Business
Did Ecobank Grow Too Fast?
Ecobank, whose rapid expansion to 35 African countries was considered by some to be the Pan-African Dream, needs to devote as much attention to governance as to growth, its largest shareholder said in a Reuters report in IndependentOnline.
Ecobank CEO, Thierry Tanoh, was ousted by the banks’ board of directors Tuesday, after months of internal division and an investigation into alleged breaches of corporate governance by Nigeria’s Securities and Exchange Commission. There could be signs of a slowdown in the rapid expansion that has taken the financial institution to 35 countries according to reports by Reuters.
Ecobank, whose official name is Ecobank Transnational Inc. (ETI), is the leading independent regional banking group in West Africa and Central Africa. Established in 1985, it also has subsidiaries in Eastern Africa, Southern Africa along with representative offices in Angola, China, Dubai, France, South Africa and the U.K.
Elias Masilela is CEO of Public Investment Corporation (PIC), a fund manager and financial services provider that owns a 18.35-percent stake in Ecobank. PIC is wholly owned by the South African government, with the minister of finance as its shareholder representative.
“(Ecobank) grew too fast in a short space of time,” Masilela said. He also said, “They needed to take stock at some point and think about internal issues instead of focusing on the expansion program only. It would seem like the expansion program preoccupied everything.”
The PIC was a vocal critic of Tanoh and called for his dismissal to prevent “the death of a pan-African dream” in a March 1 letter, Reuters reports. Ecobank needs to stabilize as it grows and faces a difficult challenge of integrating its investments, Masilela said. “Until it has stabilized it’s very difficult to tell where the risk areas are.”
PIC still considers Ecobank “a very good bank with huge prospects,” despite the recent turmoil, Masilela said. “All that we need to do is to nurture it so that it delivers as expected.” PIC’s investment in Ecobank has given it exposure to fast-growing countries such as Ivory Coast, Uganda and Zambia as the fund manager tries to diversify beyond South Africa, Reuters reports. Ecobank is headquartered in Togo and listed in Nigeria and Ghana.
