Equity bank has decided not to continue with its regional expansion plans it had announced last year. The bank will henceforth invest on the existing markets.
Initially, the bank had raked Sh20 billion from shareholders for the plan which saw it enter the Democratic Republic of Congo and also targeted entry into Burundi and Ethiopia by end of this year.
“This year we are not going to any new market but instead we want to mine existing subsidiaries to contribute at least 30 per cent of assets and hopefully 15 per cent of profits,” said the group chief executive James Mwangi.
Some countries in East Africa like Ethiopia has strict legal framework in the financial sector. The country has blocked foreign-owned banks from its market with international lenders opting to enter the economy through representative offices. However, Equity revealed that it had set aside Sh10 billion to enter the Ethiopian market but said it would only do so as a fully licensed lender and not through a representative office.
“We believe Ethiopia will open next year—we don’t want a representative or liaison office; we have been given those two but have declined because we want a full license because that’s the way we feel we can have the desired impact,” said Mr Mwangi.
Equity bank provided that they are coming up with additional capital in its regional subsidiaries to boost their performance.
Dr. Mwangi further said that the bank will inject Sh2 billion in its Uganda operations and an additional Sh2.5 billion in the Democratic Republic of Congo. Besides Congo, Equity invested an additional Sh2 billion in Tanzania and Sh1.3 billion in Rwanda.
“Increasing capital in the region means we can create more wealth with the increase in Tanzania than going to Botswana,” said Mr Mwangi.
Equity has operations in Uganda, Rwanda, Tanzania, South Sudan and the Democratic Republic of Congo.