famine. Now it has had 20 years of an open economy, and the government is working for the people of the country. Since established a strong democratic process, the country has been growing very fast.

Ethiopia is a big country and has existed for centuries, but because of famine and war, we have lost many things and a lot of time. However, we are coming back stronger and are sure that we can make it. There are so many creative people here. Most, however, were not given the chance to grow with the nation and so they left as a result. Fortunately, this government has set up a policy whereby you can move forward in every sector and in every perspective. Because of that, there are number of youngsters engaging in many different activities and looking for support from the government. The government should be drawing on that policy, in order for them to be productive and self-sustained. What the new generation needs is policy formation, a stable environment and financial support.

The government has also allowed opening private banks to support this new generation—before that we didn’t have any private banks. The vision of having a strong financial sector is being highly supported by the national economy, which can only grow if we get the new generation involved. We now have 17 private banks and they are booming, along with the economy. Twenty years back, there were only four government-held banks serving a population of 50 million. Now the population is above 80 million and we have 17 private banks and more on the way.

The government has stipulated that small and micro enterprises should be highly encouraged and involve more youngsters in their activities. Most of the population is between the age of 20-30, and they have very creative ideas. We are not only focused on creating employment, but also to support them financially as well as morally. This is one institution that will help them to go forward. Abay Bank is trying to support these people financially. We also have to go in line with the Central Bank’s rules and regulations with regard to collaterals and how we are going to support them because these youngsters don’t have anything to provide as collateral. We are trying to support them by providing them with machinery and equipment on a lease. As soon as they grow, they can pay back the money invested. Some other banks are following suit. The new generation is benefiting from having such types of financial extensions.

BF:What has been the main impact of the arrival of this bank to the banking system of Ethiopia?

MS: Ethiopia cannot be different from other countries because of globalization. The growth of our financial sector cannot be affected by the global financial crisis.

Since we have a large population, we have a large market. Abay Bank is a newcomer and there is always the newcomer’s advantage. Since we came late, we can cope with the environment very easily. Where there is an opportunity for the growth of the economy there is also an opportunity for the growth of the banks as well. In a way, the management tries to convert challenges into opportunities. In line with the policies of the government, the growth of this country is becoming an opportunity for us. We are not saying there are no problems but our management is very strong—that is why we were profitable in just 8 months.

BF: How is Abay Bank working to reach customers who had never heard of banking services before?

MS: Abay Bank’s main shareholders are farmers and cooperatives, so in a way we are reaching the real people of Ethiopia.  We believe that by working around those people, we can initiate development. Our major objective is to reach to these people and facilitate their engagement in business and bring in profit. We have now eight branches in Addis and 27 outside of Addis. We are not focusing on profits only, because we believe if we bring development, a sustainable profit will follow. Profits are not gained only by working in cities. Since the majority of Ethiopians live outside of the big cities, that is where we can gain our profit. The first step to reach those people is by serving them. During this year or next, we plan to open as many branches as we can, especially in rural areas. We are planning to introduce mobile banking, as well as using agents.

BF: How are you developing IT solutions and mobile banking in Abay Bank?

MS:There has to be a directive from the Central Bank on how to use mobile banking. Since it is a risky business, we need an agent for mobile transactions. One branch per area is needed.

We will also deposit a certain amount of capital as a risk-mitigating factor. The person working as an agent will be paid a commission. The criteria of the agents will be set by the Central Bank. That person has to have capital of his/her own used as collateral. The whole transaction will be done through this one person. The transaction will also be done with a mobile. We are drawing up strategies in these areas. We have to be proactive; we didn’t have the directives up to now, but we have already set out our IT strategy.

BF: What is your strategic plan for 2015?

MS:We have a five-year plan that cover what our HR strategies would be, what our IT strategies would be, what our credit delivery strategies would be and what our deposit strategies would be. In addition to that, we plan to reach more and more people. We always try to see the future in our strategies and they are constantly being revised. When you draw a strategy, you also consider the external environment. Whenever there are changes, we change our strategies.

BF: What do you think Ethiopian customers think when they see the Abay Bank logo?

MS: This is a new type of business. People are buying shares in many banks without knowing why they should buy into it. Our shareholders have something they can see. We are a not-for-profit bank, but we need profit coming through development. Most of our shareholders understand this objective. We have been profitable within eight months because we have supported so many people and we have loaned about 1million birr along with technical support. These people will come back to our bank; they will create job opportunities and more customers for us.  Abay Bank is supporting development. In the beginning, we had 845 shareholders and now we have more than 2,000. We really want people to see what we are doing.

Abay Bank’s logo says a lot. Abay is for all nations. When people see Abay, Blue Nile, they also see what it can contribute, not only for the nation, but also for Egypt and Sudan. We are very transparent…anyone can come to the office and speak to any manager he or she wishes. We employ young people, and we really invest in our people. We offer training to develop employee capacity. The young people’s minds are now integrated in the system and are the key to maintaining the sustainable growth of the bank.

We use the latest technologies to give fast services. We have world-class financial services, and very good software. We are following the new generation of IT models. We invest in both people and technology so that people know that this bank is moving smoothly and healthily. We have also done what no other bank has done before: our working hours have been extended to 9 o’clock in the evening. This shows that we are ready to serve the people and how committed we are.

BF: How can the UK help in the development of Abay Bank?

MS: We could use UK support in developing our capacity. It is essential. If you have a bank that has the capacity to cope with a new environment, it will be successful and will never fail. The first important area for collaboration is training in order to develop our capacity.

The other area is capital. We need to have large deposits to support people with ideas, especially female entrepreneurs. There are lots of women who have the commitment, interest and capacity to move forward and run a business. Our bank is all about the young generation and women.

We also want to make a change in this country. We want to be part of Ethiopia's growth. If a bank is only getting deposits, paying money, giving loans and getting profits, it is not really a bank. A bank should be able to play a role in a country’s economy. It is only when a country grows that a bank can also grow. We have this intention, but we are limited by our deposits.

We also need technical support from the UK. When we say financial support, we do not mean a loan from the government because in our country, an organisation can’t get loans from foreign banks. But we can manage a fund. There could be an institution in the UK that will be prepared to support the youngsters and women and manage the fund. By managing the fund, the money will be returned and many other youngsters will be beneficiaries.

We can give the technical support to them and other administrative costs will be covered. We can come up with different types of proposals and we can manage such funds. We know who the people are, where they are and what they are trying to come up with and reach them. Banks give loans to the people who have the money to pay back, but we reach the real people of the world that need to be supported. This bank is really trying to make a difference.


DISCLAIMER: This is a transcript of the interview, which may have been edited for grammatical purposes. It is not the final article, nor has it been edited for the final article publication. It is the text from which quotation shall be selected for the final article to be published. Kindly review the transcript to confirm that its contents reach your approval. Highlight specific quotes you feel are most relevant or of particular interest. Please return any comment you wish to make regarding your interview within 10 working days, with your signature on each of the pages. If we do not receive any feedback during this time, we will assume that the material is to your liking.