Odds against new NAT­SAVE CEO Muk­wandi Chibesa - Kunda

Zambian Business Times - - FRONT PAGE -

THE BOARD of Na­tional Sav­ings and Credit Bank - NAT­SAVE re­cently an­nounced the ap­pointed of renowned and ex­pe­ri­enced Banker, Muk­wandi Chibesakunda as chief Ex­ec­u­tive. This was af­ter the erst­while for­mer Chief Ex­ec­u­tive Of­fi­cer Cephas Chabu was sacked with rea­sons not made pub­lic, in June 2017.

Muk­wandi comes with a rel­a­tively strong and solid back­ground hav­ing served in var­i­ous se­nior ca­pac­i­ties in pri­vate banks in­clud­ing Bri­tish Owned Stan­dard Char­tered, South African owned Stan­dard Bank - trad­ing as Stan­bic Bank - and Nige­rian owned sub­sidiary, Ac­cess Bank Zam­bia. She has amassed over 20years on bank­ing ex­pe­ri­ence with a stint at the Bank of Zam­bia.

The odds stacked against the new Chief Ex­ec­u­tive Of­fi­cer are daunt­ing and will re­quire a com­bined skill of deep bank­ing knowl­edge and a po­lit­i­cally shrewd pos­ture. Some of the grave odds the new CEO faces are:

Pos­si­ble In­dus­trial Ac­tion

The bank has a dis­sat­is­fied work­force, that will re­quire in­fu­sion with new and in­dus­try best tal­ent for it to tap the learn­ing curve quickly. The labour force at the time of Chabu’s exit was brew­ing with pos­si­ble in­dus­trial un­rest as was con­firmed by ZUFIAW Gen­eral Sec­re­tary Chin­gati Msiska in June 2017.

Dys­func­tional Ru­bikon Bank­ing Sys­tem

The need for an op­er­a­tional core bank­ing sys­tem is crit­i­cal for any fi­nan­cial in­sti­tu­tion for the pur­pose of ef­fi­cient trans­actabil­ity and data pro­cess­ing in this mod­ern cloud backed age. The Ru­bikon core bank­ing sys­tem whose pri­mary func­tions in­clude among oth­ers bank­ing op­er­a­tions, credit, fi­nance, Au­to­mated Teller Ma­chine - (ATM) ad­min­is­tra­tion and trea­sury man­age­ment has not been suc­cess­fully in­stalled lead­ing to ques­tion­able data qual­ity and in­for­ma­tion sys­tem man­age­ment needed aid strate­gic de­ci­sion mak­ing. Core bank­ing sys­tems help the fi­nan­cial re­port­ing func­tion and si­mul­ta­ne­ously al­lows for use of an­a­lyt­ics to track trends and im­prove cost ef­fi­cien­cies.

Legacy of Qual­i­fied Fi­nan­cial State­ments

The bank has a record of qual­i­fied fi­nan­cial state­ments in the last (3) years from 2013 to 2016.

The Au­di­tor Gen­eral’s re­port re­vealed that NATSAVEs core bank­ing and ac­count­ing sys­tem can­not be re­lied upon to re­port clien­tele bal­ances. This then ex­poses the bank to credit and op­er­a­tional risks.

More­over, the Bank’s bal­ance sheet cash clos­ing bal­ances are not re­li­able and as such as there has been in­er­tia to al­low ex­ter­nal au­di­tors to con­duct re­views on such as rou­tine cash counts to as­cer­tain and ver­ify the cash clos­ing bal­ances in their fi­nan­cials.

Above In­dus­try Rec­om­mended Loan Loss Pro­vi­sions

NAT­SAVE’s to­tal loans dis­bursed by Q2:2017 shows that Port­fo­lio at Risk – (PaR) for credit de­fault was 13.9% which was 890bps above the ac­cept­able in­dus­try thresh­old of 5%. We recog­nise that this sce­nario is not unique the bank as the en­tire bank­ing in­dus­try is in breach of the pru­den­tial limit of 10% at 12.5% as re­ported by BOZ.

The in­sti­tu­tion be­ing gov­ern­ment owned is also sub­ject to po­lit­i­cal pres­sure in its lend­ing drive and ex­pan­sion de­ci­sions as its board is di­rectly ap­pointed by the Min­is­ter of Fi­nance. There are no pri­vate eq­uity in­ter­ests to bal­ance the board ap­point­ing author­ity in­ter­ests which raises cor­po­rate gov­er­nance con­cerns.

Lack of Profit Mak­ing Cor­po­rate Cul­ture

Due to the banks own­er­ship struc­ture, it has his­tor­i­cally re­lied on po­lit­i­cal pa­tron­age for its man­age­ment as well as com­pany sur­vival. There is a gen­eral ten­dency to rely on gov­ern­ment bail outs in ad­ver­sity. This also trans­mits to the man­age­ment and staff, who also not be­cause of their in­abil­ity to per­form, but by the gen­eral cul­ture ob­tain­ing, rather look for po­lit­i­cal sup­port to re­tain their po­si­tions rather than earn them through per­for­mance based cul­ture. This will per­haps be the big­gest hud­dle or odd that the new man­age­ment team will face, as cul­ture is a del­i­cate quan­tum to re-shape.

Turn­ing around NAT­SAVE will not be an easy task and may re­quire struc­tural changes such as float­ing some share on the Lusaka Se­cu­ri­ties Ex­change for Pri­vate Zam­bian in­ter­ests to join the share­holder list as a con­trol to counter ex­pe­di­ent de­ci­sion mak­ing.

What are the chances of Muk­wandi suc­ceed­ing as NAT­SAVE boss?

Muk­wandi has worked for the best banks in se­nior ex­ec­u­tive po­si­tions of re­spon­si­bil­ity and has a flaw­less record of suc­cess wher­ever she has been. Many are bank­ing on her ex­per­tise and drive to turn around NAT­SAVE, though this will be a mam­moth task for her. With her track record and ex­pe­ri­ence our strate­gists are con­fi­dent that she will suc­ceed in driv­ing per­for­mance harder. Muk­wandi will need to­tal sup­port from the Board of Direc­tors in the pow­ers they vest in her to make some tough de­ci­sions re­quired to trans­form the bank. Fur­ther, our strate­gists are of the view that she has the req­ui­site strate­gic acu­men to achieve the long awaited turn around for NAT­SAVE.

New NAT­SAVE Chief Ex­ec­u­tive Of­fi­cer Muk­wandi Chibesakunda

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