I wrote an article about the Rwanda banking sector focusing on Banque de Kigali (BK) last week, it got a mixed response; a few disgruntled customers agreed while others thought I was unduly unfair on BK.
The Chief Operating Officer – Lawson Naibo called me in for a frank discussion on his views about the article. He disagreed with me primarily on the issue of public vs private ownership; he pointed to the meltdown of the western banking model as an example that private ownership is not always perfect.
“Is that what you want? A system where a handful of private individuals nearly destroy a system, a benefit of public ownership is we can act as a stabilising force on the wider market.”
I pointed out that a market purist blames the failure in banking on poor regulation as well as greed. BK offers lower rates that most other banks cannot offer.
“We can offer 17 percent, when other banks give 25-30 percent, most of our competitors wanted to increase interest rates but we held firm,” he added.
Most of the western banks received some sort of government funding and the United Kingdom (UK) has nationalised all major banks except Barclays; so public ownership is common in the west as well but the issue is to what extent we should have it.
BK is apparently the number one bank in Rwanda but are they complacent or in a comfort zone? This made him laugh.
“We are not in a comfort-zone, we work long hours, very hard. We still have to pay our dividends to the government but they want maximum returns just like any investor,” Naibo said.
”We receive no additional assistance from the state in terms of extra capital or leeway on debt, so to call it a comfort zone is false,” he added.
I asked him if he was worried about any regional competitors entering the market.
“No major bank threatens our position currently; but a bank like Equity in Kenya would be a threat to our market as we provide a similar service.”
He is right to be cautious of Equity bank who along with Grameen’s bank have revolutionised banking in the third world.
When Equity bank first appeared on the scene they were considered a joke; they once sent a rural bank manager in slippers to a banking conference and were laughed at. Now major players like KCB aren’t laughing any more; of the 68 percent of Kenyans who have accounts, a large number are with Equity and smaller banks.
“We have little to learn from the western model of banking as it stands, we need to adapt our banks to our needs, we have more to learn from Grameen’s or Equity than western banks; and that is the untapped market,” Naibo added.
On the issue of customer service, he is promising more improvement, more training, more management intervention on the shop floor.
“I drum it into the staff that the customer is paying their salary, they will decide whether we succeed or fail. It will take time to train them but we also have a skills shortage in banking, we have to compete with other sectors for good staff,” he added.
I had stated that I didn’t think public servants can have a private sector mentality and he challenged me on this, saying it could change; as long as there is a bigger pool of workers to choose from.
I am glad for my talk with Mr. Naibo; he put me at ease that the operations were in competent hands. He was realistic about the problems he is facing but positive about the chances of change; as a customer of BK I was aware of the problems but not the causes.
He has a customer-orientated ethos that is lacking in many Rwandan businesses but my question was; is the Rwandan customer aware of what to expect after years of bad service?
That is the challenge he is facing; to create and adapt financial products for a market that is mostly rural, poor, and uneducated but needs banking.
“We need more branches, more customers, more staff, more streamlining of processes, more training but the customer has to decide what they want. We can be proud of our achievements,” he said.