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Interview With Deribie Asfaw

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Deribie Asfaw – PRESIDENT OF COOPERATIVE BANK OF OROMIA

FOUNDED IN 2004, THE COOPERATIVE BANK OF OROMIA BECAME ONE OF THE LEADING PRIVATE BANKS IN ETHIOPIA. WHAT FACTORS HAVE CONTRIBUTED TO THE SUCCESS OF THE BANK THUS FAR?

There have been several factors that have contributed to the success of the Bank. Some of them are:

Large customer base: Given that the bank was established and owned by the farmers, it has a large customer base. The broad foundation upon which the bank was built has greatly influenced its current level of performance.

The redesigned vision of the bank: “To become the leading private commercial bank in Ethiopia by 2025 G.C”. As you are aware, a vision is the mental picture of the future you desire. More than just a goal, a vision is the embodiment of our hopes and dreams in a particular area; the picture of what has not yet happened, but what the future may hold.

We, at Coopbank, firmly believe that having a clear vision creates energy and enthusiasm, increasing commitment and fostering change in our bank. Driven by this belief and the perpetual state of change in the banking industry, we have redesigned our vision to become the leading private bank in Ethiopia. The redesigned vision has ignited the performance of the bank in all parameters. The commitment and sense of ownership: All stakeholders, such as shareholders, Board of Director, Executive Management, Shari’a Advisory committee, directors, managers, and the entire staff, collectively display a sense of commitment and ownership towards the bank.

FINTECH IS IN VOGUE. YOU HAVE SHOWN INTEREST IN DEVELOPING TECHNOLOGY-BASED FINANCIAL PRODUCTS. CAN YOU SHARE WITH OUR READERS SOME OF THE RECENT DEVELOPMENTS THE BANK IS UNDERTAKING?

The Bank has introduced the first-ever uncollateralized digital lending platform named “Michu” in the history of Ethiopian banking industry.

The Bank has also started collateralized commodity financing for the first time. It is a short-term credit secured against stored commodities as collateral. Moreover, the Bank has also been working hard to introduce a Shari’a-compliant digital financing platform for interest-free banking users.

WHAT ARE THE MOST IMPORTANT STRATEGIC PRIORITIES FOR THE BANK OVER THE NEXT THREE YEARS? AS A CEO, HOW WOULD YOU ENSURE SUCCESS REGARDING THESE PRIORITIES?

Ensuring Sustainable Business Growth: To meet this growth, the bank will work hard to reignite its resource mobilisation activities through existing and new channels, capitalising on the existing business opportunities, improving its asset management, and thus ultimately maximising its stakeholder’s value.

Human Capital Development: Improving human capital development through numerous trainings, workshops, induction programmes and so on.

Digital Transformation: Launching and implementing various digital products, services, channels, and IT projects as the future banking is digital.

Enhancing Asset Formation: Building up the assets of the bank through engaging in various constructions and acquisition of buildings.

DO YOU THINK THAT ISLAMIC SOCIAL FINANCE HAS THE POTENTIAL OR CAPACITY TO OFFER A RELEVANT AND SUSTAINABLE SOLUTION POST-COVID AFRICA?

Yes.

One of the most significant impacts of the pandemic is the increase in the intensity of poverty around the world. The health sector crisis has also been causing an economic meltdown. The problem is even very high with regard to Africa. On the other hand, the main focus of Islamic social finance is to alleviate poverty and contribute to the societal well-being. If managed properly, Islamic finance can be leveraged to bridge the gap between the poor and rich. As a result, I believe that Islamic social finance, which encompasses a variety of methods for reducing poverty, has the potential and capacity to solve post-COVID Africa’s economic issues.

In addition, Islamic social finance has various tools, such as zakat, qard al-hasan, waqf, and sadaqa, for social financing. These mechanisms can play significant roles in reducing poverty and providing sustainable solutions to the post- COVID Africa.

WHAT ROLES CAN TECHNOLOGY IN GENERAL AND, FINTECH AND AI IN PARTICULAR, PLAY IN ACHIEVING ECONOMIC STABILITY AND DEVELOPMENT OF THE FINANCE INDUSTRY?

The world is undergoing a fast digital transformation as a result of technological advancement. This offers new banking models, communication, and lifestyles in the financial sector.

It will also drive financial industry growth, profitability, and sustainability in this fast-paced digital world; changing the traditional ways of banking. Unless otherwise banks transform themselves to digital, their existence in the future will be in question. Technology also enables banks to conduct banking transactions in a minimal time, saving energy and money.

AS A CEO, HOW DO YOU MANAGE TO MOTIVATE YOUR TEAM IN SUCH CRUCIAL TIMES? PLEASE SHARE WITH OUR READERS SOME OF THE LEADERSHIP SECRETS AND YOUR LEADERSHIP APPROACH.

I am a visionary in my approach, working to improve the living conditions of poor farmers and missed segments in general and those attempting to transform their lives by working in retail, medium-, small-, and micro-level enterprises.

As most of our employees are from the category mentioned above, almost all employees, management, and even the board of directors are fascinated and interested in this bank. I am a good listener to both employees and other stakeholders and deeply care about the opinions of others.

WHAT IS YOUR LONG-TERM STRATEGIC VISION FOR THE COOPERATIVE BANK OF OROMIA? WHAT CHALLENGES DO YOU FORESEE THAT MAY HINDER PROGRESS?


My long-term goals are as follows:

  • To realise the vision of becoming the leading private bank.
  • To make the Cooperative Bank of Oromia a competitive bank in the East African region.
  • To improve the lives of poor farmers even if there are so many of them in the country.
  • Challenges I foresee are:
  • The global and national economic downturn as a result of COVID-19 and political instability;
  • Competition from FinTech companies and foreign banks that are going to join the market;
  • The skyrocketing inflation and devaluation of the birr;
  • Low financial literacy across the country.

WHAT, IN YOUR VIEW, IS THE INTEREST AND SHARE OF NON-INTEREST BANKING IN THE REGION AND HOW DO YOU PLAN TO INCREASE IT?

Appropriate legal, regulatory and tax regimes that are compatible with the special nature of the business are some of the interests of non-interest banking.

The share of interest-free banking in the region remains small, although it has the potential given the region’s demographic structure and the prospects for financial deepening.

To increase the market share of non-interest banking, it is more than essential to aggressively work to exploit untapped market potential. The untapped market potential in the region offers an opportunity to mobilise resources and channels into key economic sectors. Additionally, it is crucial to create aggressive public awareness and vast training for staff and other stakeholders.

WHAT ARE SOME OF YOUR SHORT-TERM AND LONG-TERM GOALS WITH RESPECT TO FINANCIALLY IMPROVING AND ASSISTING THE UNSERVED AND UNDERSERVED COMMUNITY IN THE COUNTRY?

Some of our short-term plans are achieving yearly targets of providing appropriate and quality Shari’a-compliant financing products that are both accessible and affordable to the low-income class of our society.

One of our long-term goals is transforming the current window model to a subsidiary model to exploit the potential market in the country. Enhancing financial inclusion and embarking on aggressive public awareness campaigns are also among our long-term goals.

THE WORLD IS RAPIDLY BECOMING ORIENTED TOWARD THE USE OF SOCIAL MEDIA. WHAT ROLE CAN SOCIAL MEDIA PLAY IN CREATING AWARENESS AROUND ISLAMIC FINANCE IN ETHIOPIA IN PARTICULAR AND IN THE AFRICAN REGION IN GENERAL?

Social media is the simplest way of reaching the mass population across the country, and it saves time and energy. Hence, it has enormous marketing value for Islamic financial institutions if used properly.

It is a low-cost and additional channel that will enable Islamic finance to reach a broader audience and widely communicate their products and service offerings.

WHAT WOULD BE YOUR ADVICE TO THE ADVOCATES OF ISLAMIC FINANCE TO FURTHER DEVELOP ISLAMIC BANKING AND FINANCE IN THE REGION AND GLOBALLY?

Advocates of Islamic finance should engage in aggressive public awareness; educating the international communities of the fact that Islamic finance is not a religion in itself but an ethical and value-based financing service.

Advocates of Islamic finance shall be involved in advocacy activities that influence policymakers to pass regulatory frameworks that are in line with the unique nature of Islamic finance.

YOU TOOK OVER THE BANK AT A CRUCIAL POINT. HOW HAVE YOUR PREVIOUS EXPERIENCES SHAPED YOU AND ASSISTED YOU IN THE CURRENT ROLE?

My prior experiences have been quite helpful for me in my current position. I truly feel that the basis for my success is laid by my resilience, hard work, dedication, and commitment. Additionally, continuous learning, reading, and even work-life balance are also some of the qualities I obtained from my previous experiences. Particularly, my previous experiences have shaped me into being a positive thinker, energetic, decision maker, result-oriented, and visionary, all of which have been very helpful in my current role.

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