Moroccan financial institutions seeking growth opportunities have entered the Rwanda market through acquisitions of existing banks.
Bank of Africa which is operating as a subsidiary of Morocco’s BMCE Bank, officially entered the Rwandan market earlier last month through the acquisition of a 90 per cent stake in micro-lender Agaseke Bank, previously owned by Soras Insurance.
“When King Mohammed VI of Morocco visited Rwanda recently, we signed a lot of bilateral pacts, we are ready to support the country’s development efforts,” said Amine Bouabid, the Bank of Africa group chief executive officer.
Mr Bouabid confirms the notion that services providers follow their clients, as his bank has lined up a number of Moroccan investments to finance.
Bank of Africa is to finance the construction of 5,000 affordable housing units in Kigali city that are jointly to be developed by Palmerie Development Group and Rwanda Development Bank.
Attijariwafa Bank, another Moroccan bank signed a deal to acquire 76 per cent of Cogebanque in a deal whose details are yet yet to be made public as negotiations enter the final stages.
In the insurance sector, Saham Finances SA, a unit of Morocco-based investment firm, Saham Group acquired a 66 per cent controlling stake in Corar-AG which has been rebranded to Saham Assurance.
The acquisitions, according to analysts, support Moroccan financial institutions to spread risk and also have a share of the multimillion dollar projects their kingdom plans to develop in the region.
In October, the Moroccan government signed agreements with Rwanda, Tanzania and Ethiopia that will see investors from the north African country invest in real estate, gas, railways, banking, manufacturing and minerals.
In Tanzania, Morocco signed an agreement to construct the Mtwara to Mbamba bay railway network that would link the coal and iron ore projects in Mchuchuma and Liganga.
The two countries also saw a code share agreement reached between Air Tanzania and Morocco’s Royal Air Maroc that will see direct flights between the two countries actualised.
In Rwanda, the Moroccans enter a challenging low-margin banking business that is concentrated in the hands of just three lenders. Three banks dominate the sector controlling 45.2 per cent of the market leaving nine commercial banks with a market share of 54.8 per cent.
Maurice Toroitich the managing director of KCB Rwanda says the high concentration of banking and a big cash economy makes it hard to mobilise savings locally.
The banking sector is reporting depressed profits which dipped to negative 18 per cent during the first six months of 2016 and are projected to remain flat in 2017.
In absolute terms, the industry posted a combined net profit Rwf19.4 billion ($23.7 million) during the first half of 2016, a decrease of 18.2 per cent over the same period for 2015.