Equity gets Kigali’s nod to set up shop in Rwanda
Posted Sunday, April 3 2011 at 22:00
Equity Bank, Kenya’s fastest growing bank is expected to begin operations in Rwanda within the next few months, after acquiring a licence from the National Bank of Rwanda.
The bank is expected to start operations by opening nine branches in the next two to three months, officials said.
National Bank of Rwanda Governor Francois Kanimba said Equity is expected to not only stimulate competition in the banking sector but also increase access to financial services, with the bank aiming to reach more than four million Rwandans using its aggressive retail banking products.
“It will increase competition in the retail market because currently we have banks which focus on corporates with little activity in the retail market; we believe this will also increase access to finance for SMEs,” he told The EastAfrican following the bank’s board meeting which approved Equity’s license.
The governor said the bank is targeting opening at least 200 outlets for its agency banking model, the first of its kind on the Rwandan market.
“It is something (agency banking) that we want to encourage and we are in the process of fine-tuning our legal framework to incorporate it,” he said.
Two months ago, Equity’s chief executive James Mwangi said the bank hoped to derive at least 20 per cent of its profits from its regional operations this year, coming from further investment in its operations in Southern Sudan and Uganda, and the expected launch of branches in Tanzania and Rwanda this year.
The planned entry into the two countries is part of the bank’s wider strategy of rolling out its operations into the Comesa region over the next 10 years
Last month, Equity Bank reported a 69 per cent growth in net profit to Ksh7.1 billion ($88.75 million) for last year, helped by a steady stream of fees and commissions assured from its large customer base and distribution network.
Equity Bank will be the third Kenyan bank to enter Rwanda following KCB and Fina Bank.
“From their (Equity Bank) experience in other markets where they operate, generally their average lending rate is below the market rate by 2 per cent which is a good thing as well,” he added.
According to the Central Bank, the banking sector remains dominated by four of the eight licensed commercial banks representing 69.1 per cent of the total deposits of the industry and 46.7 per cent of loans.
“Knowing that Equity is an innovative bank, very dynamic we have already given consent and they can start preparing themselves for the operations,” Mr Kanimba revealed.
The bank is said to have started recruiting staff, with approximately 100 Rwandans currently undergoing training at the group’s headquarters in Nairobi.
“They do not want to create a distortion in the labour market by poaching staff from other commercial banks; they want to recruit young people from universities and train them intensively to go into their business due to the skills gap that we have,” the governor said.