Barclays Africa restructures bank into four operating units, makes executive changes
After an unsuccessful attempt to boost group revenues by riding on the back of growth in Africa, Barclays announced in
2016that it was withdrawing from the continent. Analysts speculated that talk about Africa rising was a damp squib, however
the picture was more complicated for Barclays. As the BBC noted, Barclays has not been as nimble as other banks, such as
Standard Bank, Ecobank or GT Bank, which have been snapping up opportunities in Africa. In addition, the merger with
Absa was cumbersome. Absa, meanwhile, has been a success story and a valuable, strong brand in South Africa before
marketing specialists started messing with the details. It’s not surprising, therefore, that Barclays Africa boss Maria Ramos
has signed off on a return to the original name for the group. The Johannesburg-based bank plans to revert back to the
Absa Group Ltd. name, as it was known before Barclays Plc took control of the company in 2005. With the British bank’s
stake now reduced to 14.9 percent, Barclays Africa is also embarking on a plan to double in size and capture at least 12
percent of banking revenues across the continent.
“We will stretch ourselves to develop the platform for double-digit growth and build momentum to accelerate delivery,” Chief
Executive Officer Maria Ramos said on a conference call on Thursday. “This is a critical period in which we will need to
complete our separation from Plc, build and scale new capabilities, and rebuild our organizational and cultural foundations
to capture growth.”
The lender, which has operations in 12 African countries, is forging its own path after Barclays Chief Executive Officer Jes
Staley opted to reduce the British bank’s presence on the continent in favor of a trimmed-down investment bank focused on
London and New York. With the split on track, Ramos, said she will consider appropriate acquisitions to support the
company’s growth plan, explore strategic partnerships and new markets, and use technology so the lender’s operations
become fully digitized.
While Barclays Africa hasn’t set timelines for reaching the goals, it will seek to support the new strategy by:
– Creating a consumer-finance business across Africa to fill a “rapidly growing need,” Ramos said. “We’re going to target
this opportunity with our core middle and affluent customers and fully expect to grow our base here.”
– Building a payments hub. “Payments is a highly profitable area and is growing at 8 percent annually. Our payments hub
needs to be simple and intuitive and work on a single platform across the continent. It also needs to be affordable.”
– Launch a transaction banking platform. “It’s going to account for two thirds of our wholesale revenue in three years. It’s fee
based and has low capital requirements. Again, we need it to work seamlessly with our corporate and small business
propositions, providing great cash management and access to our trade finance products.”
The new strategy, which was pulled together after Ramos at the end of last year gathered more than 600 of the bank’s
42,000 employees at an event over two days, will see Barclays Africa push to regain market share in South African retail,
expand its corporate and investment-banking business and integrate wealth and investment into all consumer-facing
businesses.
Dedicated Resources
To drive the separation from its former parent, Barclays Africa has about 360 people dedicating more than 70 percent of
their time on the program, which seeks to reach full deconsolidation by the first half of 2021, Finance Director Jason Quinn
said on the call. Shareholders will vote on the name change at the annual general meeting on May 15.
New structure
Barclays Africa Group Ltd., South Africa’s third-biggest bank, will be split into retail and business banking, investment
banking, the rest of Africa and wealth and insurance. Barclays Africa is splitting its business away from its former parent
company in a process that began in 2016 and is scheduled for completion by early 2021. The U.K. bank paid the South
African lender 765 million pounds ($1.1 billion) for the separation. The move has meant that Barclays Africa is free to set its
own strategy for growth in South Africa and on the rest of the continent where it has operations in more than 10 countries.
The new structure has four core businesses, each headed by a chief executive officer. These are the Retail and Business
Banking (RBB) South Africa, Corporate and Investment Banking (CIB), Wealth, Investment Management and Insurance
(WIMI) and Rest of Africa (RoA) – 10 markets outside South Africa. South Africa Banking will cease to be a management or
reporting segment.
Deputy Group CEO, David Hodnett is taking a two-month sabbatical.
RBB SA will be headed by Arrie Rautenbach as Chief Executive, currently Chief Risk Officer.
Corporate and Investment Banking will also be a separate business under the leadership of a Chief Executive. Temi Ofong
and Mike Harvey will continue as co-Chief Executives of CIB, reporting directly to Group Chief Executive, Maria Ramos
while David is on sabbatical.
Peter Matlare remains in his current role as Chief Executive of RoA and Group Deputy CEO.
Nomkhita Nqweni continues in her current role as Chief Executive of WIMI.
Yasmin Masithela, currently Head of Compliance, has been appointed Chief Executive, Strategic Services. In March Group
Chief Executive Officer, Maria Ramos said a new entrepreneurial culture and digitization would be central to the success of
the strategy she presented. In this role Yasmin assumes responsibility for the bank’s digital strategy, human resources,
group strategy and takes over the lead of the separation from Barclays PLC.
“We have set a bold ambition to double our share of Africa banking revenues, digitising our organisation end to end and
presenting bold propositions to meet the needs of our customers and clients. This executive committee will work with
leaders and colleagues throughout our business who were also instrumental in shaping our strategy and the group’s new
ambition.” said Chief Executive, Maria Ramos.
Barclays media statement:
Highlights
– Four Core Businesses
– Two new additions to Group executive committee.
– Clear focus on digital and transformation.
Barclays Africa Group Limited (BAGL) today announced a new structure that aligns the group’s executive committee
portfolios with its new strategy announced at the beginning of March. The Group plans to double its market share of Africa
banking revenues from 6% to 12%.
The Group’s new growth strategy aims to deliver on three stated priorities:
– Restoring market leadership in core businesses,
– Creating a thriving organisation; and
– Building new propositions.

Question 1 (30 Marks)
Maria Ramos said a new entrepreneurial culture and digitization would be central to the success of the strategy she
presented. In light of the above statement, investigate the unhealthy cultures that may impact good strategy execution and
the steps Maria should take to change a problem culture at Barclays Africa.

India’s Transformation After gaining independence from Britain in 1947, India adopted a democratic system of government. The economic system that developed in India after 1947 was a mixed economy characterized by a large number of state-owned enterprises, centralized planning, and subsidies. This system constrained the growth of the private sector. Private companies could expand only with government permission. It could take years to get permission to diversify into a new product. Much of heavy industry, such as auto, chemical, and steel production, was reserved for state-owned enterprises. Production quotas and high tariffs on imports also stunted the development of a healthy private sector, as did labor laws that made it difficult to fire employees. By the early 1990s, it was clear that this system was incapable of delivering the kind of economic progress that many Southeastern Asian nations had started to enjoy. In 1994, India’s economy was still smaller than Belgium’s, despite having a population of 950 million. Its GDP per capita was a paltry $310; less than half the population could read; only 6 million had access to telephones; only 14 percent had access to clean sanitation; the World Bank estimated that some 40 percent of the world’s desperately poor lived in India; and only 2.3 percent of the population had a household income in excess of $2,484. The lack of progress led the government to embark on an ambitious economic reform program. Starting in 1991, much of the industrial licensing system was dismantled, and several areas once closed to the private sector were opened, including electricity generation, parts of the oil industry, steelmaking, air transport, and some areas of the telecommunications industry. Investment by foreign enterprises— formerly allowed only grudgingly and subject to arbitrary ceilings, was suddenly welcomed. Approval was made automatic for foreign equity stakes of up to 51 percent in an Indian enterprise, and 100 percent foreign ownership was allowed under certain circumstances. Raw materials and many industrial goods could be freely imported and the maximum tariff that could be levied on imports was reduced from 400 percent to 65 percent. The top income tax rate was also reduced, and corporate tax fell from 57.5 percent to 46 percent in 1994, and then to 35 percent in 1997. The government also announced plans to start privatizing India’s state-owned businesses, some 40 percent of which were losing money in the early 1990s. Judged by some measures, the response to these economic reforms has been impressive. The economy expanded at an annual rate of about 6.3 percent from 1994 to 2004, and then accelerated to 9 percent per annum during 2005–2008. Foreign investment, a key indicator of how attractive foreign companies thought the Indian economy was, jumped from $150 million in 1991 to $36.7 billion in 2008. Some economic sectors have done particularly well, such as the information technology sector where India has emerged as a vibrant global center for software development with sales of $50 billion in 2007 (about 5.4 percent of GDP) up from just $150 million in 1990. In pharmaceuticals too, Indian companies are emerging as credible players on the global marketplace, primarily by selling low-cost, generic versions of drugs that have come off patent in the developed world. However, the country still has a long way to go. Attempts to further reduce import tariffs have been stalled by political opposition from employers, employees, and politicians, who fear that if barriers come down, a flood of inexpensive Chinese products will enter India. The privatization program continues to hit speed bumps—the latest in September 2003 when the Indian Supreme Court ruled that the government could not privatize two state-owned oil companies without explicit approval from the parliament. State owned firms still account for 38 percent of national output in the nonfarm sector, yet India’s private firms are 30–40 percent more productive than their state-owned enterprises. There has also been strong resistance to reforming many of India’s laws that make it difficult for private business to operate efficiently. For example, labor laws make it almost impossible for firms with more than 100 employees to fire workers, creating a disincentive for entrepreneurs to grow their enterprises beyond 100 employees. Other laws mandate that certain products can be manufactured only by small companies, effectively making it impossible for companies in these industries to attain the scale required to compete internationally.

Case Discussion Questions

A. What kind of economic system did India operate under during 1947 to 1990? What kind of system is it moving toward today? What are the impediments to completing this transformation?

B. How might widespread public ownership of businesses and extensive government regulations have impacted (1) the efficiency of state and private businesses, and (2) the rate of new business formation in India during the 1947–1990 time frame? How do you think these factors affected the rate of economic growth in India during this time frame?

C. How would privatization, deregulation, and the removal of barriers to foreign direct investment affect the efficiency of business, new business formation, and the rate of economic growth in India during the post-1990 time period?

D. India now has pockets of strengths in key high technology industries such as software and pharmaceuticals. Why do you think India is developing strength in these areas? How might success in these industries help to generate growth in the other sectors of the Indian economy?

E. Given what is now occurring in the Indian economy, do you think the country represents an attractive target for inward investment by foreign multinationals selling consumer products? Why?