Zanaco CEO seeks to persuade board to expand into neigbouring countries

“We need to look at one or two countries” which border Zambia, Chibesakunda says on the sidelines of the Africa CEO Forum in Abidjan. The board has yet to decide whether to pursue that strategy, and Chibesakunda expects a final decision from the board and shareholders next year. “Some board members are saying ‘let’s go for it’” while others want more review, she says.

Expanding into other countries would be largely a question of following existing clients, which would provide a “soft landing”, Chibesakunda says. Her ideal model would be to enter new countries with partners, and the bank has engaged with corporate clients who want to expand outside Zambia. Existing client relationships could be extended into partnerships, but if the right partners can’t be found, the bank “could go it alone,” she says.

There are limits to the growth that Zanaco can achieve in Zambia. The bank has 4 million account holders in a country of 19 million people, and about half the population is aged under 18. The bank is interested in expanding its network of fintech partners, and is open to international fintech partnerships, Chibesakunda says.

Zambia’s prolonged and unresolved debt restructuring process has played a part shaping her thinking. Operating in other countries “would derisk us somewhat,” she says. Chibesakunda is “cautiously optimistic” that a debt-restructuring solution will be found and that Zanaco will be “well placed to take advantage.”

Digital versus Branches

The bank was set up by the government in 1969 and privatized in 2007. The major shareholder with 46% is Arise Investment consortium, backed by Norway’s Norfund, and Dutch institutions Rabobank and the FMO. Zambia’s Industrial Development Corporation has 25% of Zanaco, and the national pension scheme 10%. The bank’s market listing in Lusaka has a free float of 19% of the shares.

Chibesakunda took over as CEO in 2020, replacing Henk Mulder and becoming the first woman to hold the post. She defines her project as making the bank more commercially viable and “monetising” the balance sheet, whilst paying attention to the goals of social and environmental impacts of the bank’s operations. “The bank has a triple bottom line.”

A key aim is to reduce the bank’s cost-income ratio, which stood at 60% when she took over. The ratio is at around 55% now, due to costs having been kept flat in 2022 while revenue increased. Chibesakunda, who looks to the second half of 2023 with “cautious optimism,” aims to get the cost-income down to 50% in the next two years.

That will be done through a mixture of growth and cost reductions, she says. Mobile banking will be a key engine of growth. Zambia’s rural population remains underserved, and Chibesakunda sees digital solutions as the way to reach them. These clients will bring small margins for the bank, but the costs to serve them are low, she says. “Reduction in cash usage means more efficiency in services,” she says. The bank’s experience of digital solutions so far is that “if it works for one, it works for all.”

Greater use of digital banking channels will over time lead to branch closures. Shutting branches will be a “consequence” of digital services, rather than a goal in itself, Chibesakunda says. There’s no target or timetable for branch closures, which will depend on the success of digital rollout, but Chibesakunda expects that some branches will start to close in the next two years.