Birth of an African champion: how it all began

Middle East, The, May, 2008

The 1980s have been described as 'Africa's lost decade' when the post-independence euphoria had given way to a series of political and economic calamities. Productivity and revenue had hit the nadir while the debt mountain grew ever higher. Africa had lost control of its economic destiny.

It was also a time when banking in Africa was dominated by foreign banks--except in Nigeria. The disadvantages of having few genuinely African banks in Africa were brought home as the magnitude of the impact of the continent's debt crisis on its economic decline became fully apparent.

This was the period when the newly created Economic Community of West African States (Ecowas) and its dependent institutions were finding their feet. In the midst of the chaos, the dream of an Africa finding strength in unity regained the currency it had lost in the intervening period.

A number of prominent personalities in West Africa were convinced that the one instrument that could bring a measure of economic control back to African hands and also serve to unite the sub-region would be an African bank with the mandate to serve West Africa. In 1984, the Federation of West African Chambers of Commerce initiated the creation of a regional banking institution in West Africa by launching Ecopromotions SA, which raised funds for feasibility studies and promotional activities.

A year later, Ecobank Transnational Incorporated (ETI) was formed as a holding company, with an authorised capital of $100m and became the first banking group of its kind in West Africa. The initial paid-up capital of $32m came from 1,200 individuals and institutions, the largest being the Ecowas Fund. The same year a headquarters agreement was signed with the Togo government, and in 1986, a technical agreement for a two-year assistance programme was signed with Citibank.

In 1988 the first banking affiliate was opened alongside ETI's headquarters in Lome, the Togolese capital, and was followed in 1989 by affiliates in Nigeria and Cote d'Ivoire; and in 1990 in Benin and Ghana. Thus over a period of five years Ecobank was well on its way to establishing a network of banks in West Africa.

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Ecobank deriving its name from the bank's origins in the Ecowas region soon became a predominantly private sector bank. Having established its core affiliates it responded to demand by opening affiliates in Burkina Faso in 1997, Mall in 1998, and Guinea, Liberia, Niger and Senegal in 1999.

The bank's first venture outside the Ecowas zone came in 2001 when an affiliate was established in Cameroon. There was then a pause for three years until a money transfer company was opened in Cape Verde.

The decision to embark on a major programme of expansion was taken during a strategy summit following the 2006 annual general meeting. Sierra Leone and Chad were opened in 2006; CAR, Guinea-Bissau, Sao Tome e Principe and Rwanda in 2007; and the Gambia, Malawi and Congo Republic (Pointe Noire) in the first quarter of 2008, bringing the total to 22. The bank expects to have a presence in 30 African countries within the next few years.

Born in the midst of one of Africa's most traumatic economic crises, the Ecobank Group has proved that it is out of crisis that the best ideas tend to emerge. Since its advent, it has become a shining symbol of continental renaissance.

Steady rise in profits and assets

After a cautious start during the economically difficult early years, Ecobank was able to post net operating profits of over $5m by 1994. Three years later, profits had grown to over $10rn and total balance sheet had reached $500m. Shareholders approved a share ownership scheme for the staff in appreciation of their hard work and dedicated efforts.

In 1999, with an increase in authorised capital, many new shareholders--both private individuals and institutions such as the West African Growth Fund and the International Finance Corporation (IFC), which has been particularly supportive--became involved.

By 2005, assets had risen to $2.2bn. This doubled in the next two years while profits before tax rose from $30.27m in 2002 to $74m in 2005.

In 2007 a $75m loan was provided by the European Investment Bank (EIB) to facilitate growth in Africa and support private sector enterprises in the more difficult national environments of the region.

The bank is planning to raise further funds through an Initial Public Offering of shares, with priority to be given to African investors, and also launching a private equity fund. It therefore did not come as a big surprise when Ecobank was voted the African Bank of the Year in the 2007 African Banker Awards. It also now ranks among the top 900 banks in the world.

Corporate social responsibility

As part of its commitment to help Africa attain the UN's Millennium Development Goals, especially in the effort to roll back poverty, Ecobank signed a Memorandum of Understanding with Action, an international non-profit organisation specialising in micro-finance programmes for development.