The African continent has vast, untapped commercial opportunities which are often over-compensated by corruption, political crisis and a history of management and financial underperformance.
And yet banks and investors continue to pour cash into high risk enterprises – in this case a pan-African secondary lending institution which is effectively owned by some 45 African states and arguably, therefore, too big to fail.
After a series of high profile bad news stories and a hard hitting auditor’s forensic report into executive corruption, poor financial control and operational ineffectiveness, EIM was brought in by the company’s (African) bank to introduce independent expatriate interim management in order to bring about high level, critical change as a pre-condition of continuing financial support.
Too much change too quickly would upset too many vested stakeholder interests so first we introduced an interim CFO and a ‘Turnaround Director’ acting as the board’s change agent.
Both report into a supervisory board representing the investor countries. Working closely with the bank it was clear that in this case only expatriate interims with an extensive understanding of African operations would be able to make a real and rapid impact and gain the trust of executive management.
The two interim executives were in place quickly and contracted initially for six months, extendible if necessary.
They were able to begin to restore stakeholders’ confidence in improved governance and financial reporting and to create a turnaround plan which satisfied the conditions for further lending.
It is fair to say that the immediate impact of the forensic report and the rapid deployment of the two interim executives shook the bureaucratic and ineffective executive and non-executive management into accepting their historic weaknesses but also galvanised them to accept the requirements of essential bank support.
The second phase of the project will be to replace the acting CEO and introduce two bank appointed, independent expatriate NED’s. In due course, therefore, it is anticipated that with governance and effective financial reporting restored the company will be in a position to hire high quality permanent board members supported by occasional UK sourced mentors and interim executives to manage key development projects into 2018.
In this case, and for the first time, the ‘special situations’ team of a large African bank has been able to access expatriate talent with local experience through EIM UK to work consensually with (initially reluctant) indigenous management quickly to de-risk the underperforming debt and to add significant value and support to the future direction of the business.
The introduction of expatriate NED’s in phase two will be the first time the bank has used external expertise rather than seconding its own officers.
For more information or a confidential discussion please contact David Kitchen on:
direct line: 020 7290 1437