Jan 27, 2023

Mawazo Writing Africa

Writing about the main

Global lenders want a piece of East Africa’s retail banking market

East Africa is becoming a fertile hunting ground for foreign banks looking to tap into the burgeoning retail market, where the assets of KCB and equity banks have each risen to over Ksh1 trillion ($8.62 billion), buoyed by the growing number of customers and growing loan books.


Leg in East Africa

The EastAfrican has experienced with Nigeria’s Access Bank Plc and Egyptian Commercial International Bank (CIB). that global players are eyeing the regional banking market Acquiring Kenyan lenders as launch pads for the seven-strong bloc consisting of Kenya, Uganda, Tanzania, Burundi, Uganda, South Sudan and the Democratic Republic of the Congo.

“The banking model has shown that it has an advantage to good expansion. When you are able to expand and grow your balance sheet, you can also increase your profitability and East Africa is seen as the next frontier for growth,” said Paul Mwai, Chief Executive of AIB-AXIS Capital Ltd and Vice Chairman of the Nairobi Securities Exchange (NSE).

A 2019 survey by consulting firm PricewaterhouseCoopers (PwC) showed that global lenders were expressing interest in the East African market as local banks become more regionally competitive Mobile money solutions, agency models and digital platforms serving East Africans

“With a population growth rate of three percent and increasing financial inclusion and uptake of financial services, the East African banking sector is poised to grow significantly and profitably in the coming years,” the survey reads.

“Internet and mobile banking are the most popular digital channels offered by banks in the East Africa region ers, while smart vending machines (ATMs) and cardless services lag behind in every country except Rwanda,” she added.

Three Nigerian banks have gained a foothold in East Africa.

2020 Access Bank Plc, Nigeria’s largest retail bank, has more than doubled its investment in its Rwandan subsidiary after acquiring Kenya’s Transnational Bank. Access Bank Plc now owns 75 percent of its Rwandan subsidiary, which has eight branches across the country.

With more than 36 million customers across the continent, Access Bank has targeted the East African banking market as part of its five-year plan (2018-2022) aimed at strengthening its retail and wholesale banking operations and positioning the institution as the world’s most respected African bank.

Nigerian Banks

Other To the Nigerian banks operating in the region include United Bank of Africa (UBA) and Guaranty Trust Bank (GT Bank), which acquired a 70 percent stake in Kenya’s Fina Bank Group in 2013.

Egypt’s largest private sector Bank by Assets – Commercial International Bank (CIB) – is looking to acquire additional banks to strengthen its presence in the East African region and to fund Egyptian investors seeking opportunities in Africa’s Am fastest-growing region.

The lender, with over $27.24 billion in assets, acquired a 51-per-cent stake in Kenya’s Mayfair Bank in 2020 and views the transaction as a stepping stone to the rest of Africa.

CIB’s ambition is to become the region’s banking giant in corporate finance, SME finance and trade finance.

“East Africa was identified as the most attractive region for CIB identified to conduct business. The region is home to some of the fastest growing economies in the world, while it will also provide a platform for CIB to learn and adopt the advances towards digital transformation and financial inclusion,” the lender said.

KCB , whose balance sheet was Ksh 1.13 trillion (US$9.74 billion) for the year ended December 31, 2021, operates in Kenya, Uganda, Tanzania, Rwanda, Burundi and South Sudan and is in the process of an undisclosed Lenders to acquire the DR Congo. It also operates a representative office in Ethiopia.

“The benefits of our regional expansion continue to contribute positively to KCB’s performance,” said CEO Joshua Oigara.

Equity Group on the other hand With assets of Ksh 1.3 trillion (US$11.2 billion), the company has offices in six countries including DR Congo, Kenya, Uganda, Tanzania, South Sudan, Rwanda and a representative office in Ethiopia.

“The next generation of banks could be much more transaction-oriented, for example by becoming a leader in payments. Size will also be important; there will be niche players, but those who engage in inclusive mass banking will be the most successful,” said James Mwangi, CEO of Equity Group.

“Mass banks will offer comprehensive services with appropriate customer segmentation and specific services for those segments, rather than solely focusing on a niche within a segment,” he said.

“There is also a perception that East Africa and West Africa share a number of similarities in terms of demographics and in terms of the services they offer,” he added.

Said that the next generation of banks could be much more transaction-oriented, for example by becoming a leader in payments. But banks that engage in inclusive mass banking will be the most successful.

Currently, the East African banking market is dominated by Kenya’s two largest retail banks, KCB and Equity, with the completed merger between NIC Bank and Commercial Bank of Africa (CBA), creating the third-largest bank.

“KCB will continue to explore and pursue attractive regional expansion opportunities to enhance our regional involvement, accelerate growth and maintain sustainable long-term performance.”