Animo Leadership Charter High School

Animo Leadership Charter High School

The Mythology of the Impoverished High School Dropout and Other Misconceptions

Posted on April 10, 2018 in Uncategorized

Introduction

The typical high dropout is not poor.

Review the statistical report of the performance of schools statewide and review the economic status of the students who dropout and you will find that the ratio of poverty to discontinuance from school is not as highly correlated as the ratio of race/ethnicity to dropout.

The typical dropout is not a minority.

Numerically, the typical high school dropout is a non minority who is not poor.

Minority governed schools do not assure that minority students will thrive there.

Some charters which are created expressly to show that minority governed schools will be more successful because of the race or ethnicity of the school leaders in relation to students have proven to be unsuccessful in student retention or academic achievement.

The truth is the unengaged student will disengage in a school environment that does not positively engage with the educational attainment of each and every student.

On the surface, minority students in predominantly white schools will attain greater levels of retention to graduation, as well, as proficient academic attainment. What would make this so? What is in the culture of some schools and districts that make the success quotient higher when the quotient is not being driven by wealth or affluence or race?

A truth

Effective Administrative and Classroom Leadership are Great Myth Busters

Clearly, there is superior educational leadership in the culture. There is a sound instructional staff. The administration and the classroom leaders facilitate the level of attainment represented in the positive statistical data. The data displaces mythology related to graduation rates, dropout rates and standardized tests performance.

Readers may want specifics to a greater extent. The reality is that success is homegrown. The best answers are found within the environment that seeks growth and improvement for its students. It is the school staff and community that govern the success of students. Parents are as a chorus to the sermon of the school culture. They can connect with the school leadership – administrative and classroom staff and students to create the mythology busting tapestry of effective schools.

Presenting – The Beach Rotary Club – Service Above Self in the Beach

Posted on April 4, 2018 in Uncategorized

One of the areas I really set out to focus on in my Beach neighbourhood portrait was the local spirit of charity and community assistance. One of the organizations that I interviewed, the Pegasus Community Project for Adults with Special Needs, left a deep impression on me. This is a day-time program for adults with developmental disabilities that also runs a local thrift store on Kingston Road to generate funding and to provide practical work experiences for the participants in the program.

Marie Perrotta, the founder and executive director of this organization, explained to me that one organization has been tremendously supportive of her initiative over the last few years: The Toronto Beach Rotary Club. So she connected me with the President, Barbara Dingle, who had also been mentioned to me by Sandra Bussin in connection with the restoration of the Gardener’s Cottage. But more about that project in a little bit.

On a frigid February day Barbara welcomed me to her home and we sat down to chat for a couple of hours. Barbara started off by giving me some general information about the Rotary Club. Rotary International is the oldest service club in the world. It was founded in 1905 in Chicago, Illinois, by an attorney by the name of Paul P. Harris who wanted to recreate the friendly spirit of his small town upbringing. The concept spread throughout the United States and by 1921, Rotary Clubs had formed on six continents. A 1943 London Rotary conference promoting international cultural and educational exchanges was part of the inspiration for the formation of UNESCO (the United Nations Educational, Scientific, and Cultural Organization) in 1946, illustrating Rotary International’s impact on a global scale.

The Rotary Club’s principal motto is “Service Above Self”, and its 1.2 million members worldwide in more than 200 countries provide humanitarian service, encourage high ethical standards in all vocations, and help build peace and goodwill in the world. The organization is non-political, non-religious and open to men and women of all cultures, races and creeds. Rotary’s main objective is to serve the community and throughout the world, taking up issues such as children at risk, poverty, hunger, the environment, illiteracy and violence. Youth programs and international exchange opportunities are also supported.

Rotary International is organized in local chapters, and the Toronto Beach Rotary Club is a fairly recent addition to the Rotary family. The club was chartered in 1999, originally as an offshoot of the East York Rotary Club which has been in existence for more than 60 years. Barb explained that the Toronto Beach Rotary Club is a breakfast club, and that members meet once a week on Tuesdays nice and early at 7:15 am at the Balmy Beach Club which generously makes their facilities available.

Barb herself got connected with the Rotary Club about 4 years ago when a friend introduced her to the club. About a half a year into her membership she went to approach various retail stores during a fundraising drive, and from her interactions with the merchants she realized the amount of respect and cache that membership in the Rotary Club conveyed. All of a sudden doors started to open easily, and people started to listen to her fundraising proposals.

Barb explains that she wanted to become involved in the community, but
was not sure where to start. A few visits to the Beach Rotary meetings
opened doors to the kind of opportunities she was looking for. Barb says
that the club meets once a week for one hour, not a very huge time
commitment, and added that many people might initially be scared of
committing to volunteer work. Barb feels strongly that an hour a week is
feasible for most of us and clarified that you can get involved as
little or as much as you want in the club’s activities. Time restraints
on our lives change from month to month, year to year. Barb adds that “if you have the desire to give back to your community and to play a small part in
helping humanity on an international level, Rotary Clubs have the
infrastructure to make it happen”.

When she first joined she had no idea what the Rotary Club was all about, and she learned that every Rotary Club world-wide works on two levels: to raise funds for and help local community organizations, and to become involved on a global level to support serious international causes.

On an international level, Rotary Clubs support a broad range of humanitarian, intercultural, and educational programs and activities designed to improve the human condition and advance the organization’s ultimate goal of global understanding and peace. The Toronto Beach Rotary Club’s international initiatives include the removal of landmines, the worldwide eradication of polio and leprosy, as well as AIDS orphans in South Africa.

Barb explained that to support the landmines program, the “Night of a 1000 Dinners” was held last November at Quigley’s Pub and Bistro, a popular restaurant in the Beach and a strong supporter of local charities. Quigley’s generously donated a gourmet four-course dinner for 50 guests that was accompanied by local guitarist Tom Price. A keynote speech was given by Scott Fairweather, the CEO of The Canadian Landmine Foundation who is also a Rotarian. A Clear-a-Landmine Raffle was held, and the top prizes, a watercolour painting donated by generous community supporter Ann Francis Oakes, and a day of golfing fun at the Toronto Hunt donated by Graham Sanborn went to two lucky winners. In total $2500 were raised from this event and presented to the Canadian Landmine Foundation.

In addition to international causes the Toronto Beach Rotary Club
is very involved in supporting the local Beach neighbourhood. The Club’s annual
“Bowl for the Beach” Bowl-A-Thon provides funding to the Pegasus Community Project , as well as scholarships to local high school students and after school programs, and The Haig Family Resource Program. This year the Bowl-A-Thon will be held on April 21 at the Thorncliffe Bowlerama, and Barb indicated that the event is always great fun, and many different groups from the community participate.

Another popular initiative is the Free Movie for Seniors, a weekly free
movie night at the Fox Theatre, a real landmark in the Beach and the
oldest continuously running movie theatre in Toronto. In addition, a
Christmas lunch donated by Quigley’s Pub and Bistro was held for the
seniors at St. Aidan’s Church. More than 300 seniors enjoyed a delicious turkey dinner, and Quigley’s generosity was much appreciated

Barb also explained a major community effort that has left a lasting legacy in the Beach: during the late summer / early fall of 2005, renovations to the Gardener’s Cottage (the historic Kew Williams House) were undertaken as a joint project by the City of Toronto, spearheaded by City Councillor Sandra Bussin, the City’s Parks and Recreation Department and the Toronto Beach Rotary Club. The Gardener’s Cottage is a treasured landmark at the foot of Lee Avenue, and was in need of repair.

One of the major strengths of Rotary is that each club is comprised of a
cross-section of vocations. By drawing on the club members’ wide variety
of skills and connections, amazing good work is accomplished. As a
long-term collaborator with Canadian home décor queen Debbie Travis, and
a past associate editor for House and Home Magazine, Barbara Dingle had
the perfect idea: to restore this treasured Beach icon together with a
group of talented local designers who each took over one section of the
building. The verandah, the entrance hall, the parlour, the dining room,
the kitchen, the upper hallway, the girl’s and boy’s bedrooms, the
bathroom and the master bedroom were all authentically restored and
decorated by different designers to reflect the Queen Anne period. A
large number of merchants and business people donated everything from
labour, paint and lumber to fabrics, draperies, lighting, plants,
accessories and furniture for the project. More than $70,000 worth of
goods and services were donated, and the entire Beach community came
together to restore a beloved neighbourhood icon. The results are
stunning.

For three weeks in September and October of 2005, Barbara and her team put together the “Dream Tour” which provided the public with an exceptional opportunity to view the designs and the contributions of the local designers and merchants. A beautiful full-colour magazine was put together to showcase the project, the history of the Kew Williams House and each section of the building that had been so lovingly restored. Funds from tour ticket sales were donated to Toronto East General Hospital’s Mental Health Program for Children and Adolescents. In total a donation of $15,000 was raised and passed along to the Mental Health Crisis Unit at Toronto East General Hospital – a true demonstration of an entire community coming together to make positive things happen.

Another big event in the works is an Annual Rotary Lobsterfest in the Beach. The Toronto Beach Rotary Club together with the East York Rotary Club is planning a fundraiser where people can feast on a fresh lobster dinner with all the fixings, listen to some great music and play games. The event will be fun for the whole family. Proceeds from this fundraiser will be donated to the Woodgreen Community Services Homeward Bound Program – a program dedicated toward helping women acquire life skills, computer skills, a community college education and employment training so they can learn to provide for themselves and their children.

Barbara added that the Toronto Beach Rotary Club is a small club, but it has done huge things for the entire neighbourhood. The club has many volunteers, loosely referred to as “Friends of Rotary” who are not full-fledged members, but who love to donate their time to help out. At the moment the club is looking for new members and has started advertisements with the headline “Do you need Rotary? Rotary needs you.” Barbara describes her volunteer work with the Rotary Club as an extremely rewarding experience.

She explained that joining is quite simple: a prospective member would come out to the breakfast meetings for several weeks in a row to assess the fit with the Rotary organization. At the end of this trial period they can officially join and become a regular member. The reasons for joining are many: not only does the Rotary Club provide the opportunity to serve and support local and international causes; it also provides a great realm for friendships and business development. The special events run by the club offer an opportunity for personal growth, leadership and ethics development. In addition, exposure to community and global programs provides learning opportunities for greater cultural awareness. All in all it’s a win-win situation, for the individual, for the club and for the communities, locally and abroad, that are supported by the Rotary Club.

Naturally I also needed to inquire into Barbara Dingle’s connection with the Beach. Together with her husband John she moved into this area in the fall of 1975 because they saw the Beach as a great place to bring up children. Their children Geremy and Emily attended local schools where their love for music and drama was fostered along with strong academics. She added that the Beach today is an area on the move, similar to 30 years ago. Everyone is renovating and “a spurt of youth” is being injected into the neighbourhood. The Beach is an eclectic mix of teachers, artists, professionals and people from all other walks of life, “a great tapestry of people and a very egalitarian place”, to use Barb’s words.

Barbara obviously loves the neighbourhood, and together with her friends at the Toronto Beach Rotary Club she has chosen to give back to organizations in her own community and to needy people around the world.

[Top]

Building a Kingdom – Case Study of Kingdom Financial Holdings Limited

Posted on March 29, 2018 in Uncategorized

This article presents a case study of sustained entrepreneurial growth of Kingdom Financial Holdings. It is one of the entrepreneurial banks which survived the financial crisis that started in Zimbabwe in 2003. The bank was established in 1994 by four entrepreneurial young bankers. It has grown substantially over the years. The case examines the origins, growth and expansion of the bank. It concludes by summarizing lessons or principles that can be derived from this case that maybe applicable to entrepreneurs.

Profile of an Entrepreneur: Nigel Chanakira

Nigel Chanakira was raised in the Highfield suburb of Harare in an entrepreneurial family. His father and uncle operated a public transport company Modern Express and later diversified into retail shops. Nigel’s father later exited the family business. He bought out one of the shops and expanded it. During school holidays young Nigel, as the first born, would work in the shops. His parents, particularly his mother, insisted that he acquire an education first.

On completion of high school, Nigel failed to enter dental or medical school, which were his first passions. In fact his grades could only qualify him for the Bachelor of Arts degree programme at the University of Zimbabwe. However, he “sweet-talked his way into a transfer” to the Bachelor in Economics degree programme. Academically he worked hard, exploiting his strong competitive character that was developed during his sporting days. Nigel rigorously applied himself to his academic pursuits and passed his studies with excellent grades, which opened the door to employment as an economist with the Reserve Bank of Zimbabwe (RBZ).

During his stint with the Reserve Bank, his economic mindset indicated to him that wealth creation was happening in the banking sector therefore he determined to understand banking and financial markets. While employed at RBZ, he read for a Master’s degree in Financial Economics and Financial Markets as preparation for his debut into banking. At the Reserve Bank under Dr Moyana, he was part of the research team that put together the policy framework for the liberalization of the financial services within the Economic Structural Adjustment Programme. Being at the right place at the right time, he became aware of the opportunities which were opening up. Nigel exploited his position to identify the most profitable banking institution to work for as preparation for his future. He headed to Bard Discount House and worked for five years under Charles Gurney.

A short while later the two black executives at Bard, Nick Vingirayi and Gibson Muringai, left to form Intermarket Discount House. Their departure inspired the young Nigel. If these two could establish a banking institution of their own so could he, given time. The departure also created an opportunity for him to rise to fill the vacancy. This gave the aspiring banker critical managerial experience. Subsequently he became a director for Bard Investment Services where he gained critical experience in portfolio management, client relationships and dealing within the dealing department. While there he met Franky Kufa, a young dealer who was making waves, who would later become a key co-entrepreneur with him.

Despite his professional business engagement his father enrolled Nigel in the Barclays Bank “Start Your Own Business” Programme. However what really made an impact on the young entrepreneur was the Empretec Entrepreneur Training programme (May 1994), to which he was introduced by Mrs Tsitsi Masiyiwa. The course demonstrated that he had the requisite entrepreneurial competences.

Nigel talked Charles Gurney into an attempted management buy-out of Bard from Anglo -American. This failed and the increasingly frustrated aspiring entrepreneur considered employment opportunities with Nick Vingirai’s Intermarket and Never Mhlanga’s National Discount House which was on the verge of being formed – hoping to join as a shareholder since he was acquainted with the promoters. He was denied this opportunity.

Being frustrated at Bard and having been denied entry into the club by pioneers, he resigned in October 1994 with the encouragement of Mrs Masiyiwa to pursue his entrepreneurial dream.

The Dream

Inspired by the messages of his pastor, Rev. Tom Deuschle, and frustrated at his inability to participate in the church’s massive building project, Nigel sought a way of generating huge financial resources. During a time of prayer he claims that he had a divine encounter where he obtained a mandate from God to start Kingdom Bank. He visited his pastor and told him of this encounter and the subsequent desire to start a bank. The godly pastor was amazed at the 26 year old with “big spectacles and wearing tennis shoes” who wanted to start a bank. The pastor prayed before counselling the young man. Having been convinced of the genuineness of Nigel’s dream, the pastor did something unusual. He asked him to give a testimony to the congregation of how God was leading him to start a bank. Though timid, the young man complied. That experience was a powerful vote of confidence from the godly pastor. It demonstrates the power of mentors to build a protégé.

Nigel teamed up with young Franky Kufa. Nigel Chanakira left Bard at the position of Chief Economist. They would build their own entrepreneurial venture. Their idea was to identify players who had specific competences and would each be able to generate financial resources from his activity. Their vision was to create a one – stop financial institution offering a discount house, an asset management company and a merchant bank. Nigel used his Empretec model to develop a business plan for their venture. They headhunted Solomon Mugavazi, a stockbroker from Edwards and Company and B. R. Purohit, a corporate banker from Stanbic. Kufa would provide money market expertise while Nigel provided income from government bond dealings as well as overall supervision of the team.

Each of the budding partners brought in an equal portion of the Z$120,000 as start-up capital. Nigel talked to his wife and they sold their recently acquired Eastlea home and vehicles to raise the equivalent of US$17,000 as their initial capital. Nigel, his wife and three kids headed back to Highfield to live in with his parents. The partners established Garmony Investments which started trading as an unregistered financial institution. The entrepreneurs agreed not to draw a salary in their first year of operations as a bootstrapping strategy.

Mugavazi introduced and recommended Lysias Sibanda, a chartered accountant, to join the team. Nigel was initially reluctant as each person had to bring in an earning capacity and it was not clear how an accountant would generate revenue at start up in a financial institution. Nigel initially retained a 26% share which assured him a blocking vote as well as giving him the position of controlling shareholder.

Nigel credits the Success Motivation Institute (SMI) course “The Dynamics of Successful Management” as the lethal weapon that enabled him to acquire managerial competences. Initially he insisted that all his key executives undertake this training programme.

Birth of the Kingdom

Kingdom Securities P/L commenced operations in November 1994 as a wholly owned subsidiary of Garmony Investments (Pvt) Ltd. It traded as a broker on both money and stock markets.

On 24th February 1995 Kingdom Securities Holding was born with the following subsidiaries: Kingdom Securities Ltd, Kingdom Stockbrokers (Pvt) Ltd and Kingdom Asset Managers (Pvt) Ltd. The flagship Kingdom Securities Ltd was registered as a Discount House under Banking Act Chapter 188 on 25th July 1995. Kingdom Stockbrokers was registered with the Zimbabwe Stock Exchange under ZSE Chapter 195 on 1st August 1995. The pre-licensing trading had generated good revenue but they still had a 20% deficit of the required capital. Most institutional investors turned them down as they were a greenfield company promoted by people perceived to be “too young”. At this stage National Merchant Bank, Intermarket and others were on the market raising equity and these were run by seasoned and mature promoters. However Rachel Kupara, then MD for Zimnat, believed in the young entrepreneurs and took up the first equity portion for Zimnat at 5%.

Norman Sachikonye, then Financial Director and Investments Manager at First Mutual followed suit, taking up an equity share of 15%. These two institutional investors were inducted as shareholders of Kingdom Securities Holdings on 1st August 1995. Garmony Investments ceased operations and reversed itself into Kingdom Securities on 31st July 1995, thereby becoming an 80% shareholder.

The first year of operations was marked by intense competition as well as discrimination against new financial institutions by public organisations. All the other operating units performed well except for the corporate finance department with Kingdom Securities, led by Purohit. This monetary loss, differing spiritual and ethical values led to the forced departure of Purohit as an executive director and shareholder on 31st December 1995. From then the Kingdom started to grow exponentially.

Structural Growth

Nigel and his team pursued an aggressive growth strategy with the intention of increasing market share, profitability, and geographic spread while developing a strong brand. The growth strategy was built around a business philosophy of simplifying financial services and making them easily accessible to the general public. An IT strategy that created a low cost delivery channel exploiting ATMs and POS while providing a platform that was ready for Internet and web-based applications, was espoused.

On 1st April 1997, Kingdom Financial Services was licensed as an accepting house focusing on trading and distributing foreign currency, treasury activities, corporate finance, investment banking and advisory services. It was formed under the leadership of Victor Chando with the intention of becoming the merchant banking arm of the Group. In 1998, Kingdom Merchant Bank (KMB) was licensed and it took over the assets and liabilities of Kingdom Securities Limited. Its main focus was treasury related products, off-balance sheet finance, foreign currency and trade finance. Kingdom Research Institute was established as a support service to the other units.

The entrepreneurial bankers, cognisant of their limitations, sought to achieve critical mass quickly by actively seeking capital injection from equity investors. The aim was to broaden ownership while lending strategic support in areas of mutual interest. An attempt at equity uptake from Global Emerging Markets from London failed. However in 1997 the efforts of the bankers were rewarded when the following organisations took up some equity, reducing the shareholding of executive directors as shown below: ïEUR Ipcorn 0.7%, ïEUR Zambezi Fund Mauritius P/L 1.1%, ïEUR Zambezi Fund P/L 0.7%. ïEUR Kingdom Employee Share Trust 5%, ïEUR Southern Africa Enterprise Development Fund – 8% redeemable preference shares amounting to US$1,5m as the first investee company in Southern Africa from the US Fund initiated by US President Bill Clinton, ïEUR Weiland Investments, a company belonging to Mr Richard Muirimi, a long standing friend of Nigel and associate in the fund management business took up 1.7%, Garmony Investments 71.7% -executive directors. ïEUR After a rights issue Zimnat fell to 4.8% while FML went down to 14.3%.

In 1998, Kingdom launched four Unit Trusts which proved very popular with the market. Initially these products were focused at individual clients of the discount house as well as private portfolios of Kingdom Stockbroking. Aggressive marketing and awareness campaigns established the Kingdom Unit Trust as the most popular retail brand of the group. The Kingdom brand was thus born.

Acquisition of Discount Company of Zimbabwe (DCZ)

After a spurt of organic growth, the Kingdom entrepreneurs decided to hasten the growth rate synergistically. They set out to acquire the oldest discount house in the country and the world, The Discount Company of Zimbabwe, which was a listed entity. With this acquisition Kingdom would acquire critical competences as well as achieve the much coveted ZSE listing inexpensively through a reverse listing. Initial efforts at a negotiated merger with DCZ were rebuffed by its executives who could not countenance a forty year old institution being swallowed up by a four year old business. The entrepreneurs were not deterred. Nigel approached his friend Greg Brackenridge at Stanbic to finance and effect the acquisition of the sixty percent shares which were in the hands of about ten shareholders, on behalf of Kingdom Financial Holdings but to be placed in the ownership of Stanbic Nominees. This strategy masked the identity of the acquirer. Claud Chonzi, the National Social Security Authority (NSSA) GM and a friend to Lysias Sibanda (a Kingdom executive director), agreed to act as a front in the negotiations with the DCZ shareholders. NSSA is a well known institutional investor and hence these shareholders may have believed that they were dealing with an institutional investor. Once Kingdom controlled 60% of DCZ, it took over the company and reverse listed itself onto the Stock Exchange as Kingdom Financial Holdings Limited (KFHL). Because of the negative real interest rates, Kingdom successfully used debt finance to structure the acquisition. This acquisition and the subsequent listing gave the once despised young entrepreneurs confidence and credibility on the market.

Other Strategic Acquisitions

Within the same year Kingdom Merchant Bank acquired a strategic stake in CFX Bureau de Change owned by Sean Maloney as well as another stake in a greenfield microlending franchise, Pfihwa P/L. CFX was changed into KFX and used in most foreign currency trading activities. KFHL set as a strategic intention the acquisition of an additional 24.9% stake in CFX Holdings to safeguard the initial investment and ensure management control. This did not work out. Instead, Sean Maloney opted out and took over the failed Universal Merchant Bank licence to form CFX Merchant Bank. Although Kingdom executives contend that the alliance failed due to the abolition of bureau de change by government, it appears that Sean Maloney refused to give up control of the extra shareholding sought by Kingdom. It therefore would be reasonable that once Kingdom could not control KFX, a fall out ensued. The liquidation of this investment in 2002 resulted in a loss of Z$403 million on that investment. However this was manageable in light of the strong group profitability.

Pfihwa P/L financed the informal sector as a form of corporate social responsibility. However when the hyperinflationary environment and stringent regulatory environment encroached on the viability of the project, it was wound up in early 2004. Kingdom pursued its financing of the informal sector through MicroKing, which was established with international assistance. By 2002 MicroKing had eight branches located in the midst of, or near, micro-enterprise clusters.

In 2000, due to increased activity on the foreign currency front within the banking sector, Kingdom opened a private banking facility through the discount house to exploit revenue streams from this market. Following market trends, it engaged the insurance company AIG to enter the bancassurance market in 2003.

Meikles Strategic Alliance

In 1999 the entrepreneurial Chanakira on advice from his executives and the legendary corporate finance team from Barclays bank led by the affable Hugh Van Hoffen entered into a strategic alliance with Meikles Africa whereby it injected some Z$322 million into Kingdom for an equity shareholding of 25%. Interestingly, the deal nearly collapsed on pricing as Meikles only wanted to pay $250 million whilst KFHL valued themselves at Z$322 million which in real terms was the largest private sector deal done between an indigenous bank and a listed corporate. Nigel testifies that it was a walk through the incomplete Celebration Church site on the Saturday preceding the signing of the Meikles deal that led him to sign the deal which he saw as a means for him to sow a whopping seed into the church to boost the Building Fund. God was faithful! Kingdom’s share price shot up dramatically from $2,15 at the time he made the commitment to the Pastor all the way to $112,00 by the following October!

In return Kingdom acquired a powerful cash-rich shareholder that allowed it entrance into retail banking through an innovative in-store banking strategy. Meikles Africa opened its retail branches, namely TM Supermarkets, Clicks, Barbours, Medix Pharmacies and Greatermans, as distribution channels for Kingdom commercial bank or as account holders providing deposits and requiring banking services. This was a cheaper way of entering retail banking. It proved useful during the 2003 cash crisis because Meikles with its massive cash resources within its business units assisted Kingdom Bank, thus cushioning it from a liquidity crisis. The alliance also raised the reputation and credibility of Kingdom Bank and created an opportunity for Kingdom to finance Meikles Africa’s customers through the jointly owned Meikles Financial Services. Kingdom provided the funding for all lease and hire purchases from Meikles’ subsidiaries, thus driving sales for Meikles while providing easy lending opportunities for Kingdom. Meikles managed the relationship with the client.

Meikles Africa as a strategic shareholder assured Kingdom of success when recapitalisation was required and has enhanced Kingdom’s brand image. This strategic relationship has created powerful synergies for mutual benefit.

Commercial Banking

Exploiting the opportunities arising from the strategic relationship with Meikles Africa, Kingdom made its debut into retail banking in January 2001 with in-store branches at High Glen and Chitungwiza TM supermarkets. The target was principally the mass market. This rode on the strong brand Kingdom had created through the Unit Trusts. In-store banking offered low cost delivery channels with minimal investment in brick and mortar. By the end of 2001, thirteen branches were operational across the country. This followed a deliberate strategy for aggressive roll-out of the branches with two flagship branches ïEUR­ïEUR one in Bulawayo and the other in Harare. There was a huge emphasis on an IT driven strategy with significant cross-selling between the commercial bank and other SBUs.

However, it was further discovered that there was a market for the upmarket clients and hence Crown banking outlets were established to diversify the target market. In 2004, after closing three in-store branches in a rationalization exercise, there were 16 in-store branches and 9 Crown banking outlets.

The entrance into commercial banking was probably held at the wrong time, considering the imminent changes in the banking industry. Commercial banking does provide cheap deposits, however at the price of huge staff costs and human resource management complications. Nigel concedes that, with hindsight, this could have been delayed or done at a slower pace. However, the need for increased market share in a fiercely competitive industry necessitated this. Another reason for persisting with the commercial banking project was that of prior agreements with Meikles Africa. It is possible that Meikles Africa had been sold on the equity take-up deal on the back of promises to engage in in-store banking, which would increase revenue for its subsidiaries.

Innovative Products and Services

KFHL continued its aggressive pursuit of product innovation. After the failure of the KFX project, CurrencyKing was established to continue the work. However this was abolished in November 2002 by government ministerial intervention when bureau de change were prohibited in an effort to stamp out parallel market foreign currency trading.

Sadly this governmental decision was misguided for not only did it fail to banish foreign currency parallel trading but it drove underground, made it more lucrative and subsequently the government lost all control of the management of the exchange rate.

In October 2002, KFHL established Kingdom Leasing after being granted a finance house licence. Its mandate was to exploit opportunities to trade in financial leases, lease hire and short term financial products.

Regional Expansion

Around 2000 it became evident that the domestic market was highly competitive, with limited prospects of future growth. A decision was made to diversify revenue streams and reduce country risk through penetration into the regional markets. This strategy would exploit the proven competences in securities trading, asset management and corporate advisory services from a small capital base. Therefore the entrance had low risk in terms of capital injection. Considering the foreign exchange control limitations and shortage of foreign currency in Zimbabwe, this was a prudent strategy but not without its downside, as will be seen in the Botswana venture.

In 2001, KFHL acquired a 25.1% stake in a greenfield banking enterprise in Malawi, First Discount House Ltd. To safeguard its investment and ensure managerial control, an executive director and dealer were seconded to the Malawi venture while Nigel Chanakira chaired the Board. This investment has continued to grow and yield positive returns. As of July 2006 Kingdom had finally managed to up its stake from 25,1% to 40% in this investment and may ultimately control it to the point of seeking a conversion of the license to a commercial bank.

KFHL also took up a 25% equity stake in Investrust Merchant Bank Zambia. Franky Kufa was seconded to it as an executive director while Nigel took a seat on the Board.

KFHL had been promised an option to gain a controlling stake. However when the bank stabilized, the Zambian shareholders entered into some questionable transactions and were not prepared to allow KFHL to up it’s stake and so KFHL decided to pull out as relationships turned frosty. The Zambian Central Bank intervened with a promise to grant KFHL its own banking license. This did not materialize as the Zambian Central Bank exploited the banking crisis in Zimbabwe to deny KHFL a licence. A reasonable premium of Z$2.5 billion was obtained at disinvestment.

In Botswana, a subsidiary called Kingdom Bank Africa Ltd (KBAL) was established as an offshore bank in the International Finance Centre. KBAL was intended to spearhead and manage regional initiatives for Kingdom. It was headed by Mrs Irene Chamney, seconded by Lysias Sibanda with the concurrence of Nigel after managerial challenges in Zimbabwe. Two other senior executives were seconded there. She successfully set up the KBAL’s banking infrastructure and had good relations with the Botswana authorities.

However, the business model chosen of an offshore bank ahead of a domestic Botswana merchant bank license turned out to be the Achilles heel of the bank more so when the Zimbabwe banking crisis set in between 2003 and 2005. There were fundamental differences in how Mrs Chamney and Chanakira saw the bank surviving and going forward.

Ultimately, it was deemed prudent for Mrs. Chamney to leave the bank in 2005. In 2001 KFHL acquired the mandate as the sole distributor of the American Express card in the whole of Africa except for RSA. This was handled through KBAL. Kingdom Private Bank was transferred from the discount house to become a subsidiary of KBAL due to the prevailing regulatory environment in Zimbabwe.

In 2004 KBAL was temporarily placed under curatorship due to undercapitalisation. At this stage the parent company had regulatory constraints that prevented foreign currency capital injection.

A solution was found in the sourcing of local partners and the transfer of US$1 million previously realised from the proceeds of the Investrust liquidation to Botswana. Nigel Chanakira took a more active management role in KBAL because of its huge strategic significance to the future of KFHL. Currently efforts are underway to acquire a local commercial bank licence in Botswana as well. Once this is acquired there are two possible scenarios, namely maintaining both licences or giving up the offshore licence.

The interviewees were divided in their opinion on this. However in my view, judging from the stakeholder power involved, KFHL is likely to give up the off shore banking licence and use the local Kingdom Bank Botswana (Pula Bank) licence for regional and domestic expansion.

Human Resources

The staff complement grew from the initial 23 in 1995 to more than 947 by 2003. The growth was consistent with the growing institution. It exploded, especially during the launch and expansion of the commercial bank. Kingdom from inception had a strong human resourcing strategy which entailed significant training both internally and externally. Before the foreign currency crisis, employees were sent for training in such countries as RSA, Sweden, India and the USA. In the person of Faith Ntabeni Bhebhe, Kingdom had an energetic HR driver who created powerful HR systems for the emerging behemoth.

As a sign of its commitment to building the human resource capability, in 1998 Kingdom Financial Services entered a management agreement with Holland based AMSCO for the provision of seasoned bankers. Through this strategic alliance Kingdom strengthened its skills base and increased opportunities for skills transfer to locals. This helped the entrepreneurial bankers create a solid managerial system for the bank while the seasoned bankers from Holland compensated for the youthfulness of the emerging bankers. What a foresight!

In-house self-paced interactive learning, team building exercises and mentoring were all part of the learning menu targeted at developing the human resource capacity of the group. Work and job profiling was introduced to best match employees to suitable posts. Career path and succession planning were embraced. Kingdom was the first entrepreneurial bank to have smooth unforced CEO transitions. The founding CEO passed on the baton to Lysias Sibanda in 1999 as he stepped into the role of Group CEO and board deputy chair. His role was now to pursue and spearhead global and regional niche financial markets. A few years later there was another change of the guard as

Franky Kufa stepped in as Group CEO to replace Sibanda, who resigned on medical grounds. One could argue that these smooth transitions were due to the fact that the baton was passing to founding directors.

With the explosive growth in staff complement due to the commercial bank project, culture issues emerged. Consequently, KFHL engaged in an enculturation programme resulting in a culture revolution dubbed “Team Kingdom”. This culture had to be reinforced due to dilutions through significant mergers and acquisitions, significant staff turnover because of increased competition, emigration to greener pastures and the age profile of the staff increased the risk of high mobility and fraudulent activities in collusion with members of the public. Culture changes are difficult to effect and their effectiveness even harder to assess.

In 2004, with a high staff turnover of around 14%, a compensation strategy that ring fenced critical skills like IT and treasury was implemented. Due to the low margins and the financial stress experienced in 2004, KFHL lost more than 341 staff members due to retrenchment, natural attrition and emigration. This was acceptable as profitability fell while staff costs soared. At this stage, staff costs accounted for 58% of all expenses.

Despite the impressive growth, the financial performance when inflation adjusted was mediocre. Actually a loss position was reported in 2004. This growth was severely compromised by the hyperinflationary conditions and the restrictive regulatory environment.

Conclusion

This article shows the determination of entrepreneurs to push through to the realisation of their dreams despite significant odds. In a subsequent article we will tackle the challenges faced by Nigel Chanakira in solidifying his investments.

[Top]