This article was first published in the November/December 2013 International edition of Accounting and Business magazine.
‘On Monday he’s in Namibia,’ says Standard Bank Africa CEO Chris Newson’s assistant, when trying to find space in his air-tight diary for an interview. ‘Then he is in Johannesburg for back-to-back meetings, then to Zimbabwe for another meeting, then Zambia, Tanzania...’.
For Newson, who was appointed two years ago to head the Africa business of Standard Bank, which operates in 17 countries across the continent, this is a fairly typical week.
‘It’s pleasant,’ he jokes on the phone from his London office when we eventually speak, when asked what it’s like to be on the ground for a while.
But hard work – one of his guiding principles – appears to be paying off for Newson and the bank he leads. Standard Bank was recently named the world’s best emerging markets bank in four African countries by Global Finance magazine. In Nigeria, third-quarter pre-tax profits rose by US$27.4m. In Kenya, first-quarter profits were up by 78.1%.
‘I guess realistically, given that we are in 17 countries, it’s often a portfolio effect. So it doesn’t mean that every country is necessarily performing to the same extent,’ says the South African accountant.
As the largest bank on the continent by assets and earnings, Standard Bank – or Stanbic Bank as it trades as in 11 of the countries in which it operates outside South Africa – is well poised to take advantage of the economic growth Africa has recently been enjoying.
‘Africa as a continent, and particularly sub-Saharan Africa, is in a growth phase and there is an increasing amount of interest from an investment point of view looking to participate in that growth,’ Newson says.
‘So it is a good news story. We are fortunate enough to have a network and a franchise that gives us a significant foothold and footprint. We are in all the countries that have the largest economies in sub-Saharan Africa, so were able to participate in some of that growth. Long may it last!’
It’s not all good news for Standard Bank’s Africa operations though.
High inflation and interest rates in Uganda and Kenya have led to a marked increase in non-performing loans, and potential political problems loom in Zimbabwe where foreign banks have been accused of not supporting local industry. But growth has been a good news story and Newson says it is vital to the future success of the bank’s operations on the continent.
Zambia, for example, is expecting an 8% growth rate this year, and he sees the bank as a partner in that growth. ‘Our fortunes are inextricably linked to the fortunes of the country in which we operate and its economy. We can’t do fantastically well unless there’s a healthy, strong and sustainable growth environment around us, so we have to see ourselves as intertwined with the country,’ he says.
‘We need to partner with them significantly for their growth agenda and for ways that we can bring whatever is needed – whether it’s expertise, whether it’s money itself, investing in hard fixed assets or investing in free markets and capital markets in those countries.
Those are some things we have the footprint and the network to do. So we certainly see that as a big part of what we try and bring to the party.’
An example of this is the listing of Ugandan electricity distribution company Umeme. Stanbic Bank was the lead transaction adviser, sole international book runner and lead receiving bank in Umeme’s US$67m initial public offering in November 2012. ‘It’s a good example of bringing a business to the market which is a fundamental part of the Ugandan economy and which requires capital going forward. The listing was a great success in providing new capital as much as giving it access to future capital on the capital markets,’ says Newson.
Aside from corporate successes such as these, Standard Bank and Newson are going after personal business as well – on a continent where the informal sector proliferates and where much of the population is unbanked. A range of innovations from internet and mobile banking to Saturday opening hours and interest-free products for large Muslim markets are getting them there.
‘If one looks at the retail market across sub-Saharan Africa, there is a very low penetration rate in terms of banking. How low varies from country to country – anything from 20% to 60%,’ Newson says, adding that capitalising on this requires more than simply a good product offering and an extensive network.
‘Ultimately it would mean us improving the bankability of the people on the continent, ensuring we develop our future economies and our future customers and revenue streams. But also ensuring that we make returns on our existing investment which we require from our own shareholders and stakeholders,’ he says. ‘But one can see across the continent a fast-developing middle class. And we see ourselves as very well placed to help and support that. And therefore a big part of what we do is linking those opportunities to our networks.’
Increased economic growth, however, is not all party – there are problems too. ‘In any fast-growing business you have to make sure your business keeps up with that growth. So for us it means things like capital, funding, physical branch networks, and an ability to keep track and pace with increasing volumes… you have to ensure you make the right level of investment,’ he says.
Africa’s growth rate has received increased attention, which means increased competition. Another issue economic growth has highlighted is the continent’s dire skills shortage, affecting government and businesses.
‘The development of skills across the continent – across all professions – is a very crucial and critical factor in the long-term sustainability of growth and the growth of the continent,’ Newson says. ‘Although one doesn’t have to stay in the accounting profession per se, I think the financial acumen that an accounting degree gives you is a good grounding for doing a lot of things.’
In addition, a qualification standard like that of ACCA allows people with skills to move – both within multinational institutions such as Standard Bank and between countries on a continent where economic cooperation is increasing.
‘Having a standard by which people can be measured is an important step, so that you don’t end up with a situation with people trying to assess whether an accounting degree in Kenya is the same as an accounting degree in Nigeria, or different from one in South Africa,’ Newson says.
‘Some general qualification by which we can all be measured and by which people know a certain minimum to be certified, is very important.’
Nicki Gules, features editor, City Press, South Africa