Ecobank/Strategic Analysis/Course: Foundations of Business Strategy/Ankit Khandelwal/1

Date: 14 April 2013

Strategic Analysis

Course: Foundations of Business Strategy, Darden School of Business, University of Virginia

Submitted by: Ankit Khandelwal, ankit.chemical@gmail.com

Organization

Ecobank is a pan African bank, which maintains banking operations through subsidiaries its subsidiary in

35 countries of Africa. It is one the leading regional banking group in West and Central Africa. It provides

multiple ranges of services to the customer in particular to wholesale and retail. The bank also maintains

presence in Eastern Africa as well as in Southern Africa in collaboration with Nedbank group, South

Africa. It has representative offices in London, Dubai and London. The group is aggressively expanding

and aiming to become pan-African player in the coming decade.

(At the time of preparation of this analysis, data till 2011 was available. Therefore, data exhibited in this report reports

is from 2011, the analysis however is up to date information).

Executive Summary

Ecobank has started in the year in 1985 in Ghana and since the inception had the vision to becoming a

pan African player. In the year 2011, through the acquisition of The Trust Bank Limited (TTB), Ghana, it

has increased its presence in the fastest growing sub-African market. In the same year, Ecobank Nigeria

has being merged with Oceanic bank to create one of the largest Bank in Nigeria to reduce cost and

marginalized operations. It has signed collaborative agreement with Master Card worldwide to bring

payment solutions of Master Card worldwide to Middle Africa. The bank is working on the single entry

platform through technological up gradation and rated one of the Best Bank to work in Africa.

Ecobank has initially taken organic route to expand and in recent years it has used inorganic route by

acquisition of banks in Zambia and Ghana. The partnership with NedBank has been reviewed and will

continue in the next 3 years. The bank has also commenced operations in Zimbabwe, through the

acquisition of premier Finance Group. Currently, it is present in more countries than any other bank in

Africa and occupies leading position in all the market it is present.

Ecobank’s capital’s distinctive value preposition arm consists of pan-African foot print with local

knowledge, client relationships, to act as a key link between the market and investors. The business is

divided into six different clusters and fully focused services on wholesale, retail, investment, transactional

and banking services. The banking is diversified across geographies, customers and products to provide

as sustainable platform for long-term growth and value creation. The single IT platform for providing

customer has helped in increasing transparency and efficiency in the system. One common platform

thereby providing common branding, policies, processes and technology to provide a consistent and

reliable customer experience across the entire branches. It has served approximately 8.4 million

customers in the year 2011. Ecobank also gives opportunity for pan-African bank account for African

Diaspora living in countries other than their native.

Ecobank also entered a joint venture agreement with Bharti Airtel to offer mobile banking services in 14

African countries2. It has been working in only in 4 countries so far and in future this will support the

grwoth of expanding financial services in Africa.

Ecobank/Strategic Analysis/Course: Foundations of Business Strategy/Ankit Khandelwal/2

Exhibit 1, 2 define the exposure of Ecobank towards the export driven sectors such as Oil & Gas3,

minerals. In the year 2011, these sectors enjoyed the growth despite global turmoil and so is the

Ecobank. Though lack of infrastructure hampered the growth but it has been compensated by service

based industries Telecom, Information Technology. In future, it can be strategic advantage if Ecobank

focus on diversifying its services towards more sectors such as agriculture, construction, wholesale and

retail trade which are more domestically controlled compared to Oil and Gas which are altered in global

demands.

The Banking industry in Africa faced unprecedented challenge in terms of vast diversity and scale

required for the expansion. This is certainly a plus point for Ecobank. The investment required to reach

every person are very high compared to rate of returns and the time frame for such development is 10-15

years. Therefore push towards mobile banking is a demand of time. However, in 2011, the uprising in

Arab World has resulted in the loss of capital and so in the political unrest in some other countries of

Africa. The downgrading of USA by credit rating agencies and euro zone crisis has brought some tears in

the globally connected world, affecting the revenue of Ecobank also. Ecobank developed a robust

performance in the recent years and worked on integration and optimization of different businesses in

single verticals. It has acted as one of the best institution to make inflow between Europe and Africa. The

challenge is to continue optimizing the services and reducing the risk exposure for unprecedented times.

The Economy and life of Africa has been changed in past ten years in a positive ways. With the growing

economy the banking sector too has experienced the significant growth. Banking industry is expecting to

grow by 15% by the year 20202.

As per the current strategy, the future of Ecobank looks very bright. Although it has some challenges, as

Euro zone is still in the crisis and USA economies is taking more time than expected. In the

interconnected global market, crisis in one parts quickly affect the others and Ecobank is certainly not

shielded with it. The Africa as a continent is witnessing rising investment flows, rising consumer spending5

and mineral exports coming on stream. Therefore this sustained growth cycle is very much open for doing

business and going to help growing banking industry also.

Strategic Advices/Opportunities: Using the SWOT Analysis given in Exhibit 3, following

recommendations can be made for Ecobank.

1. Mobile Banking/Focus on Young

As mentioned in the exhibit 4, a large section of African People, especially young are still unable to

access banking facilities. The survey also highlights the inaccessibility of the Banks to reach to the wider

set of population; with currently only 50% of the people4 or even less have access to Banking services.

Aggressive strategy is needed to tackle the young generation through interactive tools appealing to them.

The telecom subscriber base is increasing8

every year and the usage of information technology6 is rising

every year. Ecobank can tap this potential by modifying its solutions by non conventional core banking

solutions. It has already started to offer solutions in some of the countries and going to expand in future.

Ecobank, through its large geographical presence can do the work similar to to M-Pesa7 in Kenya.

2. Cross border financial crime in African Countries

This is a very growing concern and in particular linked with the risk part of doing business. Ecobank is

well aware of the risk in front of it and is working towards authorities to curb this. However, the impact has

not reported in the Annual report and solid plan is missing. Thus, it is advisable to define the strategy for

this aspect.

3. Collaboration with other banks

People of Africa, who have migrated to other countries outside Africa have been always generous to send

money back to home as a remittance. The annual report is not able to provide sufficient information, if this

customer base has been taken into consideration. According to World Bank report, the remittance flowing

Ecobank/Strategic Analysis/Course: Foundations of Business Strategy/Ankit Khandelwal/3

towards Africa is growing every year. Lack of presence in this sector, making customer turning to other

corporate banks whose presence may be small in Africa but bigger in other countries. Ecobank can

leverage this advantage by significantly expanding or collaborating with foreign banks to use this

remittance money as one of the liquidity proposition.

4. Building brand outside Africa

Africa has caught interest of many industries and nations and industrial activities are growing on high

basis year by year. Many emerging economies (Brazil, China, India, Russia etc) as well as developed

economies (USA, Germany, and France etc) are expanding their footprints in Africa. Ecobank can

leverage this advantage by strategically positioning itself as an entrant guide into African Markets, utilizing

its vast experience and geographical presence to navigate corporation in complex African Market place.

The offices opened in London, Paris and Dubai are insufficient to cater these needs and more expansion

is needed in outside Africa to fulfill the needs.

5. Diversifying to other sectors

As highlighted in the exhibit 2,3 the exposure to Oil & Gas of the Bank is quiet high. The global market of

oil & gas, minerals is always experiences market fluctuation. Ecobank can reduce this exposure by also

focusing on other economic sectors such as agriculture, telecom, information technology as well as on

manufacturing.

Further work:

The analysis can be further broadened to cater more specific needs, using more updated data.

Exhibit 1: Top 20 exposures by industry sector (%)

Source: Ecobank annual report, 2011

48%

22%

19%

11%

Oil and gas

Manufacturing

Government

Telecommunications

Ecobank/Strategic Analysis/Course: Foundations of Business Strategy/Ankit Khandelwal/4

Exhibit 2: Diversification by industry sector (%)

Source: Ecobank annual report, 2011

Exhibit 3: SWOT Analysis on Ecobank

Strengths Weakness

Presence in 33 African Nations Exposure to uncertain economic sectors

Market leading position in many countries I Concentrated in urban areas

Single IT infrastructure Cross-border financial crimes

Organic and Inorganic Growth Model Large population still untapped

Offers different range of services Overdependence on export driven products

Provide pan-African Diaspora account

Opportunities Threats

Diversification to other sectors Political unrest in Africa

Covering African living out of Africa Lack of credibility to captilize of corporate

Partnership with other banks Uncertain risks (Eurozone crisis etc)

Shifting to mobile technology platform Price inflation in export driven sectors

Weather situation (draught)

Source: Ecobank annual report, 2011

15

22

11

20

7

6

7

5

3

2

1

1

20

19

13

11

11

8

6

5

3

2

1

1

Government

Services

Oil and Gas

Commercial banks

Wholesale and retail trade

Manufacturing

Central banks

Construction

Telecomunications

Coffee and cocoa trading

Cotton

All others

Dec, 2010 Dec, 2011

Ecobank/Strategic Analysis/Course: Foundations of Business Strategy/Ankit Khandelwal/5

Exhibit 4: Population aged 15 and over with an account at a formal financial institution, 2011, % of

total

Source: World Bank and The Economist 4

Exhibit 6: References

1. www.ecobank.com

2.http://www.gfmag.com/archives/153-may-2012/11758--worlds-best-banks-2012

africa.html#ixzz2QLYaktKK

3. http://www.arabnews.com/news/447844

4. www.economist.com/news/finance-and-economics/21572768-across-africa-banks-are-expanding-their-

returns-arent-continent-dreams

5. http://mobilemedaiinfotech.wordpress.com/2013/03/26/growth-of-the-african-consumer-part-1

6. www.economist.com/news/business/21571889-technology-companies-have-their-eye-africa-ibm-

leading-way-next-frontier

7. http://www.economist.com/news/finance-and-economics/21574520-safaricom-widens-its-banking-

services-payments-savings-and-loans-it

8. http://www.rcrwireless.com/blog/20120105/industry/report-global-telecom-industry-revenue-to-

grow-at-5-3-annually/

Other References

9. www.wikipedia.org

10. www.worldbank.org/databank/africa

11. LinkedIn: Africa-Business Communities