Financial sector in Africa: training the next generation of managers

Urgent need to increase managerial capacity

Rapidly increasing investment in developing countries in general, and particularly in Sub-Saharan Africa, offers enormous potential to improve formal employment. And, independent of the source of investment, the need for labor is no longer limited to unskilled workers. By the end of 2014, the number of employees in the Access network banks had increased to 5,500, an 11% increase in just six months. A considerable part of network staff works in middle- and senior- management positions, which require strong managerial capacity – ranging from an ability to think strategically, engage in long-term planning and demonstrate strong decision-making competencies and leadership skills to the ability to develop and motivate teams, anticipate and manage conflict, foster innovation and ensure proper succession planning. Our rapid growth is not uncommon in Sub-Saharan Africa, where economic growth reached 6.1 % in 2014, almost double the global average according to the International Monetary Fund. This has been boosted by rising investment, including in such human-resource (HR) sensitive sectors as finance. In 2013, Africa saw a 4 % increase in foreign direct investments inflows with “a focus on consumer-oriented industries, including food, information technology, tourism, finance and retail” according to UNCTAD’s 2014 World Investment Report by the UNCTAD 1. This is a change from the earlier emphasis on extractive industries, with a demand for manual labour, to a need for skilled staff. A particularly important feature of Access investments is the rapid transfer of responsibilities to local staff – an important contribution to development and, more practically, it is often these people who are best equipped to interpret and manage local clients’ demands and establish long-lasting business relationships. The relatively low managerial capacities, however, present a challenge to young managers and institutions alike. While many African countries have invested in education and increased the number of university graduates, there remains a mismatch between what young graduates have to offer and the types of skills employers seek 2. According to a report by the British Council, gross enrolment rates for tertiary education have “been expanding at almost twice the global rate”3, yet only 7 % of young people in Africa are enrolled in higher education – as opposed to a global rate of 29%4. Although many public funds also offer scholarships for students to pursue studies in developed countries, many of these students do not return but seek employment abroad instead. This challenge is particularly evident in the financial sector: there is a clear mismatch between young graduates’ applied skills and what is expected from them in the first few years of work experience. The existence of this skills mismatch but may be partly explained by university systems that are more focused on textbook knowledge than the development of applied skills offered by apprenticeship programmes.

Challenges to managerial development

Beyond the simple mismatch of supply and demand, HR development, particularly in Africa, faces some more nuanced challenges. From experience four key obstacles to HR development can be identified. Firstly, local higher education institutions seldom support critical thinking or transfer learning, the transfer of knowledge from a related problem that has already been resolved, both of which are important for developing managerial capacity. For example, rather than questioning how an existing thinking might limit business opportunities, proposals are often met with “we never have done this, it is too risky”, perpetuating a perception of risk. Secondly, employees often struggle to balance local cultural values and principles with those promoted by our network. For example, while most of our staff would subscribe to the idea of equal opportunities, local HR departments often try to filter applicants by such characteristics as gender, ethnicity or religion. Furthermore, while we obviously promulgate zero-tolerance to corruption, some staff might not consider a thank-you gift for a loan approval as corruption. Thirdly, the ability to think strategically and set long-term plans and goals is a challenge for many young managers, whose usual business and private-life planning horizons are limited to the end of the month. Additionally, being asked to tackle multiple tasks in a structured manner in a short timeframe may present a further challenge. Training, however, can help develop the capacity to analyze and confront problems systematically and actively resolve, rather than ignore, them. Lastly, whether to increase competitiveness, develop new products or introduce of new technologies, change needs to be embraced as a positive process. Leading change and following it through, however, is a persistent challenge, and not only in transition and developing countries. This may be linked to the satisfaction gained from meeting immediate needs, a short-term horizon, having higher priority than establishing long-term goals, which may seem to jeopardize the status quo. Embracing and promoting common values as well as developing the ability to think strategically, plan for the long-term, and manage change are key competencies that need to be strengthened if managerial capacity is to improve. Importantly, middle managers with an increased toolkit of managerial capacities can play an important role by allowing their capacities to trickle-down through the entire institution.

Addressing the challenges

To address these challenges and the actual needs of current staff, AccessCampus provides courses to develop technical and leadership skills. Using both internal and external trainers, these aim to increase technical knowledge of such topics as financial analysis, budget planning and risk management as well as developing leadership capacities needed for fulfilling a managerial role, including change and project management, conflict management and argumentation and presentation skills. The courses are also sensitive to the working schedules of young managers, with limited classroom sessions spaced over two years, but nonetheless deliver rapid and practical solutions. All course modules have been developed to directly target difficulties faced by local managers in their day-to-day environment. And because former executive staff members teach most of the modules, they tend to be practical and incorporate examples to which participants can relate. In order to support the learning process even after participants have returned to their regular positions, the AccessCampus follows up with assignments and participants also engage in a consulting project that addresses real management challenges from the network banks. Furthermore, a best practice exchange platform generates support for managerial capacity and builds a network knowledge base. All branch managers and heads of departments from the Access network are eligible, with the banks selecting participants. Inevitably, this is not a cheap process and represents a considerable investment for our target banks. However, the programme is supported by the Dutch Development Bank (FMO), which partially covers tuition fees.

The three key results of improved managerial capacities

As better-trained middle managers have an important trickle-down effect on the overall capacity of their respective teams, significantly improving both the working environment and productivity, AccessCampus monitors both in- and post-course progress of participants. In addition to pre- and a post-module tests trainers evaluate in-class performance, while participants evaluate modules and trainers in terms of their relevance, the quality of materials and the skills of the trainer. Then, the new skills are tested through homework, group presentations and final exams. Finally, and most importantly, detailed appraisals from supervisors measure behavioural change in participants: before, during and after the programme. The monitoring process has provided evidence of three positive outcomes. Firstly, the courses have increased awareness of a healthy corporate culture including respect for and the defending of such key principals as transparency, respectful treatment of clients, performance-orientation, responsible lending and product design, equal opportunities and open communication – all resulting in the provision of better overall service to clients. Then, building the capacity of managers has increased the capacity of team members, which can be measured in decreased staff-turnover rates; increased motivation of employees, measurable through regular staff appraisals; and an increased number of local staff in senior management positions. Lastly, increased awareness of values and principles as well as the capacity to engage in long-term planning, manage conflict in an efficient manner and foster innovation, trickle down not only to the institution’s clients but also to the broader financial sector and help build the financial sector in countries in which we work, particularly in Africa.

Moving forward with management development

The challenges addressed by AccessCampus are probably shared by other actors from the financial sector operating in developing countries. In the past, only a handful of financial institutions invested in internal personal-development programmes, with others making use of summer schools offered by universities and other educational institutions. These educational offerings, along with scholarship programmes for young managers, greatly help to promote managerial capacity in developing countries. A further expansion of such programmes, especially those with a special focus on middle managers, could significantly support human-resources development in Africa, where not enough such opportunities are yet available.

1  Source: UNCTAD, 2014  http://unctad.org/en/PublicationsLibrary/wir2014_overview_en.pdf

2  http://www.africaneconomicoutlook.org/theme/youth_employment/education-skills-mismatch/

3 Source: http://www.britishcouncil.org/sites/britishcouncil.uk2/files/graduate_employability_in_ssa_final-web.pdf

4 Source: http://www.britishcouncil.org/sites/britishcouncil.uk2/files/graduate_employability_in_ssa_final-web.pdf