ZANACO – Grow Into Your Greatness

With negative economic news seemingly now more prominent than any positive stories to come from sub-Saharan Africa, it is easy to see why many have changed their stance on investment strategy on the continent. A constant wave of headlines highlighting monetary, social and infrastructural failings have resulted in the region – once a star for investors with many of the world’s fastest growing economies – becoming a much more difficult place for business.

But for those with a large presence, those with established client bases, and those with carefully crafted strategies that include provisions for the good times and the bad, there are always opportunities to be had.

However, the challenges that face businesses are vast. So many issues combined have created an unclear roadmap for future growth. Despite being home to the world’s largest free trade area and a market of 1.2 billion people, sub-Saharan Africa is only expected to achieve modest growth in 2020 after realising 2.6% in 2019 and 2.5% in 2018. These figures were below projections and the World Bank says that they come as a reflection of ongoing global uncertainty, increasingly from domestic macroeconomic instability including poorly managed debt, inflation, and deficits; political and regulatory uncertainty; and fragility.

To succeed, many big businesses have opted for an increasingly digital strategy. This is the case for Zambia National Commercial Bank (Zanaco). Headquartered in Lusaka and listed on the Lusaka Stock Exchange (LSE), this powerhouse of the region is going further than most in the pursuit of a digital future, leveraging USSD and smartphone technology to help drive financial inclusion and business growth.

THE PEOPLE’S BANK

Self-labelled ‘The People’s Bank’, Zanaco operates one of the widest branch and ATM networks in Zambia and boasts more than one million customers. The bank works across various sectors with clients in retail, public sector, agri, corporate and more.

With backing from the Zambian government, the National Pension Scheme Authority, and Dutch-based Rabo International Advisory Services (RIAS), Zanaco is recognised as one of the most solidly capitalised banks in Zambia. This is not a business ready to surrender to a weak economic environment and an uncertain future – Zanaco is carving its own path.

At the 2019 Singapore FinTech Festival, Zanaco’s Chief Digital Banking Officer, Wane Ng’ambi, explained that a new Innovation Lab is helping to connect the fantastic ideas coming up across the country so that financial inclusion can be achieved and the population can benefit. Instead of looking to out-innovate all competition, the Innovation Lab is designed to bring digital creators together to share ideas and work in unison.

“The interesting thing about the online banking sector across the region is that there is a big and deliberate drive to get collaboration going,” he said during a discussion about the role of mobile money in financial inclusion in southern Africa. “It is becoming very clear that to deliver efficient services, no single institution can deliver a single solution to problems. The key theme across the region is that there is a lot of collaboration happening between mobile money players, banks, and FinTechs, and the idea is that everyone owns a specific area of expertise. Take, for instance, the Telcos – they generate billions of data points that can be used to refine more advanced products. These are things that, five years ago, did not exist and the context around picking alternative vertical business competencies, bundling them together, and being able to co-create with third party players is a key theme that I see happening in Zambia and across the region.

“Already, we have started working on solutions as a bank where we are looking at providing switching services for third party FinTechs as an example. You don’t have to solve every vertical industry’s business from a bank perspective. All we need to do is provide the realms – open APIs – to connect banking platforms to our system and enable banking transactions to happen more efficiently.”

INNOVATION LAB

At the launch of the Innovation Lab, Zanaco CEO Henk Mulder talked of the importance that the bank places on digitising in line with government’s goals to become a leading digital player as part of the Smart Zambia campaign.

“Zambia has a young, vibrant population and it is a pool which needs to be developed into world class entrepreneurs for real economic growth to be attained. The Smart Zambia programme of the government is the future of this country and Zanaco bank is a very strong partner in this regard. We are convinced that innovation is its heartbeat and this lab is for our partners to exploit so that together we can grow our community’s businesses and economy. We can make Zambia the hub of technology exploits in Africa – this is very possible,” Mulder said.

The new centre is equipped with a world class Software Development Kit (SDK) aimed at the development of programmes, applications and systems for any device and any operating system.

Transport and Communication Minister Mutotwe Kafwaya said that all of government, especially his department, is behind the Zanaco initiative.

“Government places importance to initiatives such as this one that Zanaco bank is establishing. In this vein, may I reiterate the President’s call for strong partnership in the implementing the Smart Zambia programme because it is the country’s future.

“Zambia should have a big share at the table of innovation and because of that, I would like to assure Zanaco of my ministry’s and government’s support in its quest to digitise the landscape.”

All agreed that investment into projects of this nature will unlock human capital and accelerate national development.

Ng’ambi sees the Innovation Lab as a key enabler for FinTech businesses and digital enterprises going forward and explains that collaboration between market players, both old and new, will be the fundamental driver of progress.

“Without co-creation across different areas of expertise, you tend to stagnate development,” he says. “No bank is going to solve the smartest insurance solutions, so it is now a question of how do key vertical industries work together to co-create products through an open API.

“We just recently launched an Innovation Lab and we have created what we call our Sandbox where we have partnered with a lot of local universities to create an innovative hub that is moving towards an end goal of an ecosystem environment. We have created a platform that connects into a financial system – Zanaco is already the biggest bank by customer numbers in Zambia – and that gives us and the FinTechs capacity to connect into a financial institution. A challenge for FinTechs is to find established entities to plug into. We are partnering with hundreds of young innovators across Zambia to enable different financial solutions.”

FINANCIAL INCLUSION

For the first half of 2019 – Zanaco’s 50^th year of operation – the bank announced decent financial performance against a bleak economic backdrop. Total assets increased 9% from K9,599 million in 2018 to K10,474 million in 2019 mainly attributed to growth in investment securities and loans and advances to customers. Investments securities grew by 10% from 2018 while net customer lending also increased by 25% from K3,074 million in 2018 to K3,832 million in 2019. Customer deposits increased to K8,418 million from K7,532 million representing a 12% increase. 

The expectation is that, through innovation and a customer centric strategy, Zanaco will grow in the future as financial inclusion in the country is improved.

According to Henk Mulder, the focus on financial inclusion, knowledge and education is never ending. “Financial literary is Zanaco’s all year-round agenda. Meaningful inclusion can only be achieved when individuals have the right information and skills to manage their finances. We are all encouraged to critically check our financial life and build ourselves.”

Growth in Zambia is expected to reach 2.4% in 2020 – behind forecasts. But business challenges will continue and new strategies with fresh ideas are required. Zanaco is a great example of how to reinvent your offering to industry to meet a modern need.

“Zambia is currently sitting at around 38% financial inclusion and that is a big improvement over the past five years. We still have a long way to go and the government has deliberate initiatives in place to drive this,” highlights Ng’ambi.

“Personally, I am very excited at the opportunities that are to come but also scared about the rate of change that is already happening in these sectors.”