DOMINANCE BY STANDING OUT: LESSONS FROM KENYA’S CBA BANK

Interesting times these are – after the enactment of the Banking (Amendment) Bill 2016 late last year, most of the Kenyan banks’ profits went southwards. Actually, for the financial year closing June this year, a bank known to have zero loans at risk of loss (PAR), Victoria Commercial Bank, recorded a loan on default, to underscore the dire situation facing the industry.

But even more amazing is one bank that went against the tide – Commercial Bank of Africa (CBA) which posted improved profits where even its more heavily capitalized bedfellows failed. Last week the bank reported a net profit of Kes. 2.7 Billion up 14.1% from the previous year.  It would be interesting to study their business model to find out why.

The underlying reason for this resilience is their association with another powerful brand – Safaricom’s Mpesa product. Safaricom is East and Central Africa’s most profitable blue chip entity; with a valuation that ranks it as the fourth most valuable brand in Africa. Mpesa is a mobile phone based wallet that enables the public to do financial transactions at their convenience.

By linking up with Mpesa, CBA developed a mobile based banking service called Mshwari that has become a hit with the unbanked. As such, anyone, as long as they are subscribers of Mpesa, can borrow and repay funds through their mobile phones. Additionally, subscribers are able to save their funds at a fixed rate of return to be withdrawn later with some interest. It is literally a bank without a physical vault. As at the end of last year, Mpesa had on boarded slightly more than half of Kenya’s population – over 47 million customers.

By compensating for the fall on revenues due to regulatory restrictions through enhanced revenues from Mshwari, the bank was cushioned adequately. It is observed that revenues rose by 16.3 percent year to year to close at Kes. 5.5 Billion.

The Hint

According to the World Giving Index published this year, it was observed that Kenyans are the third most generous people in the world. It underscores the social cohesion that exists amongst Kenyans and their sharing habit. It is this social value that the developers of Mpesa chose to ride on and develop their product, thereby aligning their product with a truly Kenyan value. This is the main reason why Safaricom and Mpesa to be specific have enjoyed dominance for the last ten years of its existence.

And this brings out two very important lesson most of us entrepreneurs purposely ignore: synergy and values.

Robert Kiyosaki said that networking is the business of the 21^st Century. Networking is about leveraging relationships, within and without the firm. Smart firms, like CBA as explained above, chose to take advantage of the readily available market by Mpesa subscribers to offer their services – banking. As an entrepreneur, ensure you create linkages with other players in the sector and related sectors to ride on their associations and operations. Be it supply chain management, production, knowledge exchange, etc. ensure you find a suitable partner to establish a mutually beneficial relationship. For CBA, Safaricom Mpesa provides them with an already established market. In turn, Safricom earns from the lending expertise from the banking partner. The days when a firm would exist on its own are gone and synergistic interactions are the way to go.

Values, I say, are the most important element in a business. I always ask people- what does their business stand for?  I opine that any great business is built on the foundation of their organizational beliefs. Its product offerings are only accepted once their value system is in tandem with the societal belief systems of their target markets. Considering this example, Safaricom realized Kenyans like sharing. Our national philosophy is Harambee, literally meaning to pull together. Whenever someone has an enormous project, people would come together and contribute towards helping in the realization of the project. These gatherings are called Harambees. In the west, it is known as crowd funding. It is an embodiment of our giving spirit.

A Kenyan who lives away from home would always send home some cash to help his kin back at home. Mpesa’s launch, coincidentally, was done at the onset of the infamous 2007/2008 Kenya Post Election Violence (PEV) period when banks and other financial systems ground to a halt. With the service, stranded populations were able to send and receive cash at the convenience of their homes. Additionally, as opposed to banks which had locations majorly in urban centres, Mpesa had a huge network of agents that permeated all the areas of the country. The footprint covers more than 70% of the nation, with a huge concentration in the rural areas. Add that to the convenience of only requiring an ID to be registered, Mpesa became an instant hit with users all over the country.

Much more can be said about this success story of Safaricom but one thing stands out: values. This is what made them to be acceptable and build a loyal client base that has proven hard to break. Airtel Kenya Limited, then known as Zain, launched a competing service nicknamed Zap. It waived its fees altogether but the population could not accept it since it did not resonate with its ideals and values. To many, Zain was for the urban rich and elite. It was also not used by the majority as almost all phone owners had Safaricom lines.  Safaricom hence passed off as an authentic Kenyan brand that was deemed cheap (even when it was not).

Well, there you go: what will you do as an entrepreneur to replicate a success story like CBA’s? It is not too hard to go against the grain and disrupt the ideal and become dominant. It just needs a little tweaking of the obvious to stand out.

And indeed, you can!

Objective Networking in Business

When we speak of networking, many take it as the usual meet-the-people activities we engage in during our free times. Like going to pubs and having some weekend snack with pals. Of course most are characterised by football or political banter that does not add any real value to life.

But let us think over this in a few: how many meals do we take in a day? I guess on the higher side three  breakfast, lunch and supper, if at all there are no snacks in between. Of these, how many do we employ for use for the benefit of our professions or businesses? I know most have none as the answer!

If we are to compute the total number of meals using the three meals a day average, it comes to about 1095 meals in a year. If we imagine only ten percent of these dedicated to utilising them to grow our business and professional relationships, this translates to around a hundred opportunities availed! Man is a social being and as such, networking events are relationship connections.

Networking has the potential of facilitating growth of business and professions through cultivating mutually beneficial relationships with other parties. They operate on the givers gain policy where, those who are willing and are committed to offer the other party something, benefit in return. 

An objective driven networking event or social gathering ensures that each member of the network comes with something to offer the other member and in return, they get to receive something. As such, whenever the members of the network congregate, each comes with a referral or a business fulfilment for the other party.

Everyone would want to work with someone they know and as such, a relationship or acquaintance has to be cultivated. You can only work with someone you know, trust, like and invest time in building that social bond for mutual benefit.

Professionally run and objective driven networking gatherings work in a structured manner, with laid down ground rules that dictate the mannerisms of its members. What they aim at is to build a structured supportive system of doing referrals to its members. As such, each member would emanate from the meeting with substantial business and hence gain value from the relationship. They therefore need to have a common bond and objective  to network and grow mutually.

Objective networking also would require that the members have an unbowed and unwavering commitment towards the social organisation. They should be able to afford to sacrifice their time resources or otherwise towards the networking forums. Most usually hold their meetings over a meal, either the breakfast or lunch period. As such, there should be strict observance of time and frequency of meetings. Some clubs have established ground rules that dictate penalties for deviance from established norms as a deterrence measure.

As mentioned, the mind-set of the network members should be sole  to give. As such, all should work as a team with their sole purpose to market the other persons business. And hence each member markets the other members profession and business and in a way, advertises their commodities business via word of mouth. There is therefore need for sincerity on each members part to help the other as he or she receives help in turn. At the end of the day, through word of mouth, each business entity represented there is advertised for free and business leads generated!

The most important bit is availing tools of networking by the members. The most basic of them are business cards. These hold vital information and as such, they should be articulately designed and laid out with attractive features. A blog would also come in handy as it would be a platform for articulating issues of concern or interest and as such, attract followers and build a fan base. It helps one create an influence cheaply and conveniently.

As mentioned, one obvious benefit of networking is free and cheap advertising through word of mouth and referrals. Indeed, comparing the heavy costs of doing media ads versus the free word of mouth referrals, the later wins the day! In actual fact, it is said that over 98% of business leads generated today are through networks. If your business is currently not leveraging on this, then you are not in business!

It would also be an enriching experience socially and professionally to interact with people from diverse backgrounds. It is said, that we are defined by the books we read and the PEOPLE we associate with. It would also be a platform to learn new skills and get to learn from people who possess better experiences.

In a nut shell, next time you meet a person, get to task to see what you can learn from him or her. Let that interaction leave a lasting impression and in return, influence their life in one way or another. For indeed, clever people look for business or work. The smart build networks!