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Gemechu Waktola (PhD) is executive founder and CEO at the i-Capital Africa Institute and Assistant Professor at Addis Ababa University (AAU). He has taught courses on strategic human resource development, managing change and organization and human capital at AAU. Capital’s Muluken Yewondwossen talked Gemechu about i-Capital Africa Institute and its recent financial summit, Excerpts;
Capital: What is I Capital and why did you establish this organization?
Dr. Gemechu: Even though I came up with the idea there were partners and co-founders when the organization was formed in 2015. Our studies were related to organizations, developing an effective business, managing and developing capital. We began working on a consultancy service to help us ask better questions and understand how companies can be more competitive and effective in the future.
So we decided to establish a consultancy service for public or private organizations. We believe that organizations need to work on human development. Often, businesses believe the way to success is to invest in high tech equipment or infrastructure but in reality developing the skill of human resources is vital.
We focus on four major areas, a platform for knowledge sharing and critical voices, human capital development, advisory services, and data. We take research based practices and share the knowledge with industries to enhance their policies or practical activities. We also work on developing skill sets through our human capital development packages and management trainings. Most of the packages are undertaken via international partners like the International Financial Corporation (IFC), the private sector wing of The World Bank.
Unlike other countries it is difficult to get data in an organized fashion from most companies in Ethiopia. This makes it difficult to analyze past experiences and develop future strategies and better policy or new products, so we work with companies to get better data as well.
Capital: The private sector has been growing but lack of managerial skills is still a major challenge. Many businesses are run by traditional methods as opposed to considering new knowledge or research what are you doing about this?
Dr. Gemechu: Knowledge is not what has driven the Ethiopian economy. For example the civil service institutions have ample employees, but we do not get innovative service and the bureaucracy strangles many since advancement is not based on competency, capacity, skill and character. Proactive based knowledge and skills have to be improved, you see this in businesses that come from abroad. Local businesses have to enhance the knowledge and skills of their employees to compete. For example if you do not really have a grasp of technology and how to operate it you can’t be competitive. Funding is less of an issue than this. Figures indicate that existing finance is 10 times higher than the total GDP of the world so the challenge is how to manage the finance based on the talent of change agents. Local business must learn to value talent. Our human capital conference is designed to emphasize this. We want to encourage people to recruit top talent.
Capital: You’ve held several major events. Two weeks ago the I Capital Africa Institute carried out the second Annual East Africa Finance Summit at the Economic Commission for Africa. What was the main objective?
Dr. Gemechu: In the knowledge economy we have to include the experience of many. That is why we call it the East African Summit. We wanted to learn from others in our region. It was a public private partnership co-organized with public universities and other public institutions. Last year was our first time running it and we came up with a central theme of building competitive and cooperative financial institutions in the region. Participants came from Kenya, Germany, the US, and other areas.
Several impressive papers from Kenya and the National Bank of Ethiopia were presented. One difference between Kenya and Ethiopia is that they believe in innovation first followed by regulations whereas in Ethiopia the reverse is true. Insurance, innovation and human capital were also discussed in the sessions. The implementation of a capital market that Ethiopia experienced about a century ago was also reviewed.
This year we focused on ‘preparing for tomorrow building a proactive finance sector in East Africa’. Things are changed frequently, there are many disruptions. There were 13 papers presented and a policy roundtable held.
Capital: Similar issues came up in both summits; merging, regulating the insurance industry and a secondary market. Why do you think this occurred?
Dr. Gemechu: Well the issues keep coming up because they are not adequately resolved. For example the capital market problem was mentioned at both summits because it is a key issue and there has been some progress for example this year there is more data showing a cost benefit analysis of establishing a stock market. The lack of a stock market has affected projects and finance in the country. An organized and well structured secondary market would benefit the private sector. Mergers were mentioned by an expert from South Africa saying they would enhance regional competitiveness.
Capital: What is your perspective on this specific issue?
Dr. Gemechu: I believe in market power as opposed to forced mergers but the capital requirement will force banks to merge. The economy needs strong financial institutions.
Capital: What are the points raised regarding insurance businesses in Ethiopia?
Dr. Gemechu: The insurance sector got a lot of attention in the session. The consensus was the central bank was not the right body to govern the insurance industry. Lack of creativity and innovation are others concerns. Competiveness depends on premium prices. Lack of new products and skilled labour are major challenges the insurance sector is facing.
Capital: What else have you been doing?
Dr. Gemechu: In addition to the financial sector, we have a knowledge sharing platform and we have cement, concrete and energy events. The other major event that we are directly involved in is the continental human capital development platform. Our main intention is not to facilitate these events; instead we look at them as our main products. Networking and trust are crucial in the business so we hold these events to develop these networks. When we develop other products we will increase our trust and network. The knowledge sharing platform helps us include new products and reach out to potential customers. We have to make people more employable. Jobs are going to change and disappear in the new future so we have to be prepared.