Dr. Addis Ababa Othow: Unlocking Financial Access

Inkonversation S03 E9

Tune into our latest episode as Dr. Addis Ababa, Managing Director of Equity Bank South Sudan, discusses the evolution of the banking sector in South Sudan through digital services and the pursuit of financial inclusion.

Transcript

Transcript 

Doreen
Thank you so much for being with us this morning. My name is Doreen Keiji. I work for Inkomoko as the investment manager here in South Sudan. Today we have the Managing Director of Equity Bank, South Sudan, doctor Addis Ababa. I would like to give him a chance to introduce himself. 

Addis 

Thank you, Doreen. I am happy to be with you this morning to have a conversation with Inkomoko. 

Doreen 

Thank you. You have good experience in the banking and academia with multiple PhDs. Could you share with us some of your career journey from banking to lecturing.

Addis 

I've been working in academia, financials and particular banking sector for quite some time, since 1996. I started my journey as a teaching assistant at the Milan University in Khartoum, Sudan, back in 1996. Then joined the Central Bank of Sudan in May 97 as an inspector officer in the Department of supervision. so and then later on I left for Netherlands in Europe, where I also embarked on the study, did their finance and accounting at Holland university and I have worked there also for auditing firm called Devour. After that I came back actually to Juba, southern Sudan, by then, before independence at end of 2010. Where I started I first got here after the CPA agreement as a consultant for anti Corruption Commission. And then I joined Central Bank of Southern Sudan. It was an A window that was specifically created by CPA to serve the people of South Sudan based on the conventional banking system. Worked there up to February 2015. At the time I joined Equity Bank Kenya in Upper Hill as a general manager operation. Later on, I was lucky to be promoted as a Director of operations and then re-deployed back to South Sudan as Deputy Managing Director. Yes, I've been in banking and academia for quite some time. My passion is actually teaching. I am an Associate, a young, associate professor and. At Juba University. I do postgrads programs and sometime undergrads, but that's that is where my passion is. So that's a bit about myself. 

Doreen 

Thank you so much. I would like to know, within your journey, what are some of the challenges that you have seen and successful success that you've witnessed in the banking sector 

Addis 

Let me start by the the success that I've witnessed when I came here, you know, the city was signed in 2005. And they were. A few banks. That were operating as a part of Southern Sudan region that were affected by war and conflict. So after the CPA is signed, we have seen some of those banks moving back to Sudan. Because of the system, the conventional system that were introduced or have been introduced them in southern Sudan and those banks that were here were mainly Islamic on Islamic models and Islamic system. So they had to relocate back to Sudan. But we have seen a lot of success. We have seen so many bank coming up. KCD subsidiary was established here. Equity came here in 2009. And then cooperative eco. Currently we do have almost 30 bank operating in South Sudan among them 8 regionals and International Bank.

So during that period we have seen a lot of growth in terms of customer base and bank hub and back then on the on boarding. The unbound population, say, as I said, South Sudan was mainly affected by war and they some people were had no access to financial system and mainly the financial services. So the bank that that came were mainly focusing on financial inclusion. Bringing more customer on board, introducing them into the financial services. That  is one of the success that I have seen.

We also seen many of the insurance company coming to South Sudan. And New Sudan insurance UAP Britain, although there is a lack of regulatory framework, but I think they saw an opportunity to come to the market and operate and become part of the financial institution that are here. also to support and promote the growth economic growth in emphasized, we have seen also microfinance institution numbers growing and we had a few microfinance institutions that that were offering their services to people of South Sudan and the government. Also, play a very big role and then by forming what it was used to be called South Sudan Microfinance Development Facility. SSNDF. It is an an affect body that was supported by by World Bank to bring about. Private Sector development initiative, so that has helped also to enhance the knowledge and and the capacity of those who were in business.

They the bank then were very liquid and they had. An opportunity despite the regulatory challenges to play the critical roles, accurate the mandate or. Banking Monday to promote a. The business and promote the economic growth. So those are the the success that I have seen.

Doreen 

Thank you very much. We have seen that the, the successes outweigh the challenges because the challenges comes once in a while and they go, but the successes they stay with us. So I would like to know what do you think are the most important steps to strengthen financial institutions in emerging economies like South Sudan? 

Addis 

In my humble view the most important step to strengthen the financial institution in the emerging market like South Sudan, #1 is political stability. and when we talk of political stability as a concept, what come in mind is the rule of law, having an effective macro finance management. we have seen the dividend of peace and that we have enjoyed for the last six years. So that is the result of political stability. So the the the political stability, regardless of the political system. Always result into what we call financial and economic stability. And I think that is an important step. 

The second thing is to build a strong financial institution. What I meant by that is to have an institution that mainly focus on their mandates and their objectives, structured based on the good governance practices. The accountability and transparency is part and parcel of their practice. Because we all believe that institution cannot be better than than its people. It is through institution that you will see. A lot of structure that help to strengthen not only the financial stability but also the... 

The other thing is the regulatory framework, what we call the regional supervisory framework, that helps also to guide the entire banking sector and maybe in general financial sector to drive and to thrive and provide access to credit. Introducing also the national payment system that will also enhance the financial and economic stability that we all looking for. 

Doreen 

In South Sudan, it is not a secret that access to capital is still way below global standards and with financial institutions mostly domicile in the capital, which is Juba. What do you see is the role of financial service providers in promoting growth in South Sudan, especially in terms of financial inclusion and access to credit for underserved communities? 

Addis 

This is a very challenging environment, a environment exercised by the hyperinflation, the national currency depreciation, sometimes conflicts here and there especially in the rural area and also your political instability, whether regionally or internally. It is essential for financial service providers must play a critical role in promoting economic growth, and especially by driving financial inclusion. For the institution like Equity Bank to use their a business model we do have. Triple engines business model that focus on social arm, economic arm and sustainability arm. Those engines are used to ensure that you will bring on board more customers. and the more you focus on the social engine to bring about economic growth, the more you have a sustainable approach. Pay into your business. So financial inclusion is mainly focusing on how you grow the business using the the social agents, making sure that you create the loyalty, bring people closer and that's why our, our customers, we don't call them call them customers we call them members. 

We also use social Payment intervention. What we do now across South Sudan in partnering with our UN Agency and international NGOs, the social payment and what is known as cash drop and cash distribution is mainly to ensure that. You bring on board. As much as you can, those who are benefiting from the financial services. So yes, it might seem like the… when the bank is providing. Services to IDP's to vulnerable people in, in refugee camps like they, it is just only purely a business driven approach, but it's the our intention is to bring the same group into the banking system. Introduce them into a financial service that we offer and make them understand that their future… changing their life depends on the way they look into the business. The way they now tap it and use those facilities to change their lives. So we used it as social payment interface. 28:01 To bring about the financial inclusion, 

we also use our capability in terms of mobiles and banking solution we have. A digital arm that is easier and convenient in reaching those in hard to reach area in remote area where there is no physical branches established in those areas. So we also use the agency banking and merchant services. Most of the banks were mainly in big Towns and that is the fact. But because the concept of banking has already changed, the bank is not where you go, not the building the, the Nice, beautiful. Yeah. Building that has well put for customers. But it is what you do. So we use the digital platforms, the agency banking, the merchant service, the POS to ensure that those who might think that bank is. It's just a physical places will now change their mind. That they can access all those services regardless where they are. So that's that's that's that's the capability that we are offering to ensure that we reach those population as a part of our national reach. To deepen the financial inclusion. 

Doreen 

Equity is very unique and equity works with Inkomoko and Inkomoko works with entrepreneurs to help the entrepreneurs create job, improve livelihoods and also develop a thriving community. With that, we would like to know in this. South Sudan economy that is very unique as well. What strategies is equity bank using to help the medium small and micro enterprises get financing and overcome financial challenges 

Addis 

We have to the partnership that we have established with Inkomoko. And and the the partnership was based on the common objective of our sisters. Organization being equity and Inkomoko. Our intention is also to transform the lives and livelihood of the people of South Sudan. The the strategy that we have adopted to help the micro, small and medium enterprises get. Financing and overcome the challenges because there are so many challenges that we talked about that that particular group are facing. we want to ensure that that. We design A financial product to help that group that particular group the the the micro small and medium enterprise by offering them a loan with a flexible repayment terms. Because. The challenges are many. If if you are just strictly adhering to the loan condition, as it is known in other markets, it might really be a set back to an entrepreneur that is venturing into the new maybe. Businesses. So you need to offer a loan with a very flexible terms in terms of repayment, the grace periods, but also an interest. It should be competitive so that so. That they feel like they also encouraged to do more business and manage and create jobs, create wealth. 

The other thing is a capacity building. Which we thought is important and particularly what we call entrepreneurship education. Now. What that means is that we organize workshop, we conduct also training to improve the financial management skills of all our micro and small and medium enterprises. To learn how to handle the debt, their financial. Very responsible manner how to create business plan. Uh. How to maintain a financial discipline and this is actually a key and I want to especially. In our context, as the South Sudanese. The moment when we already know, in this country, when, when, when you establish a a business, you know they they the social relationship is so strong. You know we believe in. That's a social gathering and social relations. But all those kind of things, not only with those immediate family members, but even those who are a bit far. So the moment you are seen to have established kind of a business that seemed to be successful. Then, then they they, they, they, the pressure, the the burdens of the family members. Will be now channeled. Everyone will be like like, you know what my kids have not gone to school for the two semester and they need to be paid simply because they have seen kind of success that you might have. 

So so that that has really become a real challenge to so many people with a good idea who would have succeeded in their businesses. Why? Because they don't have what? We call financial education. So there is a need to separate the social issues, social needs from the needs of your businesses. We also partner with our UN agencies NGO. And all the development agencies and development partners on what we call risk sharing arrangement. And there are some sector where. We believe that a risky from purely business point of view of bounds. If you look at agriculture. 

Why not find a bank or a credit department who will quickly approve a loan agriculture loan simply because they seem to be or considered to be risky? So we partner with the UN Agency Development Partners and yours? Now we hope to partner with some of our agencies here and like for our the rest just to ensure that based on that risk sharing arrangement, we'll be able to craft and design the product that will suit the needs of that particular group. While you're also covering. The risk. In terms of sharing, so they they bring kind of funds as a cover. 

Percentage to any risk that might arise during the implementation of any any project that is supported. By loan so. So. The thing that we do and we we will help SME's to get financing and overcome the challenges, 

Doreen 

Equity has also partnered with the World Food Program to connect agricultural value. Main actors to financial literacy and concessional financing. Now, with the literacy that you have already established, giving your clients, I would like to know how does this partnership with Inkomoko and with wealth program align with equities mission. To support small businesses. 

Addis 

The partnership that we have established with the World Food Program, Inkomoko and other development partners. Is aligned with our mission of offering integrated financial services that economically and socially empower our customers, our businesses and community. The reason why we focus on empowering those categories is for them to create wealth as a part of our bigger plan in terms of African recovery and resilience plan that focus on 6 pillars and one of them is at the. Because we see. Huge opportunity for all our the beneficiary to grab that opportunity and create job opportunity and wealth to drive the growth that we all are looking for. 

So the partnership with World Food Program is to connect agricultural value chain actors and the people. All. The activities to the financial literacy through the concessional financing and those are particularly for that group. We're also trying to look into building capacity for sustainable growth. 

We also want to support the agriculture value chain access to credit at the concessional loan concessional interest rates based on the risk sharing arrangement I already talked about, the intention is to to to empower that agro business program in in South that we saw an opportunity. There and we think that is it is our responsible part, our poor banking business. To ensure that we promote the agro businesses by helping them access financial resources that are critical for their to scaling up their operation, improving their productivity and driving the economic growth, especially in the rural areas. 

Doreen 

Thank you very much. You see, I have come from the bank myself. I have been working in the bank for almost seven years. And I have seen that the bank has done a lot in bringing in so many innovations and you you can see like you've talked about the bank not being the building anymore. What are the changes or innovations that you think that will come and will grow the financial sector in South Sudan? 

Addis 

If you look at the South Sudan market and especially when it comes to. Digital and mobile transfer. Information products, the revolutions itself, the market has not developed, although there is an E mobile operations, but the mobile operators that are in South Sudan have not picked up, has not contributed. So might in terms of financial inclusion. And providing financial services, so we see. We see a huge opportunity when it when it comes to strengthening the the financial infrastructure, the banking infrastructure, the mobile banking info. In South Sudan. Financial inclusion should be spearheaded as a program by the government. I'm glad to to know or to learn that the governments might come up with what? National Financial Inclusion program, or a strategy that will focus on embarking on the campaign to create awareness for this. What is it that people are talking about when when they hear financially it is? What is it that banks are offering? What is that that the the insurance are offering microfinance so. So that kind of of of financial inclusion complaint that is will be headed by the government. Help all the financial institution now to to develop also a program in line with with that national agenda to ensure that we bring everyone on board. Remember they the bank population in South Sudan is less than 8%. So there is a. Huge, huge eternity. For the panel to tap into the the unbound population and make use of the capability to grow the businesses, create more job, create more investment and drive. They they close. And particularly economic growth.

Doreen 

Thank you very much for today. And we want to say that equity is our huge, huge supporter in this country. Inkomoko expanded to South Sudan in 2023 and we've seen there is a lot. Support that we received from equity from our equity partnering with us in financial inclusion, bringing our clients who have never opened accounts before they were able to open accounts at Equity Bank.

Addis 

Thank you very much. The bank is for everybody. Our mission and vision is to transform the lives and livelihood of people of Africa, but particularly the people at the bottom of the pyramids. Those with low income, those whom you are targeting and that's why we are happy to have that kind of partnership with Inkomoko. I thank you once again for giving me the opportunity to talk to. Everybody through your platforms. Thank you very much. 

Doreen 

Thank you.