Sponsored Contents | Jan 17,2022
Apr 22 , 2023
By BERSABEH GEBRE ( FORTUNE STAFF WRITER )
The London-based accounting giant, PricewaterhouseCoopers (PwC), has secured a 1.3 million dollar contract to help executives of the Commercial Bank of Ethiopia (CBE) reposition the state-owned Bank.
PwC emerged as the winner among five consulting companies that expressed interest in the contract three months ago. Three companies reached the financial stage, with McKinsey & Company offering 17 million dollars and KPMG offering 2.4 million dollars for the lucrative contract.
The project is part of a broader financial sector strengthening and access initiative launched with a half-billion-dollar loan from the World Bank. The Ethiopian government aims to ensure financial stability through the reforms. It is a key component of the reform, where the federal government seeks to ensure financial sector stability through these reforms, including at the National Bank of Ethiopia (NBE) and the Development Bank of Ethiopia (DBE).
CBE has undergone reform since the restructuring of its board two years ago. The Bank’s board is now chaired by Teklewold Atnafu, former central bank governor and current monetary policy advisor to the Prime Minister.
Despite being in a strong financial position with consistent growth in key areas such as assets, loans, and deposits, its profitability has been volatile, with a 13.9pc growth from the previous year, reaching 13 billion Br. CBE’s capital adequacy ratio dropped by 3.7pc to 5.4pc last year, representing a small percentage of the industry’s average of 17pc.
The restructuring project will focus on revamping the Bank’s digital banking, data management, and information systems, according to Dahlak Yigezu, CBE’s deputy director for digital banking services.
CBE initially engaged McKinsey to develop strategic planning documents, paying 1.7 million dollars for the service. However, the Bank’s management, led by Abie Sanu, deemed McKinsey’s request of 24 million dollars to implement the reform too expensive. CBE’s attempts to implement some of McKinsey’s recommendations internally were unsuccessful, leading them to seek external technical expertise.
According to Dahlak, the Bank plans to implement 70pc of the strategy in-house while outsourcing the remaining portion to international firms with expertise in digital factory concepts. Digital factory addresses virtual product creation, from business opportunity analysis and user story development to backlog management, application development, testing, deployment, and ongoing operations.
Sources familiar with the bidding process revealed that CBE’s management opted for a two-step tender with cost and technical stages, allowing companies to present a range of tasks for CBE to choose the most advantageous offer based on their asking.
The substantial variation in prices quoted by bidders raised eyebrows, but project office managers claim it is expected. An executive from the Project Office said that the price discrepancy would not impact the output as the tasks are not material-based, unlike construction projects, where offering lower prices is customary among bidders.
Experts concur that price variations in strategic design and implementations are common, though the quality and scope of provided services may vary.
Tewodros Tassew, a financial technology consultant, noted that higher prices are typical in implementing strategic reform, as it requires more time and resources than merely crafting a strategic document. He observed that McKinsey might have an advantage, having developed the strategy and maintaining a reputation among international consulting firms.
“The scope and quality of services may be adjusted with their offer,” Tewodros told Fortune.
Dahlak stated that the bid focuses less on entirely reshaping digital banking and more on restructuring internal processes to enhance efficiency and rapid innovation of customer-based products. CBE aims to maintain its position as a pioneer in the Ethiopian banking sector by embracing innovation and new technologies.
CBE’s mobile banking application has recently added a QR scanner feature as an in-house payment option for its customers. Dahlak emphasized that the transformation focuses on improving the value proposition of the Bank’s products and services.
“We’re trying to maintain our position as a pioneer by considering innovation and technologies,” Dahlak told Fortune.
The state-owned commercial Bank has been at the forefront of introducing new banking technologies to its customers since 2008, including ATMs and card services. Over the past year, CBE has grown its customer base by 6.1pc to 38.1 million, with 8.8 million ATM cardholders.
The contract awarded to PwC marks a significant milestone in the ongoing reform efforts of Ethiopia’s largest Bank. As the Bank seeks to maintain its market position and stability, the restructuring project, under PwC’s guidance, is expected to bring about much-needed improvements in digital banking, data management, and information systems.
PUBLISHED ON Apr 22,2023 [ VOL 24 , NO 1199]
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