STRATEGIC BUSINESS PLAN

Transcription

1 STRATEGIC BUSINESS PLAN November

2 FOREWORD The Development Bank of Zambia (DBZ) commenced 2013 with the preparation of a Strategic Business Plan (SBP) to provide a guide/road map for the plan period In the preparation of the SBP, departmental and unit heads participated in two strategic planning workshops; the first from 25 th to 27 th January 2013 and the second from 4 th to 5 th May 2013 to plan and agree on the outline of the plan. The business plan is based on the deliberations and consensus reached at these workshops. The Strategic Business Plan builds on the accomplishments of As the Bank is re-capitalised and consolidates its position in the market, a substantial upturn in activity is expected during the plan period. Developments in the economy and the Banking and Financial Sector will have a significant impact on the operations of the Bank. This plan is prefaced on the prudent management and success of the economy. It envisages that there will be stability in Africa and the region and that Zambia will continue to rank amongst the most attractive investment destinations. The Government of the Republic of Zambia s continued support to DBZ will help consolidate the Bank s position. It is exciting to note that in common with other countries, the Government of Zambia recognizes the pivotal role that DBZ can play in empowering citizens and in contributing to the development of the country. An added advantage arises from the review of assistance programs by Government and major cooperating partners. The old models for channelling development assistance are changing. Increasingly, development assistance is being channelled through development institutions with emphasis on the reduction of overheads relating to the delivery of this assistance. DBZ is ideally positioned to take advantage of this dynamic. In order to consolidate the impact of the Bank s operations and enhance its contribution to the development of the country, the Bank will attach importance to achieving improved project quality at entry. The supervision and monitoring of project operations will also be strengthened in 2

3 order to improve the timely and successful completion of expected output. DBZ intends to increase mobilisation of resources from the market to finance demand for its products. Internally, there are a number of issues which the Bank needs to address: i. The portfolio will continue to grow on the back of increased capitalisation. This growth must take account of the continuing volatile conditions in the financial markets and the economic stress suffered by borrowers. ii. The Bank will diversify and expand its product offering, gradually shifting to more term lending and offer infrastructure/project finance iii. Attention will be given to continuing the promotion of self-liquidating loans to the Small and Medium Enterprise (SME) sector and financing based more on project cash flows and less on security. iv. Co-operation with International Financial Institutions, donors and other external actors will form an increasingly important activity, as the Bank seeks to expand partnerships in order to achieve greater leverage of own resources, improved risk sharing and the establishment of new sources of finance. In line with the core objective of developing an institutional culture of transparency, accountability, cooperation and sound corporate governance, DBZ is committed to developing and implementing the necessary systems and controls. To this end, this Strategic Business Plan outlines the Bank-wide and the departmental objectives and strategies to be pursued and implemented by each department and unit to achieve growth and manage risks during the Plan s implementation period: Jacob Lushinga Managing Director 3

4 1.0 Introduction The Development Bank of Zambia (DBZ) was established in It was established under Chapter 363 of the Laws of Zambia. The shareholding of the Bank is comprised of the Government of the Republic of Zambia and public sector financial institutions, the local private sector and foreign institutions. DBZ is committed to meeting shareholder expectations and enjoys strong support from government and other regional and international development finance institutions. The Bank has earned recognition from government and the development community as a vehicle that can be used to spearhead and catalyse development. Despite these achievements, DBZ cannot afford to be complacent in the current plan period which is characterised by risks and global financial uncertainty. Zambia is highly interconnected to the global economy, with high dependence on foreign investment capital and foreign demand for her exports. This renders the country and the bank vulnerable during times of global financial and economic uncertainties. DBZ s business plan is designed to both effectively address the challenges facing the Bank and reposition the institution to better meet its overarching objective of deepening the development impact of its interventions. To this end, this business plan is intended to help the Bank attain its premier status through greater mobilization of resources and enhancing its capacity to dispense development financing through a diversified portfolio of short, medium and long term funding instruments. 2.0 Our Mandate DBZ s mandate is to support the Government of the Republic of Zambia s economic development strategies for growth, wealth creation, job creation, poverty reduction, infrastructure development and improved service delivery. In the Bank s quest to fulfil its mandate, DBZ s main focus is to: 4

5 i. Support investment in both the public and private sector to galvanize growth, productivity, employment, wealth creation and broad based citizen s economic empowerment; ii. Support infrastructure financing to catalyse economic activity and improve service delivery; and iii. Proactively provide technical support in terms of policy advocacy and advice to Government and other stakeholders. 3.0 Target Sectors In carrying out its business, the Bank will endeavour to provide capital and other resources for investment in the following main areas which are consistent with the objective of maintaining a reasonable diversification in its investments among all sectors of the economy:- Agriculture and agri-processing; Manufacturing, tourism and hospitality; Transport, Storage and Communications; Mining, Construction and Renewable Energy; and Infrastructure and other economic activities 4.0 Our Mission The mission of the Bank is to provide competitively priced, tailor-made financial, technical and advisory solutions to viable local enterprises as a catalyst in economic development. 5.0 Our Vision To be Zambia s premier development finance partner 5

6 6.0 Our Values The values that the staff of the Bank embraces in the execution of their duties reflect the pivotal role the Bank plays in the development of the country. The values are known by the acronym I-CREDIT, depicting one of the core objectives of the bank which is the provision of medium and long term credit as a tool for achieving developmental growth. I-CREDIT stands for: Integrity: Exhibiting the highest levels of objectivity, accountability, honesty, transparency, fairness and responsibility at all times; Customer Focus: Placing the customer at the core of the Bank s business and ensuring high quality of service at all times; Recognition: Recognizing and rewarding high performance Effectiveness: Executing mandates effectively, ensuring delivery at least cost and in the shortest time possible; Diligence: Highest levels of proficiency and due professional rigor; Innovation: Cutting-edge idealism and adaptability, ensuring the optimum use of information technology and current financial engineering techniques; Teamwork: Working in teams to ensure that the objectives of the Bank are achieved in the set timeframes at all times; 7.0 Our Objectives DBZ s overall objectives under the new business plan are to: 7.1 Seek rapid growth in business volume and, in that regard, assist in deepening the development impact of DBZ s interventions. 7.2 Be the market leader in the chosen segments/niches. 6

7 7.3 Broaden and diversify product range. 7.4 Develop customer responsive pricing policies. 7.5 Accept risk and align attitude to risk with the business environment. 7.6 Seek alliances with other banks to enhance clients credit propositions and provide term finance which other banks may be unable to provide. 7.7 To Modernise ICT Infrastructure These overall objectives are closely supported by departmental commitments as reflected in respective streamlined objectives, coupled by corresponding matrices of interventions. 8.0 Challenges In designing the business plan, and as reaffirmed by the Bank s internal corporate strategy for the period , DBZ is mindful and prepared to affirmatively tackle the challenges it faces in its quest to fulfil its mandate. 8.1 National Challenges High incidence of poverty and unemployment Unequal access to economic opportunities, including investments financing, among economic sectors and regions Low rate and poor distribution of wealth creation, poor service delivery, and A poorly diversified and integrated industrial export base 8.2 Internal Challenges Unclear or lack of internal policies and procedures; 7

8 8.2.2 Sluggish credit appraisal and approval system; Absence of an effective project monitoring system; Inefficient financial and management reporting systems; Weak internal control systems; Poor and ineffective debt collection procedures and processes; Inadequate skilled staff; Poor and inadequate ICT infrastructure; and Poor quality of information. 9.0 Causes of Challenges DBZ is however mindful of the underlying causes of these challenges that include: 9.1 Poor quality, costly and limited infrastructure 9.2 Inefficient public expenditure management 9.3 Highly capital intensive and urban-based sectors: mining, construction, tertiary sectors, etc 9.4 Limited access to land and other factors of production 9.5 Binding micro-level constraints, including high costs of doing business, poor business management skills and governance practices 9.6 Financial market failure low access to financial and related business support services high interest rates and fees scarcity of term finance pre-eminence of a conservative commercial bank system 8

9 9.6.5 an ascent non-bank financial system and capital markets. To enable DBZ achieve its mandate the aforementioned issues need to be addressed within the context of the Business Plan Interventions Within the context of the Plan, DBZ will provide the following interventions: 10.1Direct lending (providing short, medium and long term investment capital) 10.2Equity Financing in strategic areas of opportunity 10.3Funds Management (mobilizing and investing third party funds in priority sectors) 10.4Co-financing and syndicated financing arrangements 10.5Apex lending (wholesale lending to financial institutions operating in Zambia) 10.6Provision of technical assistance, business advisory services and capacity building 10.7Fund-based term financing; bridge financing; refinancing; leasing; equity; working capital and trade finance. 10.8Modernisation of ICT infrastructure 9

10 11.0 Departmental Challenges and Strategies The urgent need for the deepening of the development impact of DBZ s interventions calls for the Bank to implement the requisite corporate reforms and to build its financial base. In that regard, the Bank has decided to frontload the departmental interventions and development strategies as indicated below: 11.1 Human Resources Department Inadequate staffing levels and skilled staff Lack of cohesion and team work Inefficient recruitment and retention procedure HR capabilities in financial and business acumen Lost organisational memory with restructuring and probably turnover Lack of proper systems and process Objectives Time Lines To attract and retain competent and qualified employees Introduce a fair, equitable and competitive remuneration system December Develop and implement a retention policy March Introduce a private pension scheme for employees September Capability Development 10

11 Identify business, team and individual learning & development needs March Design and facilitate implementation of development programmes to improve On going leadership and technical skills Provide employees with a tool to develop personal development plans December Develop and implement learning evaluation to selected programmes February Conduct familiarization tours to other developmental finance institutions in the region Ongoing Operational Excellence Develop and Implement HR Manuals Develop equitable incentives and remuneration system Benchmark reward and remuneration with financial institutions in Zambia March Introduce a private pension scheme for employees December Conduct a job evaluation exercise December Conduct HR Policy Sensitizations to staff On going Introduce wellness programmes and team building activities Implement Performance Management System Train Heads of Departments (HODs) Line Managers and employees on the PMS December Facilitate agreements of annual Performance contracts January Facilitate attachments with Development Financing Institutions (DFIs) Ongoing 11

12 11.2 Corporate Planning Integrate PMS with reward system January Key challenges Low levels of awareness of the bank and its offering Low brand recognition Absence of comprehensive Corporate Social Responsibility Programme Absence of communications standards Lack of bank-wide unity of purpose Objectives Time Lines To reposition the Bank and re-engineer business processes to enhance service delivery Co-ordinate the implementation and monitoring of the Corporate Strategic Plan January 2014/On-going Periodic review of the Strategic Plan in order to adapt it to changing circumstances Bi-Annual Develop Corporate Communications Manual March Enhance Resource Mobilization Development and co-ordination of Resource mobilization strategy in conjunction with Finance Department March Identify sources of income through new products December Introduction of fully operational business advisory services in order to create and maintain a 12

13 competitive edge December Identify potential sources of affordable finance that will ensure the Bank s financial sustainability January 2014/ongoing Engage and collaborate with local, regional and international financiers for potential funding June 2014/On-going Develop a prioritized product portfolio in liaison with Projects March Publish annual report by June of every year Oversee timely implementation of bank-wide strategic initiatives and projects Periodically monitor and record progress in the attainment of departmental activities as outlined in the strategic plan Quarterly Develop and implement corporate performance management framework in collaboration with all departments Develop Corporate Key Performance Indicators December Promote the Bank s business and image Create awareness of products and services offered by DBZ. June 2013/ongoing Develop an integrated marketing and communications strategy to engender loyalty January Rebrand the Bank January

14 Create buy-in of strategic plan from all stakeholders January 2014/ongoing Participate in local and international shows/exhibitions June 2014/ongoing Develop, implement and monitor a Corporate-wide Marketing Strategy Segment the market (develop strategies for each segment): March 2014 i. Government ii. Capital markets iii. Donors iv. Customers v. Stakeholders vi. Special interest groups Develop and implement product/service marketing plan. May Monitor Marketing plan Quarterly Develop a sustainable Corporate Social Responsibility Programme Identify initiatives to generate maximum publicity and goodwill, targeting those groups that are untapped but may have significant impact on development. February Develop a CSR policy January Implement programme and measure impact. June Schedule events to showcase and promote the identified initiatives using various media channels identified in the Communications Policy. June

15 Participate in various social activities that create visibility of the Bank to promote its image 2014/ongoing January Enhance skills in Departmental Capacity Develop and implement an annual training schedule in collaboration with HR. Annual 11.3 Information and Communications Technology (ICT) Department Key challenges Poor and inadequate ICT infrastructure Poor internet connectivity Disparate IT systems, none of which are integrated Lack of an Information Security Management System Non existent Governance, Risk and Compliance model Inadequate skilled resources Lack of project management skills Objectives Time lines Develop a comprehensive ICT Strategic Plan aligned to the Corporate Plan Identify all major IT projects and their estimated budgets January Prioritize IT projects in order of justified business case, impact on overall Bank 15

16 effectiveness, market competitiveness and timeliness January Identify and recruit IT resources to execute the IT Strategy February Replace information system infrastructure Complete core ICT procurement process January Prepare building for new network infrastructure February Complete installation of new network infrastructure March Complete installation of Front End Solution February Apply for E1 ISDN (Integrated Services Digital Network) March Commence procurement of UCS Telephone System March Complete installation of UCS Telephone System August Commence procurement of Electronic Security System August Complete installation of Electronic Security System December Enhance project portfolio management systems and delivery capabilities of the Bank Commence implementation of core banking software to increase efficiency. March Appoint Banking and ERP Consultative Forum March Complete implementation of ICT system. September Implement ICT governance, risk and compliance (GRC) framework Agree on drafted ICT Policies September 2013/Completed Implement ICT Policies December Appoint GRC Consultative Forum January

17 11.4 Projects Department Introduce and commence implementation of ICT Governance and Management Best Practice Cobit 5 February Introduce and commence implementation of ICT Service Delivery Management Best Practice ITIL (Information Technology Infrastructure Library) February Introduce and commence implementation of IS0/IEC and Best Practice on Information Security Management System February Transfer skills transfer and capacity building Embark a comprehensive capacity building programme On going Commence Core Banking and ERP training July Foster knowledge sharing Deploy knowledge management systems: Document Repository and Smart Templates October Introduce online and web-based client services Launch rebranded Website January Launch online Customer Service Management December Key challenges Lack of operational manuals, guidelines and policies Low business volumes Increasing non-performing loans 17

18 Inadequate human and financial resources to support increase in lending portfolio Absence of a risk management framework Inadequate staff Lack of policies and guidelines Non-existent monitoring and risk management frameworks Objectives Time Lines Foster Financial Sustainability through better performance of lending portfolio Review the appraisal processes and procedures for the range of products and services offered by DBZ. December Develop Frameworks, Systems and Tools for Project Monitoring and Supervision December Develop terms and conditions for managing special revolving funds to finance specific sectors and/or projects December Update and introduce Bank Policies, Procedures and Operational Manuals for Projects Department December Increase lending to PFIs from K46,501,367 to K150,000,000 December Initiate lending to Local Government for housing requirements as follows: K100, 000,000 December 2014 K200, 000,000 December Increase lending to Microfinance institutions (World Bank Funds) from K12,000,00 to K14, 000,000 December Increase lending a) SME - K105,000,000 December

19 b) Medium Corporates - K100,000,000 December 2014 c) Large Corporates - K200,000,000 December Start disbursement of GRZ SMEs Fund December Utilise CDB SMEs Fund December Management of Third Party SME Funds (AfDB and RFP Lines) December Establish and utilise Women Special Fund December Diversify income stream Establish Fee Income from Project formulation and resource mobilisation to K2,500,000pa December Introduce a collateral insurance brokerage of at least 5%-10% of the premium be paid to DBZ June Introduce another managed fund to generate fees of at least 2% or with interest sharing of at least 1.5-3% December Improve asset quality Establish a Projects Monitoring Unit under Project Department October Create autonomous Projects Monitoring Department December Develop a Projects Portfolio Monitoring Manual December Build capacity within the department through staff training and secondment to other DFIs Annual Maintain portfolio at risk to under 8% per annum Ongoing Improve governance framework Improve Customer Inter-face and response times from current one month to five working days October Out-source Technical Advisory Services for SMEs January Up-date/Introduce Bank Policies and Procedure/ Operational Manuals December Formulate strategies for: December 2013 i. SME Lending ii. Wholesale lending iii. Retail lending to large Corporates 19

20 iv. Technical and advisory services Deepen the development impact of interventions Introduce a development impact monitoring framework covering: December 2015 i. Employment creation ii. Poverty Alleviation iii. Capacity building iv. Value addition v. Increase Access to Credit by type of entity vi. Promotion of women and youth entrepreneurs Promote Social and Environmental Sustainability Develop a social sustainability policy and monitoring framework December Develop an environmental sustainability policy and framework December Promote citizens economic empowerment December Promote women participation in the SME sector by allocating 5-10% of SME funding to women owned and managed enterprises December Finance Department Key challenges Poor quality of information for management in planning, control and decision making Weak internal control environment 20

21 Lack of a robust credit administration system Objectives Time lines Develop an effective service focused-finance unit that supports business strategy Deliver timely, insightful financial intelligence that will contribute to the organization s competitive advantage. Ongoing Identify key performance matrix for periodical reporting to decision makers December Build capacity of Finance Staff to equip them with core competences to effectively deliver services Ongoing Review accounting policies and procedures May Contribute to the effective governance of the Bank Create a reserve fund as a cushion against losses - 25% of profit after tax December Improve timeliness in the preparation of the financial statements Publish annual audited financial statements within 90 days of the year end Within 90 days of year end Present audited financial statements to the Minister of Finance Within 120 days of year end Submit Monthly Prudential returns to Bank of Zambia Monthly/ongoing Improve coordination of budget planning and production, monitor and control budgets Deploy business decision support analysis tools, among them long range and annual operating planning, preparing budgets, analyzing results and ad hoc analysis Ongoing 21

22 Manage cash using robust cash management and treasury systems Use ICT platforms to enhance cash balances monitoring Ongoing Provide management with daily cash positions Ongoing Evaluate and compute taxes and statutory payments in a timely manner Pay taxes and other statutory obligations by due dates Ongoing Set up a Treasury Unit, an Internal Audit Department and a Risk Department Legal Department Key Challenges Outdated policies and procedures Non-adherence to policies and procedures Weaknesses in the perfection of security for loans Weak regulatory compliance Non adherence to prudential regulations and international best practice Shortcomings in corporate governance Objectives Time Lines Strengthen legal policies and procedures 22

23 Review existing legal policies December Implementing legal policies where necessary e.g. Anti-Money Laundry policies. December Develop Legal policies where necessary. December Ensure that security is perfected diligently and on time With additional human resource in the department: Conduct searches at Lands Department to deduce title and at PACRA to establish ownership and directors of prospective clients December Verify properties to be pledged to the Bank as security December Reduce the volume of outsourced legal services by 75% Create capacity in Department to maintain the records management system in the department December Reduce cost by negotiating fees in respect of outsourced legal services December Improve corporate governance In collaboration with other departments introduce a risk management and compliance component in the Bank in line with the Bank of Zambia Corporate Governance Guidelines. December

24 Update shareholders agreement December Organise induction, training and workshops for Board members December Arrange study tours of Projects and other Development Finance Institutions December Introduce Directors self-performance evaluation June Procurement and Administration Department Key Challenges Limited staff resources Lack of documented policies and procedures Objectives Time lines To comply with the Act and Regulations Develop a Procurement Plan in coordination with all user departments and submit to ZPPA 31 December Re-constitute the Procurement Committee and submit names to ZPPA 30 September Publish and update the Procurement Plan on DBZ s website and government gazette 30 April Training of Procurement and Evaluation Committee members To obtain value for money Ascertain that the most appropriate procurement method is applied for all purchases of goods, works an services Ongoing 24

25 Ensure adequate inspection for all goods, works and services delivered to the Bank Ongoing Publish in a timely manner all intended purchases of goods, works and services in the public media. Ongoing Maintain an up to date Register of all DBZ assets and ensure periodic checks on their status and value. (disscuss with finance) Ongoing To encourage and promote private sector participation Encourage active participation of suppliers of goods, works and services in DBZ Procurement by ensuring timely publication of the Procurement Plan and other Procurement notices 30 April 2014/ongoing Ensure that procurement of goods, works and services is timely and conducted in a transparent and fair manner June 2013/ongoing To improve efficiency of the operations of the department Enter into Maintenance and Repair Contracts (MARC) for all works and services required through the year and/continuously 31 March Enter into Purchase Supply Agreements (PSA) for all goods required continuously throughout the year 31 March Introduction of simplified work procedure manuals and administrative forms 30 April Develop a stores systems for stock items 30 April To improve fleet availability and management Ensure vehicles are only driven by competent drivers/persons authorised to do so Ongoing Ensure vehicle service and housekeeping schedules are adhered to Ongoing Ensure proper allocation of and efficient use of vehicles Ongoing To ensure maximum use of office space not occupied by the bank 25

26 Rent out premises/office space not occupied by the bank Ongoing Ensure timely collection of rentals and service charges due to the Bank Ongoing To ensure proper maintenance of buildings Ensure commencement of refurbishment of both Lusaka and Ndola Development Houses 30 September Ensure that the office buildings are maintained both in terms of infrastructure and housekeeping Ongoing Ensure availability of office space and furniture for all members of staff Ongoing 11.8 Research Department Objectives To create the Department January Internal Audit Department Objective To create the department December Treasury Department Objective To create the department December Risk Department Objective To create the department December Monitoring and Supervision 26

27 Objective To create the department December Risk and Compliance Objective To create the department December Monitoring of Implementation of the Strategic Plan The Corporate Strategy and Marketing Communications Department will be responsible for monitoring the implementation of the Strategic Plan by each department and by collaborative efforts among departments. Each department will be required to submit the following reports on their progress in implementation of strategies under the Strategic Plan: a) Monthly report b) Quarterly report c) Annual Report Each of the reports will contain the following elements: i. Progress against the Plan ii. Performance against the budget for each respective strategy iii. Causes of any delays in the implementation of actions under respective strategies iv. Actions or resources required to remedy delays stated if any v. Proposed revisions to the strategies 27

28 The Head of Corporate Strategy and Marketing Communications will spearhead the consultative meetings to be held with all departmental heads to assess progress in the implementation of the Strategic Plan. These meetings will consider changes in timing, priorities or resources required for the successful implementation of all departmental strategies. The Managing Director will present quarterly and annual reports to the Board of Directors on the implementation of the plan. Successful implementation of each strategy in the Strategic Plan is in the first instance the responsibility of departmental heads. This responsibility requires that all departmental staff gain familiarity with and ownership of the plan and their respective department s role in implementation. In addition, all departmental heads will encourage staff in their respective departments to provide feedback on ways that the Bank can integrate the Strategic Plan in their day-to-day operations. Departmental heads in liaison with Finance Department must ensure that actions to be taken in the implementation of the Plan are incorporated into the budget process. All budget proposals should be prepared with resource allocations that reflect the strategies to be undertaken under the Plan The Corporate Scorecard DBZ will use the Balanced Scorecard (BSC) as a strategic management tool to direct and manage performance. Four strategic perspectives will highlight the Bank s Key Performance Indicators (KPIs). The perspectives will be weighted. The weighting will take into account the operating environment, available resources and government priority and shall be subject to annual review. Figure 1 shows the Corporate Scorecard of the Bank. 28

29 FINANCIAL IMPACT 1. Sustainable Earnings 2. Cost-to-Income Ratio 3. Non-performing Loans as % Gross Debt 4. Net Interest Income as % Interest Bearing Assets ORGANIZATIONAL CAPACITY 1 Policies 2. Systems & Processes 3. Learning anf Growth 4. Facilities DEVELOPMENT IMPACT 1. Employment Effects 2. Access to Credit 3. Environmental & Social sustainability 4. Capacity Building STAKEHOLDER ENGAGEMENT 1. Staff 2. Customers 3. Community 4. Strategic Partners 5. Board of Directors & Shareholders Figure 1: DBZ Corporate Scorecard The Corporate Scorecard will be cascaded to departmental/unit and individual levels and linked to performance contracts to ensure the achievements of the objectives and targets. The initial scorecard places more weight on the Financial Perspective (40%) to reflect the focus on ensuring that the Bank positions itself financially to carry out its development financing mandate. This is followed by Organizational Capacity (20%), Stakeholder Engagement (20%) and Development Impact (20%). 29

30 13.0 CONCLUSION Effective and timely implementation of the business plan as outlined above will enable the bank to deepen the development impact of its interventions and thereby meet its mission of stimulating economic activity through the provision of short, medium and long term capital/funding. The successful implementation of the planned departmental strategies will play a vital role in supporting the efforts of the Board and Management to mobilise resources for both the large corporate borrowers as well as the SMEs sector that could, given the right support, play a major role in uplifting standards of living in the country. 30