Rwanda leads region in minting profits for Nairobi banks

Friday May 19 2023

An aerial view of Rwanda's capital Kigali. The country contributed the highest earnings capacity recording $73.9 million in profits for Kenyan banks in 2022.


Kenyan banks with subsidiaries in Rwanda made the highest profit in the region as East Africa’s fastest growing economy provided the most fertile ground for banking business in the region last year, withstanding the economic shocks related to the Russian invasion of Ukraine.

Latest data by the Central Bank of Kenya shows that regional subsidiaries profit before tax grew by 88.65 percent to Ksh32.51 billion ($237.29 million) last year, from Ksh17.23 billion ($125.76 million) in 2021 with a bulk (31.26 percent) of the earnings coming from the Rwandan operation.

Rwanda contributed the highest earnings capacity by recording Ksh10.16 billion ($74.16 million) in profits, translating into 31.26 percent of the total profits.

It was followed closely by subsidiaries in the Democratic Republic of Congo (DRC), which generated Ksh9.78 billion ($71.38 million) in profit, equivalent to 30.1 percent of the total profit.

Uganda and South Sudan subsidiaries contributed 16.11 percent and 14.28 percent respectively.

However, Kenyan banks with operations in Mauritius, Tanzania and Burundi were the least profitable and contributed 4.5 percent, 2.82 percent and 0.93 percent of the total profits respectively.


Three subsidiaries (two in Tanzania and one in Uganda) posted a combined loss of Ksh2.4 billion ($17.51 million).

The Kenyan banks that have expanded in the East African Community partner states and beyond include KCB, Diamond Trust Bank (DTB), NCBA, Guaranty Trust Bank Kenya Ltd, Equity, I&M, African Banking Corporation (ABC) and the Co-operative Bank.

In addition to having presence within some lenders such as I&M and Prime Bank have expanded beyond the EAC jurisdiction. For instance, I&M holds 50 percent shareholding in Bank One Ltd in Mauritius, while Prime Bank has 10.6 percent shareholding in First Capital Bank Malawi Plc, 6.62 percent shareholding in First Capital Bank of Botswana and five percent shareholding in First Capital Bank SA, Mozambique.

Kenyan banks have 133 branches in Rwanda: KCB (84), Equity (16), NCBA Group (5), I&M Holdings (14) and Guaranty Trust Bank (14).

KCB and Equity banking giants, which have operations in DRC control a total of 189 branches led by KCB (108 branches) and Equity (81 branches).

Rwanda plays host to 16 commercial banks as well as a number of microfinance institutions and rural savings and credit co-operatives.

Financial inclusion

The growth potential for banks in Rwanda remains strong where only 77 percent of the population is engaged in the formal financial system (which includes the banking sector as well as insurance firms, mobile money networks, and microfinance institutions).

As of 2020, 36 percent of adults in Rwanda had access to and were using banking services (up from only 26 percent in 2016, 23 percent in 2012 and 14 percent in 2008).

According to the US agency in the department of commerce International Trade Administration Rwanda has established the Kigali International Financial Centre (KIFC), an ecosystem that seeks to attract international financial service providers and funds to Rwanda.

It is modelled upon those available in advanced markets such as Mauritius, Marrakesh, and Johannesburg.

Over the course of 2020 and 2021, the country changed the majority of its investment and commercial laws to align with OECD best practices for financial centres.

The 2021 Investment Code provides also incentives for companies that operate in the KIFC, which has seen several lenders increase investments in the country.

“There is still low penetration of SME and retail products in Rwanda and hence Kenyan banks have been able to fill this gap,” said Kestrel Capital CEO Francis Mwangi, adding that Kenyan banks are also leveraging on technology to control operational costs in Rwanda.

Ken Gichinga, chief economist at Mentoria Consulting, said Rwandan Government has made deliberate steps to ensure ease of doing business placing the country at second spot in Africa and 29th in the world.

Security assurance

“Furthermore, agencies such as Rwanda Development Board have been at the heart of creating a thriving private sector. This has made the country attractive to foreign investors such as Volkswagen which has an assembly line in the country,” said Mr Gichinga.

In 2020, Nigeria’s largest retail bank, Access Bank Plc, more than doubled its investment in its Rwandan subsidiary and in 2021 KCB acquired 62.06 percent stake in Banque Populaire du Rwanda from the British financial services conglomerate Atlas Mara Ltd.

KCB later increased the stake to 76.67 percent by acquiring additional 14.61 percent of the shares from the minority shareholders, increasing its assets by 15.4 percent to Ksh1.13 trillion ($8.24 billion).

Key target

On the other hand, DRC has become a key target market for EA lenders despite the security threats in the eastern parts of the country that has affected operations of some banks in the country.

Last year, KCB Group, which is listed on the Nairobi Securities Exchange completed the acquisition of 85 percent shareholding in Trust Merchant Bank (TMB), one of largest Congolese banks, giving it a foothold in an economy with an estimated market size of 85 million people.

Tanzania’s largest retail bank by assets CRDB, riding on financial backing from the Norfund of Norway and the Investment Fund for developing countries of Denmark, has announced entry into DRC by setting a subsidiary in in the large commercial city of Lubumbashi, in the south-east DRC near the Zambia border.

Equity Group Holdings Ltd already has presence in DRC through the acquisition of 86 per cent stake in a German bank ProCredit between 2015 and 2017 and renamed it Equity Bank Congo (EBC) S.A.

In August 2020 the lender completed the acquisition of 625,354 shares (66.53 per cent) in BCDC, DRC’s second largest lender by assets, at a price of $95 million.

EBC S.A. was then merged with BCDC to form EquityBCDC. The amalgamation of BCDC with the Equity group created an institution with Ksh1.12 trillion ($9.49 billion) worth of assets.

EquityBCDC Director-General Celestin Mukeba told The EastAfrican last month that DRC is a unique market by virtue of being a dollarised economy which protects company earnings from foreign exchange losses associated with volatility in exchange rates.

Banking industry assets are 90 percent held in dollar terms, and the country’s macroeconomic fundamentals have been characterised by strong GDP growth, standing at 8.5 percent in 2022.

Mineral-rich DRC owns 70 percent of the world’s cobalt and copper and now accounts for most regional assets at 40.5 percent in 2022 compared with 34.5 percent in 2021, with the growth mainly driven by KCB Group Plc’s acquisition of TMB.