Kenya’s cooperative bank has injected additional capital of Ksh 372 million (US$ 3.2 million) into its subsidiary in South Sudan. The unit has accumulated losses of Ksh 3.29 billion (US$ 28.36 million) over the eight years of its existence.
The Juba-based subsidiary started operations in September 2013 and is operating four branches.
It made a loss of Ksh484.41 million (US$4.17 million) in 2021, versus a loss of Ksh1.56 billion (US$13.44 million) in the Year 2020.
The Nairobi Securities Exchange-listed lender said it also wrote off the Ksh 671.56 million ($5.78 million) cost of implementing a new software.< /p>
Use of the software was discontinued when Co-op introduced a unified core banking platform, which is now being implemented.
In its 2021 annual report, the bank announced that it Capital in its operations in South Sudan from Ksh 2.27 billion (US$19.56 million) to Ksh 2.64 billion (US$22.75 million) < /p>
“The Co-operative Bank of Kenya Limited has injected additional capital of Ksh 372 million (US$3.2 million) into the Co-operative Bank of South Sudan in 2021” , the report said.
In 2013 , Co-op Bank, which is 64.6 percent owned by cooperatives in Kenya, invested Ksh 2.27 billion (US$19.56 million -dollars) for a 51 percent stake in its subsidiary in South Sudan. The government of South Sudan holds the remaining 49 percent through a joint venture agreement.
Last year, Co-op Bank extended the joint venture by three years. The lender said the planned transfer of the minority stake to South Sudan’s cooperative movement was delayed by economic and political challenges in the country.
The subsidiary’s only profit came in 2015 of Ksh849.72 million ($7.32 million).
According to the International Accounting Standards 29 Financial Reporting in Hyperinflationary Economies, the South Sudanese economy was considered hyperinflationary as of 2016.
The country’s civil war from 2013 to 2020 led to massive asset depreciation, lost revenue and hyperinflation. This led to banks reporting losses due to asset and liability revaluation.
The seven years of fighting led to the collapse of oil production in the war-affected areas.
KCB began operations in the country in 2006, Equity in 2009 and Co-op Bank in 2013.
In 2014, KCB closed three branches in South Sudan following the outbreak of war. In 2017, Equity Bank closed seven of its 12 branches in the country.