In the end, National Bank of Zambia (NBZ) could not keep up the pretence any longer. The banks Chief Executive, Robert Tusheni, who came from Barclays Bank in 1997, and its Chairman, Mr. Patrick Kunda, an old hand, were at each others throats and one of them had to go. It was Mr. Tusheni, the young, well-regarded Zambian MBA graduate, who was ousted last week, rather than Mr Kunda, who is 67 years old and due to retire in 2009. As soon as Mr Tusheni arrived at the bank, he made the banks top managers face some uncomfortable truths. In the late 1970s, he reminded them, NBZ and the other commercial banks in Zambia, had roughly similar geographical reach, balance sheets, market capitalizations, profits and staff numbers. Why was it, he asked, that NBZ had so dismally underperformed its rival banks ever since? If it was not to lose even more ground, Mr. Tusheni told them, its culture and strategy would have to change. Under his leadership, NBZ increased the number of branches countrywide. In the urban area, the bank still faced competition from the private banks, notably, Barclays Bank, Stanbic, Standard Chartered, Finance Bank, Indo-Zambia Bank and Investrust. NBZ nevertheless had an edge on the private banks because of its unquestionably privileged relationship with the government. This special business relationship with the government was rooted in the fact that the bank was a joint venture between the governments of India and Zambia, and the Zambian government deemed it financially prudent to channel all its business through NBZ. In the case of rural areas, the vacuum created by the withdrawal of private commercial banks was an added bonus for NBZ. The banks market share standing was also boosted by its liberal credit policy and affordable minimum balance requirement. The bank thus became a natural and automatic attraction to low income groups and, more importantly, to rural dwellers who included government civil servants, peasant farmers and an assortment of retirees who had opted to settle away from the hustle and bustle of urban life. The turn in fortunes of the bank under Mr. Tushenis stewardship was also manifested by an increase in business in the region attributed to the decision to headquarter Comesa in Lusaka. The share of the banks profit that came from the region rose sharply. Last year Mr. Tusheni started to back away from the unspoken tradition of granting soft loans and advances to old political hands, whose default rate on repayments was becoming a matter of concern. This did not however please Mr Kunda who drew his support from the political establishment of the ruling party. Moreover, so Mr Kunda argued, NBZ was a national and peoples bank. On his part, Mr. Tusheni made no secret of his disdain for what he considered Mr. Kundas archaic banking practices. Mr. Tusheni also riled the expatriate staff who felt insecure by Mr Tushenis slant toward indigenization of the bank. A firm believer in the African way of doing things, Mr. Tusheni had, in the last two years, began promoting local fellow Zambians and Africans from COMESA member states to managerial positions, traditionally a role reserved for British and Asian expatriates. Forcing the pace of change at NBZ, half of which dates from the 1980s, was a hard task, and Mr. Tusheni made enemies along the way. Critically, he failed to keep in with the banks non- 88 executive board members, viewed in the City of Lusaka as a conservative lot, and hopelessly locked and steeped in English tradition. It was these folk who turned on Mr. Tusheni last week, despite his support from the executive managers. Most recently, differences between Mr. Tusheni and his Chairman had been aggravated by Mr. Tushenis open enthusiasm for a proposal from advocates of privatization for the government of Zambia to sell its shares in the bank to ordinary citizens. Mr. Kunda is known to be passionately opposed to any watering down of government ownership. . How the bank charts its course in the post-Tusheni era will now be the job of Mukela Mundia, NBZs former Operations Manager, who was promoted to Managing Director last week. Mr. Mundia is known to be a close confidant of Mr. Tusheni and reliable sources believe there will be no major shift from Mr Tushenis stance. So Mr. Tushenis ideas, if not his management style, will continue. Source: Adapted from The Economist, December 8-14, 2001, p.72 Required: Identify the