African banks are enhancing their presence in East Africa to
exploit the market when member countries integrate, creating one of
Africa’s largest trading blocs.
Large institutions such
as South African Standard Bank, Togo-based Eco Bank, and Nigeria’s
United Bank of Africa are currently operational in Kenya, Uganda, and
Tanzania.
The Kenya Bankers Association chief executive, Mr Habil Olaka, said this trend is prompted by the need to tap into the regional market.
The Kenya Bankers Association chief executive, Mr Habil Olaka, said this trend is prompted by the need to tap into the regional market.
“Most banks are also looking at spreading their
assets so as to avoid crises in case of geographical losses in monitory
value,” he said.
The East African Community Common
Market Protocol guarantees free movement of people, goods, capital, and
services with the bloc, moving towards creating a monetary union and
eventually a political federation.
THIRD LEVEL OF INTEGRATION
A
statement released by the bloc mid this year says the community has
earmarked November 30 as the day for entry into the third level of
integration.
“This shall be a unique opportunity for
the EAC to usher in the common currency and harmonisation of the
macro-economic policies of partner states,” said the Speaker of the East
African Legislative Assembly, Ms Margaret Zziwa.
Kenyan
banks are also looking at the wider EAC market; Equity, Kenya
Commercial Bank, Commercial Bank of Africa, I&M, and Diamond Trust
Bank have a regional presence.
Equity entered Uganda by
taking up 100 per cent stake of Uganda Microfinance Limited at Sh1.66
billion in 2008. It currently operates in Rwanda, Tanzania, and South
Sudan.
National Bank of Kenya is preparing to go regional next year.
The
bank’s chief executive, Mr Munir Ahmed, announced in May that after
rebranding and a proposed rights issue to be carried out in the first
quarter of 2014, it would enter Tanzania, South Sudan, Uganda, and
Somalia.
“We will use the additional capital of Sh10
billion the bank will seek through the rights issue to open operations
in the proposed countries,” said Mr Ahmed.
UNTAPPED MARKET
He added: “We have already commenced preliminary surveys of the regional market; we see it kicking off in the next 12 months.”
It
is estimated that of the 41 million Kenyans and 120 million people in
East Africa, only half of the population has accounts, hence the
potential.
According to Mr Kassi Ehouman, the managing
director of Kenya and cluster head of East Eco Bank, most banks are
moving from their countries of origin to avoid possible economic crises.
“Banks
are also looking at tapping into inter-African trade. They are
aggressively adopting mobile banking in a bid to spread their wings,” he
said.
Experts say the main attraction towards the region’s banking market is that it is wide and largely untapped.
Possible
completion of the EAC Common Market deals and lifting of the Comesa
safeguards come February 2014 are just other additives that have
attracted banks.
Emerging oil deposits in the region and mobile penetration are also a major attraction.
No comments:
Post a Comment