Tasked with leading South Africa’s Absa Bank into the rest of the continent is the newly appointed chief executive John Gachora.
Gachora joined Absa in January 2009 as the head of Africa at Absa Capital, the investment banking division of Absa Bank Ltd, where he was responsible for setting the strategy for Absa Capital’s Africa business, and redefining the presence of Absa Capital and Barclays Capital on the continent.
Absa is a subsidiary of Barclays Bank Plc, which holds a stake of 55.5 per cent in the group.
“My new position is an expansion of my portfolio which is a natural extension of the relationships, impact and influence I have established with key clients, governmental structures and regulatory bodies on the continent,” he said.
“The difference between my previous and current role is that I was in investment banking but now I am dealing with the physical banks in the various countries.”
To drive this expansion, Gachora will implement his leadership, experience and vision through the bank’s strategic goals in growing revenue, assets, extending access to financial series to entry level banking customers and enabling corporate customers to do business through Absa and Barclays in Africa.
He is also responsible for physical banks, approximately 2,500 staff and 700,000 customers.
“Absa is found in Tanzania, Mozambique and Namibia. We also have an operation in Nigeria offering both retail and commercial services,” he said.
Absa Africa has a three-pronged strategy for its expansion plans.
“The first prong is to deepen our offerings and returns where we own banks like in Tanzania and Mozambique. The second is to work with the countries where Barclays has a presence,” said Gachora.
The third prong of the strategy is to grow Absa’s new markets: Nigeria, Namibia and Angola.
“Nigeria and Angola are the two largest economies in sub-Saharan Africa outside South Africa. These two countries have a high GDP, growing economies and have high revenues from their oil and gas sectors. Their banking systems are becoming more and more sophisticated,” he added.
“It has been estimated that Nigeria’s economy will surpass South Africa’s by 2020. Therefore, Nigeria is a very important market that cannot be ignored.”
Namibia and South Africa are closely linked with a lot of trade between them.
This has made it easy for Absa to understand Namibia. Furthermore, Namibia and South Africa have similar risk management and control systems.
“Angola is similar to Nigeria in terms of its growth, high GDP and oil revenues. It is a very important market for our corporate and investment banking division.”
Partnership or acquisition?
When it comes to expanding a business, one can either set up structures or partner with an existing institution.
In Namibia, Absa made an acquisition but it is also looking into growing organically in certain regions.
“But organic growth is very expensive because of customer acquisitions and hiring the required skills,” said Gachora.
Expanding into developing economies has never been a walk in the park for companies, and this applies to Nigeria too.
“It has been challenging... The previous governor was against buying of majority stakes in their local banks,” he said.
Gachora was born and raised in Kiambu, Lari district, the eighth of 13 children. His parents were farmers. He had his secondary education at Alliance High school.
“I studied sciences. My plan was to go into engineering which was the ’hot’ profession while we were in Alliance.”
He then joined the Massachusetts Institute of Technology where he studied engineering and computer science.
After MIT, he joined a securitisation group at Credit Suisse as an IT systems engineer in 1994.
While at Credit Suisse he was sponsored to pursue his masters in business administration at Wharton School from 2000 to 2002.
He became the vice president and head of structuring for asset securitisation. He left Credit Suisse 10 years later.
He joined Bank of America where he rose to be the managing director and head of restructuring— the first Kenyan to hold such a position in the firm.
Gachora was introduced to the investment banking division of Absa through a recruitment road show.
“The banking industry has a preference for engineers due to the skills we have and the systematic way of thinking that we embrace. Finance is very systematic, it’s about ‘inputs and outputs’ when you are structuring. My skill is in creatively finding the in-between that will move the process from being an input to an output.”
According to Gachara, East African banks are retail-focused, which is costly as a business model.
“Looking at Kenya, most banks have not built critical mass. Worse, the country has too many banks, 44 in a country of some 33 million people compared with Nigeria’s 26 banks for a population of 150 million people.”
He adds that Kenya does boast a sophisticated banking system. It has the potential to expand into more African countries but only if the banks consolidate.
“Banking in Africa has evolved over the years with the two key banking markets — Nigeria and South Africa — aggressively expanding on the continent. They will continue to dominate sub-Saharan Africa if other players do not rise to the occasion,” Gachora added.
Gachora has much to say about what he is bringing to Absa and the continent as a whole.
“From an investment banking perspective, I am able to offer the same service and product in Africa that you would generally expect to see in New York or in the UK. My years with leading global banks abroad have provided me with the ability to develop creative and innovative solutions for my clients. I understand the art of relationships, very well.
“Today’s banking will be won through solid relationships and quality service. This trend now transcends all forms of banking.”
As to what Africa lacks, Gachora picked out aggressiveness in banking.
“We are coming from an era where people only went to banks when they were in need like how you go to see a doctor. There is a need to change this mindset and to understand that the customer is king.
“There is a lack of ownership. Banks generally employ smart people, but you need people who are able to do what they do without supervision. I often hear my colleagues complain about the lack of skills in Africa. The skills they refer to have little to do with formal education, but a lot to do with ownership. Ownership is a crucial skills, own the work and do it to your ultimate best whether your manager is there or not,” Gachora adds.