Viewpoints | Oct 19,2019
Jan 12 , 2019
By Asseged G. Medhin
Ethiopia’s financial sector is overdue for new shared values and practices that can see it cross into the 21st century, writes Asseged G. Medhin (kolass799728@yahoo.com), deputy CEO of operations at the National Insurance Company of Ethiopia (NICE).
Most participants in the field wrongly feel that the Ethiopian financial sector is lucrative and that the future will be rosy for incumbent rivals. They extended their argument that the capital strength of the financial sector for both bankers and insurers is sound enough and the regulatory bodies' oversight of raising capital provides a good foundation.
Most of the leadership face a serious dilemma though in leading the sector strategically. The problem is the result of the long closed-door policies followed by the regulatory bodies. The decision, in turn, left dissatisfaction among shareholders and boards of directors.
Experts in the field knowingly follow the archaic traditions, despite their degrees and long-term experiences in the last five decades, except a few who push back.
When people merely reflect the rate of growth for the financial sector, they would find shabby performances based on the parameter of today’s dynamic business environment. CEOs are not doing a great job of dealing with the driving forces of innovation and customer demands.
Insurance is not an ordinary service, and the focus of compensation is shifting from individual customer to the ultimate shared value of industry, where social impact is integral to economic success. Reducing accidents, improving health and helping organisations better prepare for economic risks both enhance the profitability of insurers and enable better outcomes for the lives of millions of people.
This can be through close engagement of corporate strategy and will benefit all stakeholders. The inability to see the shared values in the insurance industry can lead to the bankruptcy of the firms.
Today, lack of forward thinking among leaders and muted performance in the insurance sector, particularly in the last decade, and the restrictive role of regulators has ensured that the insurance industry was locked out of the 21st century. We cannot attribute the current state of affairs to anything else but the cost of laziness used to defend the status quo of ancillary networks.
A pragmatic leader wins his own fear before venturing, prepares for drastic changes and develops models to make use of every opportunity that will allow him to operate as glue in the sector.
The most important initiative that needs to be taken today is to weaken the traditional practices and aim for higher goals, which will set the scene for shared values in the industry’s future. Top management must persist with strategic goals and measure every good progress against each of the goals, even if the difference is subtle.
Despite disruptive technologies and new competitors on the horizon of the financial sector, companies are continuing with business as usual. This was part of the debate in the Third East African Financial Summit held last month here in Addis Abeba. Participants showed the thirst for proactive change, which is something that has been noticeable in the financial sector as gradual reforms are being taken by the administration of Prime Minister Abiy Ahmed (PhD).
The most dedicated and engaged leader allows employees to develop new ideas and push these ideas in the company, help convince business leaders to try new things and free up IT capacity for implementation down the line. Employees should be involved in the shared value process whether on sourcing ideas, contributing extra capacity for pilot programs or being included in a test population for new products.
Leaders have a chance to motivate talent that looks for purpose in their work and develop pilot initiatives where they clearly project and measure social and business value creation to prove that such win-win strategies work.
They should as well consider changing the incentive system for managers, moving from short-term goals to longer-term thinking. Some shared value business cases that break away from commoditised markets and focus strategies on unaddressed customers might have lower or slower profits in the short-term but improve firms’ long-term competitive position.
Leaders of the financial sector in Ethiopia should change their focus from having to win every demand of the stakeholders and prepare themselves for the most demanding challenges of transformational leadership. Not everyone may be happy with the style and choice of the firms, but a bet on the long-term should be taken.
No one will take the blame for the failure of a leader at this juncture, for any resistance to change for the defence of the status quo will be to failure to embrace blessings the 21st century offers the insurance industry. It is a time to call and push for changes in the regulatory framework of the sector and have an independent supervisory body.
Inability to see the shared values in the insurance industry with the intent to follow a closed-door approach harms the sector.
PUBLISHED ON
Jan 12,2019 [ VOL
19 , NO
976]
Viewpoints | Oct 19,2019
Fortune News | Dec 05,2018
Fortune News | Aug 19,2023
View From Arada | Oct 12,2019
Commentaries | Dec 04,2021
Commentaries | May 11,2024
Radar | Jul 29,2023
Fortune News | Feb 20,2019
Fortune News | Apr 22,2022
Fortune News | Dec 12,2020
Photo Gallery | 98788 Views | May 06,2019
Photo Gallery | 91019 Views | Apr 26,2019
My Opinion | 76484 Views | Aug 14,2021
My Opinion | 72775 Views | Aug 21,2021
Editorial | May 18,2024
Feb 24 , 2024 . By MUNIR SHEMSU
Abel Yeshitila, a real estate developer with a 12-year track record, finds himself unable to sell homes in his latest venture. Despite slash...
Feb 10 , 2024 . By MUNIR SHEMSU
In his last week's address to Parliament, Prime Minister Abiy Ahmed (PhD) painted a picture of an economy...
Jan 7 , 2024
In the realm of international finance and diplomacy, few cities hold the distinction that Addis Abeba doe...
Sep 30 , 2023 . By AKSAH ITALO
On a chilly morning outside Ke'Geberew Market, Yeshi Chane, a 35-year-old mother cradling her seven-month-old baby, stands amidst the throng...
May 18 , 2024
Prime Minister Abiy Ahmed (PhD) took a handful of his cabinet members last week to th...
May 11 , 2024
The ruling Prosperity Party - the Prosperitians - has its leaders turned to the Publi...
May 2 , 2024
For successive generations of Ethiopia's tax authorities, the chore of tax collection...
Apr 27 , 2024
The Prosperity Party (PP) - Prosperitians - is charting a course through treacherous...
May 18 , 2024 . By AKSAH ITALO
A Federal Higher Court ruling has ended the legal battle between BGI-Ethiopia...
May 18 , 2024 . By MUNIR SHEMSU
With the impending Meher season, lawmakers' focus shifts to the distribution of ferti...
May 18 , 2024 . By AKSAH ITALO
A recent regulatory change that removed the wage requirement for workers under private employment agencies, is sparking concerns about explo...
May 18 , 2024 . By BERSABEH GEBRE
Behind the nondescript facade of a drop-in centre in Addis Abeba, a quiet struggle unfolds nightly. Among...