Prof Marco Trombetta of IE Business School shares his recent executive development experience in Ghana:
Cape Coast, November 2012. In a hot room where computers share the space with solar power charged lamps, Master in Finance students at IE Business School are asking questions to Veronica Kitti CEO of Alternative Sets of Assistance (ASA) Initiative, a Micro Finance Institution (MFI) based in Cape Coast and operating in the Central Region of Ghana. Just the day before, we had spent the whole day travelling on a small 4x4 bus through dusty roads of Ghana in order to visit some of the clients of the ASA initiative. Why are we all in Ghana? Because we are involved with “Financieros sin Fronteras” (FsF - Financiers without Borders) an NGO founded in 2010 by a group of people linked to IE Business School in Madrid.
FsF offers free consultancy services to MFIs in order to help them gain better access to the financial market and guarantee a stable source of financing for their operations. The consultants are students of the Finance Masters at IE Business School who have chosen to do this voluntary work as the final project of their Master program. Back in Madrid they will present their analyses and conclusions to the examination committee as part of their final exam to obtain their degree.
During the past two years, 49 students have travelled to Ghana to work with six MFIs. They all have financed the trip by themselves and have come back to Madrid with a unique work experience - and a smile on their faces. And the word is spreading – already students, when asked, are saying that they have chosen IE Business School over other business school because it offers them FsF in Ghana as a final project for their master degree. So what started as the independent initiative of a small group of people willing to go beyond traditional teaching methods has now been fully endorsed by IE Business School.
When Maria Luque, an IE Business School alumna herself and the executive director of FsF, had to decide in which country to start operations, Ghana was a clear choice because of its booming MFI sector, spoken English, and general safety for visitors. Two years later, after tons of e-mails, phone calls, and four trips to the country, FsF and Maria have gained steady recognition in Ghana. Just recently, the association of MFIs of Ghana – with the support of the Ministry of Finance – asked FsF to organize a capacitation initiative to train MFI personnel and this training activity has since been added to the orginal consultancy work developed by FsF. So IE Business School professors, myself included, have joined students and supervisors on the trip and run workshops to provide management and financial skills to those executives involved in running the MFIs.
Just as it is a unique learning experience for the IE finance students, it is for us professors as well. We are certainly teaching “executives” – this is something we are accustomed to, but these are executives of a different kind, with hundreds or even thousands of entrepreneurial clients to whom they provide much-needed financing. On the one hand, this is not investment banking in a traditional sense; these clients may borrow as little as the equivalent of 100 Euros in order to buy seeds for their small farming activity – or they can borrow as much as 5000 Euros to open their third stall in the crowded local market. No deals worth billions of Euros will be found in this market. But, that does not mean that these MFIs do not need solid financial instruments that adapt to the special needs of their clients. Furthermore, they must achieve their own financial sustainability in order to survive, without forgetting their social objectives.
Is this so different from what traditional investment banking should do in developed economies? Not really. But we needed to adapt the traditional concepts of, for example, financial accounting and financial management to the reality of a MFI operating in Western Africa. Lending money to a self-employed individual with no collateral should be considered a risky strategy for traditional banks in developed economies, but it makes perfect sense among the rural communities of Ghana. Collecting in advance cash as a guarantee for the final repayment of the loan would be considered a condemnable behavior in a developed economy, but it is a very sensible practice when dealing with clients that struggle to manage their cash flow properly. But you need to account for it properly and within an adequate system of corporate governance. These are just some of the arguments discussed during the workshops. And what a discussion they raised! These executives may not work in slick corner offices at the top of office buildings, but the interaction with them was as animate and as challenging as the one experienced with a more traditional business school audience.
Being effective in this peculiar experience of executive education was a challenge for me and the small group of experienced IE Business School professors running the workshops in Accra. But it was an incredibly rewarding experience too, both from a professional and from a human point of view. Back in my office in Madrid I find myself wondering: who really learnt the most? Me or them? I really do not know, but I can’t wait to go back!
Marco Trombetta is Professor of Accounting and Management Control and Vice-dean of Research at IE Business School in Madrid (Spain). He holds an M.Phil. and a D.Phil. in Economics from the University of Oxford (UK). Marco has also an extensive experience as a consultant and in in-company trainer. Among others he has worked for Whirlpool Europe, Accenture, Pricewaterhouscoopers, CEIM.