With over 25 years of experience in finance, banking and development across three continents, Admassu Tadesse has carved out a reputation as an industry thought leader. When he took the reins of Trade and Development Bank (TDB) a decade ago, he had big plans for the Mauritius- and Burundi-based development finance institution whose mandate is to foster the sustainable development and economic integration of its African member states’ economies.
"TDB has been around for 38 years," Admassu tells The CEO Magazine. "When I came on as President and CEO, we had just over US$1 billion [€997 million] in assets. Today we’re sitting at US$8 billion [€7.97 billion], so we’ve had a great run in the past decade."
Over the past two years, the bank has grown and transformed into a group structure to increase its impact. TDB Group comprises TDB, the Trade and Development Fund (TDF), Eastern and Southern African Trade Advisors Limited (ESATAL), TDB Captive Insurance Company (TCI) and the TDB Academy.
"Innovation is about improving your offerings and impact and, in the final synthesis, putting forward a better value proposition for your clients and stakeholders," Admassu says, who moved into the role of TDB Group Managing Director and Chair of its Executive Management Board in early 2022. "The formation of a group structure has allowed us to expand our offerings and leverage the strong brand we’d developed over the years and to start introducing new vehicles, products and services that are allowing us to do more."
Innovation is about improving your offerings and impact and, in the final synthesis, putting forward a better value proposition for your clients and stakeholders.
Centres of excellence
In the lead-up to the establishment of TDB Group’s new vehicles, Admassu oversaw the creation of centres of excellence within TDB to ensure the bank was upgrading and strengthening its capabilities. "We really sharpened the capabilities of our various functions as well as business areas," he says. "We created a much stronger institutional framework that boosted our financial firepower through smarter approaches.
"We started reaching into different money centres and pools of capital across the world, including Japan, China, India and the Gulf, as well as Africa. We now have strong partners in all these markets in addition to our footprint in Europe and China, which have always been very strong markets for us. We’ve managed to diversify our access to funding across the world."
With enhanced risk mitigation and risk sharing, our portfolio has diversified further, and quality has improved alongside liquidity.
TDB established a dedicated treasury department in place and invested in a strong risk management framework. "We have very strong risk, treasury and legal structures and capabilities built up and strengthened over the years," Admassu explains
"That’s something I’m very proud of because these functions are critical and sensitive in banking. As a result, we have strong talent and modern systems. Several seasoned executives have come in and really upped our game. We’ve established a much more sophisticated understanding of the market and shaped an effective and efficient business model."
"This is in addition to other impactful reforms in the bank’s human resource management, IT and, importantly, its capital structure," Admassu says. "As we spoke about at length two years ago in our last interview with The CEO Magazine, we now have a substantial cohort of institutional investors such as pension funds, insurance companies and DFIs as shareholders."
"All of these reforms have made it possible for TDB to attract a lot more capital and funding and achieve investment-grade credit ratings. With enhanced risk mitigation and risk sharing, our portfolio has diversified further, and quality has improved alongside liquidity."
• TDB Group finances trade, regional economic integration and sustainable development through trade finance, project and infrastructure finance, asset management and business advisory services.
• TDB Group has helped support over 1.1 million jobs, 54 per cent of which is female employment.
• TDB Group has principal offices in Burundi and Mauritius and regional offices in Kenya, Zimbabwe, Ethiopia and the Democratic Republic of Congo, Ethiopia, Kenya and Zimbabwe.
One important aspect of TDB’s transformation into TDB Group was the expansion of its geographic scope. "Initially, our prospects for expansion were restricted to some 19 countries," he says. "Today, we have a potential market size of about 30 countries and we’ve managed to take it up to 23 so far. We now have a footprint across all five subregions of the continent."
Since TDB Group’s new business units were created, the development finance institution has repositioned itself to reach new heights in terms of impact and footprint.
"Through TDF, the Group is able to serve financially marginalised groups through blended finance; with ESATAL, and the main fund it manages, the Eastern and Southern African Trade Fund, we are able to expand our offerings and capacity in trade finance; via TCI, we’re insuring and re-insuring exposures and enhancing efficiencies in risk management; and with the Academy, we’re rolling out capacity building initiatives internally, but also for select stakeholders," he says.
It’s essential to find partners who are willing to do business in frontier markets and overcome stereotypical old mindsets.
In terms of relatively more recent operations at the bank, he adds that its "export credit lending business unit allows us to work more closely with the various countries that want to trade and invest in our part of the world".
"We also built a strong syndication and co-financing business unit because there’s so much interest in Africa," he says. "Through our syndications, we’ve managed to attract a number of partners. Part of our philosophy is to crowd in other financiers and investors from around the world into our market space. That’s been another area that we’ve built up very strongly over the years and that we’re proud of.
"It is fairly well known that the African economy and demographics are going to be very significant in the decades to come, but it isn’t always easy to know how best to enter it and navigate the operating environment.
"It’s essential to find partners who are willing to do business in frontier markets and overcome stereotypical old mindsets. The investor and financial communities need collaborators and partners on the ground that have local networks and knowledge and a demonstrated track record."
Over the next few years, TDB Group will endeavour to continue its robust growth trajectory. "We’re looking at a baseline growth of around 10 per cent per annum in the next three-to-five years," Admassu says. "There have been several shocks unsettling the global economy that have modified the context of our operating environment, but we’re resolved to navigate this new environment with commitment to climate and SDG agendas.
Africa needs several world-class African financial institutions that can help provide financial solutions to these various development imperatives. TDB Group and its partners have a lot of work to do.
"The African Continental Free Trade Area has come into force and is gaining momentum. It’s increasing opportunities for investments in cross-border infrastructure, energy, agro-processing and light manufacturing that will enable Africa to diversify and add value to its resources.
"There’s a lot to be done in building regional supply chains in various sectors. Africa needs several world-class African financial institutions that can help provide financial solutions to these various development imperatives. TDB Group and its partners have a lot of work to do."