Fortune News | Aug 24,2019
Zemen Bank has joined the ranks of commercial banks that have contracted external consultants to overhaul their management strategies. Zemen has hired PricewaterhouseCoopers East Africa (PwC) to design a five-year strategic plan and a 10-year strategic road map.
PwC will also design an organisational structure, employee payment schemes, and overall policy documents for Zemen at a negotiated price of 350,000 dollars. PwC secured the project after vying with two other international companies, Mackenzie Investments and Grant Thornton.
The management of Zemen Bank and PwC signed the contractual agreement early last week at a ceremony held at Intercontinental Hotel. PwC, a multinational network of professional service firms with roots that date back to the 19th century, has been contracted to perform the project in a 20 to 25 week timeframe.
Zemen floated a tender to hire consultants over a year ago before the outbreak of the Novel Coronavirus (COVID-19), and the bid was opened almost a year ago. During the financial opening, PwC offered the lowest price of 600,000 dollars to render services requested by Zemen, which grossed 1.1 billion Br in profit over the past fiscal year by operating with 52 branches and 998 employees. Its paid-up capital also reached 1.8 billion Br.
As prevention mechanisms and guidelines were set in place, the Bank decided to hold off on negotiations. Later, the Bank resumed its negotiations virtually. The team from PwC initially stated that they were only able to work virtually due to COVID-19.
The amount PwC proposed dropped after virtual negotiation, according to Meseret Wondim, vice president of corporate resource management at Zemen.
Zemen's management convinced PwC that working virtually would inhibit them from understanding the working structure that is in place at the Bank, according to Meseret.
PwC was chosen for three major reasons, according to Meseret: for having extensive experience in East Africa including the implementation of several projects in Ethiopia; for specialised expertise in banking consultancy; and for having previous experience working in the local banking sector with Zemen as well as other companies upon the recommendation of the Ethiopian Bankers Association (EBA).
PwC East Africa has previously collaborated with Zemen Bank and other Ethiopian banks and insurance companies to establish International Financial Reporting Standards (IFRS) following a law that compelled financial institutions to convert from Generally Accepted Accounting Principles (GAAP) to IFRS. The two parties have also previously collaborated for the implementation of IAS 39, an international accounting standard, at Zemen, which has 4,964 shareholders and has mobilised 14.4 billion Br in the last fiscal year. Its outstanding loans have also reached 9.7 billion Br.
Facing fierce competition in the industry, the Bank plans to get ahead of the game by developing a strategy that addresses the arising needs of customers who are dispersed all over the globe.
Other banks have also been sourcing outside help in developing strategies. So far, Hibret Bank and Bank of Abyssinia have hired Deloitte, while Awash, Dashen and Nib International Bank followed suit by recruiting KPMG East Africa Limited for similar projects. The Commercial Bank of Ethiopia (CBE) also started the process to hire a consultant for the preparation of a strategy that would help the state bank attain world-class status by 2025.
"We're facing fierce competition head-on," said Meseret, explaining the need for a new strategy. "Customer demand is not as it used to be."
Zemen wants to stand out and make strides by redesigning its strategic plan to meet the growing demands of international standard banking.
This is the third long-term strategic plan for Zemen, whose assets have climbed to 18.5 billion Br. The previous two strategies were carried out by local and in-house experts. The Bank has grown its net profit exponentially with the implementation of these two strategies, according to Meseret.
Representatives from PwC East Africa did not respond to an email inquiry from Fortunebefore this issue went to print.
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Dec 19,2020 [ VOL
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