Mauro Scarpa, a  Senior Product Engineer Manager at Singapore’s Standard Chartered Bank  · declared winner  of the Standard Chartered Recognition Award 2023 in the category of Never Settle category 

 He answers 10 Questions regarding the victory and how he got involved in the project 

1. When was the Standard Chartered Recognition Award initially launched and for what purpose? And how often does the competition take place?

Mauro: The Standard Chartered Recognition Award was launched a few years back but I  can’t say exactly when. It takes place annually.

      2. How many geographical jurisdictions participate in the competition?

Mauro: It is worldwide.

      3. Please outline the number of Categories involved in the competition.

Mauro: Never Settle, Better Together, Do the right thing, Leadership.

      4. Who are the judges and who appoints them?

Mauro: Judges are: Bill Winters, Jose’s Vinals, and extra judges that can change.

      5. You won in the #neverSettle category with the launch of the  Standard Chartered Shilingi Funds for the #Kenya market. What was your                             involvement in the project? In other words, what is it that you did – either as a team or individually that led to your win? And does the award                   have any monetary reward for you or is it simply symbolic?

Mauro: I was driving the project from a technology standpoint as the delivery head. The reward is only symbolic and gives you access to 6                       months of coaching too.

      6. Who came up with the idea of launching the Fund in Kenya and why settle for this East African State?

  The Kenya Wealth team – SC Shilling funds target the mass market segment – the next emerging affluent and affluent customer. By                              launching an end-to-end solution, it ensured we enabled more people to make informed financial decisions that lead to a better standard of                    living and  economic future of the country.

       7. And why did the Shilingi Funds for the #Kenya market stand out? What sort of impact has the Fund had so far and is it likely to be replicated in              other markets? 

Mauro: This product helps us drive financial inclusion by empowering our people and communities with financial choices through access to                 simple, seamless, and easily accessible investment products. Yes -eventually we will replicate it in other markets.

        8. In the #neverSettle category you stated you were selected from a pool of over 1100 nominations. Which geographies were they drawn from?

 Mauro: worldwide.

        9. Where was the ceremony held and what is so significant about the venue?

Mauro: It was held in the Singapore headquarter, Marina Bay Financial Centre

       10. Standard Chartered Bank’s CEO Bill Winters & Chairman Jose Vinals were in attendance giving the ceremony weighty awe.On the night that

             you won the award did either of them tell something that indelibly stuck in your mind?

Mauro: Jose’ said something very important to me: he basically highlighted that we represent the best employees in the bank and SSCB is lucky to have us in the organization.

Naom Monari is the founder of BENA Care Ltd, an award-winning social enterprise located in Kenya that provides clinical and physiotherapy care services to patients inflicted by life-threatening illnesses from the comfort of their homes.

And verifiably since implementing lessons learned at the   Futuremakers program, an initiative run by the  Best Foreign bank in Kenya the company has witnessed a seismic improvement in service delivery including a substantial increase in its footfall which got a footprint here in 1911 with the first branch opening in Mombasa city. 

The program builds on the success of Standard Chartered Bank’s Seeing is Believing (SiB) initiative that tackled avoidable blindness and visual impairment reaching over 176 million people and raising more than US$  100 million.

Through the Futuremakers program, the bank’s global ambition is to raise US$ 50 million, empower 500,000 adolescent girls, support 100,000 youth towards employability, and build the entrepreneurship capability of 50,000 micro and small businesses.

It turns out meanwhile this organization which also offers a platform for buyers of homecare equipment to access cheap, used, and well-maintained medical equipment like oxygen concentrators, is on a tear.

“ Within two years we have seen the patients we have attended grow from 300 to 6000. We have also improved our efficiencies by setting up a healthcare technology app @benacare, which is a digital platform  that geo maps nurses and physiotherapists drawn from across the country, who then take care of patients from the comfort of their homes. And a positive spin-off is that we have been able to attract new sponsors from outside the country including from Kenya,” says Monari who says the brand name of the company was formed from the name of her two-year-old daughter Beita, now aged eight years including her name Naom.  

The five-year-old Kenyan social enterprise that Monari runs has a dedicated network of more than 9000 healthcare workers that provide affordable, preventative, therapeutic, and rehabilitative care to people suffering from life-limiting illnesses from the comfort of their own homes.

Regina Mukiri, Regional Head, Community Impact and Engagement, Kenya & AME Standard Chartered Bank

Regina Mukiri, Regional Head, Community Impact and Engagement, Kenya and the Middle East, at Standard Chartered Bank, says   31,075 young people in the Kenyan market, who include Monari had by the end of April 2023 benefited from the programme with the lender spending Ksh 189M for the financial year ending 2023.

According to the website of Standard Chartered Bank, the Future Makers initiative supports young people from low-income communities, especially girls and people with visual impairments, to learn new skills and improve their chances of getting a job or starting their own business.

 This is in line with the UN’s SDG Goal 5, which calls for eliminating all forms of discrimination and violence against all women and girls, including those with disabilities. It also stresses the importance of their full and effective participation and equal opportunities in political, economic and public life.

 Mukiri says  the initiative cements Standard Chartered Banks’ commitment  to addressing “prevalent issues that impact our communities” particularly  youth unemployment, and also cements the lender’s credentials  of being here for good.” 

 “We believe that social and economic inclusion leads to more prosperous and sustainable communities. We believe everyone should be able to contribute to and benefit from, sustainable economic growth in their community. We promote greater economic inclusion through Futuremakers by Standard Chartered, our global initiative to tackle inequality. Futuremakers supports young people from low-income households, particularly girls and people with visual impairments, through community programmes focused on education, employability, and entrepreneurship,” says Mukiri.

In what was dubbed the first phase, the initiative was initially launched in June 2019 and rests on four pillars, namely  Education, Employability, and Entrepreneurship.

The education pillar sees girls being equipped with the confidence, knowledge, and skills that would lead them to become economic leaders in their families and communities.

While the employability column develops opportunities that support young people to become job-ready.

In the entrepreneurship plank, the bank provides support, mentorship opportunities, and access to resources, such as funding and banking products and services, to female entrepreneurs in the technology sector.

In the first phase of the program, the Bank equipped over 4800 students drawn from five local universities with employability and life skills. The universities included Jomo Kenyatta University of Agriculture & Technology, Kenyatta University, USIU-Africa University, Multimedia University, and Zetech University.

During the second phase which began in  April 2022, Standard Chartered Bank Kenya injected Kshs 96.9 million, to run for two years targeting 790 young jobseekers with disabilities, including 150 jobseekers with visual impairment. 

Kellen Kariuki, Standard Chartered Kenya’s Board Chair says the African continent has the youngest population globally, with 70% in sub-Saharan Africa falling below the age of 30. And that the burgeoning youth population presents a massive opportunity for economic growth – but only if the new generation is empowered to realize their full potential.

“ It is particularly important for these young individuals to be included in decision-making, accorded the right work opportunities, and to innovate. Sadly, the high levels of inequality in education and the job market have presented an almost perpetual challenge,” she says.

Indeed unemployment remains a big issue.

According to the African Development Bank (AfDB), approximately 10 to 12 million young Africans enter the labour market annually where only 3 million formal jobs are created by African countries. This leaves most youth unemployed or forced to settle for low-paid and low-productive jobs in the informal sector to make ends meet.

In Kenya, the situation is dire as official statistics show a third of Kenyan youth, eligible to work are jobless.

Enter  Maureen Awino, another beneficiary of the program. She’s the founder of Modesh Bakers in Kisumu City. She says that she’s now able to run her company effectively.

“I’ve expanded my product line to offer different types of cookies. I  also trained 80 women last year. This has enabled me to increase my sales from 150 packets of cookies to 3,000 packets weekly,” says Awino.

Standard Chartered Bank set out to fundraise and donate US$ 50 million for Futuremakers between 2019 and 2023, funds that would empower the next generation to learn, earn and grow. In response to COVID-19, the lender committed a further US$ 25 million to Futuremakers to support economic recovery for young people impacted by the pandemic.

It achieved the US$ 75 million target set for 2023, a year earlier, with additional donations made during the pandemic. In 2022, the Bank fundraised US$ 14.7 million for Futuremakers including Group donations, bringing the total fundraised from 2019 to 2022 to US$ 78.7 million.

The program is part of a global initiative to tackle inequality by promoting greater economic inclusion across global markets by empowering young people to unleash their full potential and lift their participation in the economy.

“What I loved about the programme was that we were provided with female entrepreneurs of note who took us through the ropes of how to excel in entrepreneurship and how to navigate the business cycle. We were also provided with  US$ 10,000 as seed funding,” says Monari who began Benacare in 2017, as a student nurse at Gatundu Level Five Hospital, in Central Kenya after witnessing the growing number of patients that stayed in the hospital receiving non-urgent medical care, a phenomenon that inspired her to introduce the home nursing service.

“We are transforming society through our Futuremakers programs that include our GOAL project, Youth Employability programs, and Entrepreneurship programs such as Women in Tech. At Standard Chartered, we are committed to supporting the youth and women by creating opportunities to support them when they embark on entrepreneurship, Joyce Kibe, Head of Corporate Affairs, Brand and Marketing Kenya and East Africa, says.

The banking sector displayed positively throughout the year. Robus’s double-digit performance was reported by all the nine listed banks under our coverage as the lenders weaved through the tougher economic environment evidenced by rising inflation, higher interest expenses, declining bond valuations, and currency challenges.

The strong performance was also reflected in the dividends as all the nine lenders save for Kenya Commercial Bank (KCB) raised their absolute dividends without significantly raising their payout ratios.

KCB’s pay-out dropped significantly (15.8% vs 44.7% in FY19) due to its 85% acquisition of Trust Merchant Bank (TMB) – DRC which impacted its
capital ratios as well as a rise in non-performing loans (NPLs).

We believe the transaction cost came in much higher at KES 25bn from our initially estimated KES 20bn given it was completed towards the tail end of the year, with TMB growing its book value within the period coupled with the Kenya shilling weakening.

Sector loan book growth averaged 17.7% within the year with most lender cutting their forecasts for FY23 which we think could settle around 10%.

We envision that the lenders will have a mad dash for borrowers (digital as well as corporates in the steel and energy sectors) within the region
in a bid to lock in income at high margins amid a potential decline in private-sector credit.

In addition, we expect to see more focus and competition on the digital lending side as various banks ramp up their digital lending as already
witnessed by Co-op Bank, Stanbic, KCB, Equity Bank, and Absa Bank.

During the year, foreign exchange trading income was a major winner for the banks as most lenders posted near doubling in the income line which
considerably supported their bottom line.

This considerably boosted bank’s non-funded line contribution to levels not witnessed in recent memory.

It is key to note that the Competition Authority of Kenya (CAK) has launched a probe into some banks for alleged fixing of foreign
exchange rates with likely fines or convictions if found culpable.

Notably, some weakness began to be witnessed in 4Q22 with most lenders posting upticks in provisions and NPLs alongside declines in fee income.

Further cementing this argument, only Equity Bank, I&M and StanChart recorded quarter-on-quarter (q/q) gains in their 4Q22 profit before tax
(PBT), cumulatively accounting for KES 3.3bn (35.4%) out of the KES 9.3bn rise in overall banking sector 4Q22 quarterly income.

However, as of January 2023, overall banking sector PBT stood at KES 21.4bn (+12.6%y/y) – highest January PBT since 2015 (KES 37.3bn).

Net interest margin (NIMs) growth should be witnessed within the year
as some lenders begin implementation of risk-based pricing lending with
others repricing
loan rates following the hike of the Central Bank Rate (CBR).

_*movement between 3Q22 & FY22_

Being cognizant of the heightened credit risk in light of the elevated sticky inflation, we analyzed non-performing loans; highlighting sectors
that have a high contribution to NPLs, NPL ratios per sector as well as historical Gross NPLs.

The regulator noted that the banking sector NPL ratio worsened to 14.0% in February 2023 from 13.3% in December 2022, though noted that banks
have made adequate provisions.

We reiterate that part of the solution to the NPLs may be in the resolution of government pending bills, contained inflation, currency
stability and overall recapitalization of firms that struggled during the COVID-19 crisis.

At the same time, private sector credit growth dropped to 11.7% from 12.7% in December denoting the impact of the interest rate hikes by the Central Bank, with potential borrowers more cautious about their borrowing amid higher interest rates.

Liquidity remained sufficient though it progressively declined from 56.7% in January 2022 to 50.7% in January 2023 – lowest since July 2020
(49.7%).

Key happenings within the year included a 50% overall reduction in fees charged on the Fuliza product (partnership between Safaricom, KCB and NCBA), a credit repair framework in which 50% of non-performing digital loans which had tenures of 30 days or less would be forgiven (expires on 31st May 2023), IFC became the second largest shareholder in Equity Group, announcement of reinstatement of bank <-> mobile charges at discounted rates of up to 61% on bank to M-Pesa charges (I&M has waived these charges).

We have upgraded our recommendation on Equity Bank and I&M Bank from a HOLD to a BUY in light of declining MTM losses, robust loan book and non-funded income outlook, risk-based pricing implementation and a price decline already witnessed, and on attractive trading multiples and
improving metrics respectively.

Key to note, lenders will by June shift their loans, deposits, and borrowing contracts which are pegged to the LIBOR (London Interbank
Offered Rate) to SOFR (Secured Overnight Financing Rate) which is considered more accurate and secure. In addition, banks will be required to comply with much stricter IFRS 9 capital ratios following the expiry of the 5-year CBK allowance in which they could add back loan loss provisions to capital.

By the Standard Investment Bank Research team