Fortune News | Mar 23,2019
Jan 21 , 2023
By Asseged G. Medhin ( Asseged G.Medhin, deputy CEO of Global Insurance Company. )
The Ethiopian financial sector is leaning towards new products. It is not by choice, strategic breakthrough, using technology, or farsighted leadership skill but by the change in the global world and the pace that left no room to entertain traditionally.
When we refer to our strategic pillars, golden opportunity flies as technology amasses the usual way of accepting business proposals. Everything changes. Today is not yesterday's today, and tomorrow will not be like those tomorrows we knew in the past. There is not one best way of doing things, as the global pace demands dynamic ways with existing optional strategies.
The best strategy of our century is that which will decrease aspects of risks and benefits. Multiple new and diversified threats emerged as we struggled to manage challenges and mitigate observed and justified risks. We are in the perpetual drive for changes that urged leaders to open their eyes endlessly and observe the business environment differently.
The current financial industry allows the existing "never mind" dynamism to dive in before the accurate testimonial return to shareholders and the board of directors on the summarised financial statements. I strictly argued that a traditional company with change-resistant forces across the institute, from the gatekeeper to the boards, will reap what they sowed during the year.
Some financers are branded using their network. The composition of leaders is based on the network they set, and the centrepiece of strategy is mainly on the regional market to their network belonging. I am not opposing expansion to the regional market, but it should be knowledge-based leadership.
Some insurers are not exempted from ethical operations. Like finances, they are also operated based on their network from the institute's gate to the board of directors.
Can we exist with the same level of understanding and block the idea of liberalisation backbiting those who promote professionalism more than their usual and obnoxious business process? This is a question that needs an answer.
With this mentality and leadership, we only read the word 'international' in the financial statement book. But, I go for transformational leadership in all financial institutes before mergers, acquisitions and strategic alliances.
Technology and global forces enlightened customers' minds to resist the traditional business process and financial institutes with skyrocketing buildings filled with inefficiencies. Today's customers seek simplicity and knowledge-based management.
Network-free business leaders are successful. They build long-term relationships with customers, suppliers, employees, and shareholders. They make farsighted investments to support and develop their core competencies. They act quickly to ensure that short-term obstacles do not disrupt their long-term strategies. In conceiving and implementing corporate strategy, managers have drawn on the skills of specialists, from marketers to production experts.
There is a need to re-engineer the financial sector. In most neighbouring countries and the Middle East, a small but growing number of senior managers have found that financial engineering practitioners can help them achieve their companies' strategic objectives. Like other technological breakthroughs, such as cheap computing power, it can reduce the cost of existing activities and make the development of new products, services, and markets possible.
The notion is that financial engineering might advance a company's strategic goals by using derivatives to manage risk and create customized financial instruments.
Recognizing new technologies' pitfalls but failing to appreciate their competitive value can be shortsighted and ultimately hazardous. Any technology has its drawback initially, yet it is the best we have. Insurances policies, claims management processes, loan processing management, allocation of money, organization setups, formation of capital, and manpower development must be technologically driven.
Financial institutes in Ethiopia must have financial engineering now.
Forward-looking managers must keep well-informed of their rivals' successful uses of promising breakthroughs like financial engineering. Unfortunately, those are the stories that remain untold. The financial sector could not solve the nation's problem. Neither the monetary nor fiscal policy of the nation fundamentally addresses categorical challenges. The ongoing reform is supported politically than a farsighted, strategic financial engineering.
The regulatory body and those crafting the nation's economic policy should stick and bring a solution once they choose a short- or long-term remedy. If not, the wrong guide decision has no end tail. The near past government's decision to manage the impact of inflation and shortage of hard currency turns out to be more adverse than before. Things are aggravated, and the government can no longer control the pressure.
The notion is clear; many changes have been underway in the past half-decade. Knowledge-based and institutionally framed changes are visible and progressive. Financial institutions are not the only ones demanded to do so. Regardless of exhibited growth, the economy lacks reengineering free from political models.
The country has faced several risks, including political unrest and financial and environmental hazards. A clear risk map has to be rolled out and integrated with economic models. Similarly, every institute should design its own risk map. The all-rounded reengineering in other sectors, including the regulatory body, will alleviate the existing problems.
PUBLISHED ON Jan 21,2023 [ VOL 23 , NO 1186]
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