Firms make inroads into region in search of larger markets

Ugandan Daily Monitor newspaper that is owned by the Nation Media Group. FILE

By Mugambi Mutegi


IN SUMMARY
At least 11 Kenyan banks have set up shop in Uganda, Rwanda, Tanzania, South Sudan and Burundi, with their subsidiaries bringing in a combined profit of Sh5.1 billion last year.
On Thursday Nakumatt is set to open its seventh branch in Entebbe, the third to be opened in the country this year.
NMG is serving the regional community through a number of newspapers, radio and television stations.

  
Kenyan companies are making foray into neighbouring countries in search of larger markets, with regional integration expected to be a key driver of Kenya’s growth in years to come.

At least 11 Kenyan banks have set up shop in Uganda, Rwanda, Tanzania, South Sudan and Burundi, with their subsidiaries bringing in a combined profit of Sh5.1 billion last year, up from Sh2.3 billion the previous year.

KCB, which set up in Tanzania in 1997, now has branches in the five East Africa Community which earned it Sh1.33 billion in the nine months to September.

“We want to focus and cement the ones we have while keeping an eye on lucrative markets such as Angola and Congo,” said Collins Otiwo, KCB Group chief financial officer.

Diamond Trust bank and Co-operative Bank are also off to a good start with their regional units while the performance of Equity Bank’s subsidiaries dipped 11 per cent in the nine months to September.

Retailers have also made inroads into the neighbouring countries, with Uchumi and Nakumatt supermarkets hoping to replicate their Kenyan success there.

On Thursday Nakumatt is set to open its seventh branch in Entebbe, the third to be opened in the country this year. The 48-year old chain also has two branches in Rwanda and one in Moshi. The subsidiaries account for about 10 per cent of the firm’s revenues.

“Our key driver for regional expansion was to support regional integration by fostering regional formal retail growth. The demand for our kind of services is growing with society’s exposure to global standards,” said Atul Shah, Nakumatt’s CEO.

READ: Nakumatt set for share sale to fund expansion projects

Uchumi Supermarkets recently cross-listed at the Uganda Securities Exchange (USE), in a country where it has four branches.

The supermarket has 25 stores across East African and targets to add 13 more next year. Uchumi is also listed at the Rwanda Stock Exchange.

East African Breweries Limited (EABL), which is listed in the Nairobi, Uganda and Dar es Salaam stock exchanges, is also consistently earning good money from East Africa. EABL, which became a public company in 1934, is the biggest brewer in terms of asset size in the region.

Analysts say the firm’s Uganda and Tanzania subsidiaries are expected to contribute more to its sales after accounting for 18.6 per cent and 12.6 per cent respectively.

Two other firms celebrating their forays into the region are Nation Media Group and Kenya Airways.

NMG is serving the regional community through a number of newspapers, radio and television stations.