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About bankelele

Writing on banking, finance and investments in East Africa. Email bankelele_at_hotmail.com, Instagram: Bankelele, Twitter: @Bankelele.

5 Kenyan banking stories of 2022 and 2023

2022 in Review 

1. Credit reference shake-up: A failure of banks to carry out proper credit education and to convey the benefits of good repayment to customers, through lower interest rates, caught up with them. This was combined with a tendency to blacklist defaulters at the earliest instance to punish them – and became an issue at political campaigns ahead of the August 2022 election.

The new government set in motion a plan to clear over 4 million borrowers from credit reference bureau blacklists This was in part a 50% waiver on their debt and a window of six months for borrowers to pay the balance of the amount. At the Absa Q3 results briefing, management of the bank explained that there would be no immediate impact as these were loans of people who got stuck in 2020 (during the Covid-19 disruption) that had already been fully provided for

2. CEO suite changes: At Absa Bank Kenya, MD Jeremy Awori left after nine years. He later joined Ecobank Transnational Incorporated, the parent of the Ecobank Group, as the Group CEO replacing Ade Ayeyemi, who retired after attaining the age of 60. Absa Kenya then picked its Chief Financial Officer Yusuf Omari to take over as interim CEO  as  Moses Muthui was made the interim CFO. 

At KCB Joshua Oigara left after nine years and later in the year joined the Standard Bank group as the CEO of Stanbic Kenya and South Sudan, after Charles Mudiwa retired after two decades. KCB appointed Paul Russo, who was MD of their National Bank subsidiary as the new KCB Group Chief Executive Officer. Following that, KCB now has Anastacia Kimtai as the acting KCB Kenya MD and Peter Kioko as the acting MD of National Bank of Kenya

At the I&M Group, the CEO of I&M Bank Kenya Kihara Maina moved on to be the group’s regional CEO, taking over from Chris Low, and the new Kenya MD is Gul Khan who joined from Airtel Money Africa. 

Cooperative and Diamond Trust and Equity banks still retain their long-serving leadership though, at Equity, Polycarp Igathe stepped down as Chief Commercial Officer to contest for the Nairobi Governor seat in the August 2022 elections. edit And from Mwango Capital, we learn of more leadership changes at banks with Sam Muturi joining as Consolidated Bank’s new CEO and Anuj Mediratta as CEO of Gulf African Bank with Helen Chepkwony as the acting CEO of the Kenya Deposit Insurance Corporation (KDIC). Also, Shelter Afrique had another executive change with Thierno-Habib Hann stepping in as the new MD/CEO, replacing Kingsley Muwowo, the CFO, who had been the interim boss. Another change saw Rose Kagucia become the Acting CEO/Managing Director at Dubai Islamic Bank, replacing Peter Makau.

edit in February 2023, Ecobank appointed Josephine Anan-Ankomah as the Managing Director, Ecobank Kenya, replacing Cheikh Travaly who retired at the end of 2022 after attaining the mandatory retirement age of 60 years while NBK appointed George Odhiambo as its substantive Managing Director.

3. Capital raising and arranged marriages: Banks set out to raise new capital in different ways. Larger banks with foreign links like Absa can attract Tier II funding at low rates (of about 3%) which is lower than the cost of deposits or the bond markets (about 9%). Smaller banks arranged sales like Spire to Equity and Sidian to Access while deposit-taking microfinance banks found fintech partners. Key Microfinance is now LOLC Kenya, UMBA, a Delaware fintech bought 66% of Daraja Microfinance Bank, Century Microfinance became Branch Microfinance Bank and Uwezo Microfinance is now Salaam Microfinance Bank. 

4. Green finance is in: Banks report on it and the Kenya Bankers Association published sustainable finance guidelines and principles for banks to align their processes and products (including loans) and the Central Bank has guidelines on climate risk management. Banks are now attracting “green finance” and touting their green credentials joining new green alliances and measuring their activities such as tree planting and reducing their carbon footprints. 

5. Resurgence of the bank branch” Co-Op, Diamond Trust, Family, and NCBA bucked the branch closure trend to show that digital growth needs a physical presence to support it. 

Outlook for 2023

1. Go Big in Ethiopia: Following Safaricom’s big entry into Ethiopia, will banks now follow into the next big African market African after DRC that has delivered big for Equity? Kenyan bank support new partners of the telco that can lead to other businesses in the country that need to unlock financing – and take on the local giant Commercial Bank of Ethiopia (27th largest in Africa), which is not growing its assets now with currency restrictions and a prolonged war. The entry path for foreign banks is now set and KCB, Equity and Stanbic are among the dozen foreign bank that have had representative offices in the country for a few years.

2. Will digital bank customers stick around? January 1 sees a return of several bank charges that were waived in March 2020 at the start of the Covid-19 wave to enable bank customers to make digital and contactless payments. Many tried out digital services offered by their banks for the first time as they were now free of charge. Non-funded income is key for bank profits, but it will be seen how the return of bank and mobile payments/transfer charges will be received by customers are different banks. In this economy, customers are more cost-conscious than ever, especially with the government tax on every bank transaction going up to 20% in 2023.  

3. New savings and investment products that target diaspora, retail and unbanked customers. While lending to the “hustler” economy is well-documented, digital wealth creation and preservation products are still lagging.

Ahead of the much-anticipated IPO’s to come to the Nairobi Securities Exchange, EFG Hermes has invested in a platform for retail investors and this week Acorn got approval for Vuka, a platform for retail investors to into REIT’s.

4. African banks get serious about Nairobi: Access (17th largest in Africa) Ecobank (18) and UBA (25) have all had relatively small footprints in Kenya but now have a chance to grow. Across Africa, there are changes in the banking hierarchy with the largest bank group by asset size for decades, Standard Bank of South Africa with a sluggish home economy about to be passed by the National Bank of Egypt 166 billion, as Egypt Bank Misr has also passed SA’s Absa group to be number six on the continent. You can also expect a resurgence in West Africa, into East, perhaps by buying more banks, as Access is with its second bank deal (for Sidian) to leap up the Kenya asset ranks which are led by Equity (37th in Africa) and KCB (40). edit. However, in January 2023, Centum Investments cancelled the agreement to sell its 83.4% stake in Sidian Bank to Access Bank.

edit Jan 27, 2023.

5. The year is expected to usher in a new regime at the Central Bank of Kenya with a new Governor, Deputy (2 positions) and Chairman by June 2023. The current cabinet Secretary of the National Treasury (i.e. the Finance Minister) is himself a former CBK governor. 

Kenya’s Top Banks in 2022

Spire (38th in assets), the smallest bank in the country, had been up for sale, and Mwalimu Sacco announced that they would not be putting in any more capital in the Kshs 3.5 billion asset bank to bury a bad investment made in 2015, but still faces resistance from some stakeholders. Equity Group (2) agreed to buy Spire‘s assets in September 2022.

Access, the largest bank group in West Africa, bought Transnational, the 33rd largest bank in Kenya in 2019 and renamed it. Then in June 2022, Access announced that they would take over Sidian Bank (20) with Kshs 43 billion of assets, by buying a majority stake from Centum for Kshs 4.3 billion. 

President William Ruto announced at the Nairobi Securities Exchange in October that Credit Bank (27) along with Bio Foods were on a path to floating their shares at the NSE. He encouraged the private sector to join the new government in working to revitalise the NSE and promised 5 to 10 public listings – and where Development Bank (29) may also feature. 

First Community Bank (26) overcame a mini-run in October and assured panicked depositors that their funds were safe.

Top 10, by assets in June 2022.

10. Bank of Kigali, which is cross-listed in Nairobi. 

9. I&M.

8. Stanbic Bank. 

7. Diamond Trust. 

6. Standard Chartered. 

5. Absa Bank Kenya.

4. NCBA briefly edged ahead of Co-op for 3rd in the assets race this year.

3. Co-operative Bank. 

2. Equity Bank have a slight edge in group assets over KCB Group (both at Kshs 1.26 trillion) after buying two banks in DRC.

1. KCB Kshs 887 billion assets and Kshs 23.8 billion profit as of June 2022 and then bought into DRC before the end of the year. 

$1 = Kshs 118 in June 2022.

Guide to the 2022 World Cup in Doha

Getting There: Depends on where you are flying from. For us, coming from Atlanta, USA, it was Delta through Paris. There was an Air France through Paris, which ended up being a headache for our friends, as they had to check their bags (again) in Paris, and almost missed their flight.

We stayed in Abu Dhabi and drove to Doha through Saudi Arabia for the first couple of World Cup matches. But what was supposed to be 4 hours by road, took us 7 to 8 hours, because of the 7 Saudi checkpoints we had to go through.

Using Fly Dubai to Doha was a better way to go, but too bad we did not discover it sooner. There were flights every other hour daily.

Staying in Touch: On arrival, all visitors with digital Hayya cards (visas) were given a free SIM card for the duration of their stay. This allowed us to stay connected while in Qatar and browse the internet

Where to Stay: A hotel like the Hampton by Hilton in Doha runs about $600 a night. This was obviously due to the world cup, an event that’s irreversibly transformed so many towns and cities around the country, but hotels were scarce, which in turn drove the prices up. So we stayed in Doha for only a couple of nights but opted for Abu Dhabi (which celebrated 51 years in 2022), that offered more options and whose prices were much more reasonable.

Getting Around: Doha, is smaller than Abu Dhabi, and there were easily accessible means of public transport such as taxis, Uber, Lyft, and buses. The Metro was the most convenient way to get around the city. During the World Cup, the metro and buses were free of charge. English was the language outside of Arabic that was the most spoken.

What to Eat: You have a diversity of meal choices from around the world. Apart from Qatari, there were Middle Eastern, Asian, and other international cuisines. In terms of politics that they talk about, the Palestinian Cause was front and centre. Several news outlets tried to get our views on the matter.

Shopping & Sight-Seeing: The main activities to see were the World Cup events in Doha. Souq Al Waqif is where the fans congregated, ate, sang, shopped, and danced in the colours of their countries.

During the World Cup, the FIFA Fan zones are both wonderful places to bond with other fans. There were also some concerts and DJs played some fun music after the games and we danced our behinds off.

It was nice to see soccer stadiums and how unique they all were, especially the one that is made of shipping containers. Surprisingly no one talked about the organization in terms of being forward-thinking and environmentally conscious in that Qatar will only keep 3 of these stadiums, and recycle or donate some to other countries.

You can also explore downtown Doha, the beach, the Souk (market), or the Museum. You can through a day by spending between the equivalent of $20 in Qatari Dirham to thousands of dollars if shopping is involved.

Biggest surprise about the country: 50 years ago, this country was a desert and looking around, and seeing how much they were able to build in such a brief period is mind-boggling. The other thing that absolutely surprised me is how graceful the Qataris were after the loss to Senegal, almost everyone we came across was congratulatory and asked to take pictures with us.

Qataris, in my opinion, are the friendliest people I have come across. The place was very secure, and I did not see armed soldiers patrolling the city. They were proud of their sociability and seemed to intentionally strive to make soccer fans experience the best World Cup – and they succeeded! – and this suggests that the trend to avoid serving alcohol during the tournament may become entrenched in future.

Read More: The economics of hosting a World Cup and the decision that led FIFA members to award the 2026 tournament to USA/Canada/Mexico over Morocco.

A guest post by a fan of the Lions of Teranga

KCB buys DRC’s TMB

KCB Group Plc has completed the acquisition of DRC-based Trust Merchant Bank (TMB) and now owns an 85% stake in the bank that is estimated to have an 11% share of the Democratic Republic of Congo banking sector, after obtaining all regulatory approvals.

KCB will offer banking, insurance and trade finance services using TMB’s brand, 109 branches and customer relationships built over its 18 years. In 2021, the Banker named (Trust Merchant Bank) as the “Bank of the Year” in the DRC.

E-commerce Moment: Which Way Up?

E-commerce is increasingly useful, and nice to have as a service, which we use every day, but is it profitable?  There were two e-commerce deal announcements in Nairobi today that happened almost simultaneously.

First up was Lipa Later, the “buy now pay later” fintech company confirming that it had acquired SkyGarden, a popular site for purchasing goods from abroad. SkyGarden had recently announced they were closing shop, as they were running out of cash – and this S.O.S. announcement appears to have worked as a last-minute rescue deal with  Lipa Later came just days after. Lipa Later has been signing up partners and SME’s enabling them to sell products like laptops, phones, and insurance to customers on credit. The two companies had worked together and with this familiarity, the deal for a 100% takeover is complete and SkyGarden, with its staff already absorbed, will remain, and run independently. SkyGarden had invested $6 million to run in Kenya but seems to have faced challenges with the logistics of e-commerce. Lipa Later will maintain the “same day” delivery attraction of SkyGarden whose customers will now be able to pay using Lipa Later instalments in Kenya and later in Rwanda, Uganda and Nigeria.

Then there was the launch of Kapu Africa, from former executives of Jumia and other technology leaders.

Kapu Africa is focused on bringing down the cost of weekly groceries by sourcing from farms and food manufacturers for free next-day delivery to a Kapu agent collection centre such as hair salons or other homes near the buyer’s house. Orders are to be placed on WhatsApp by 9 PM  with even lower prices for group purchases. Kapu says it has 1,500 centers in areas like Eastlands, South B, Kawangware and Kasarani and plans to be all across Nairobi by March 2023. 

Other recent developments: 

Safaricom for juniors: E-commerce buyers tend to be over-18 as payments require that a card and M-Pesa (mobile money) be used, but Safaricom has gone beyond that hurdle in launching M-Pesa Go, to tap kids between the age of 10-17, who have access to mobile phones, and enable them to buy from stores and pay for things like taxi rides and online meals, with supervision from their parents.

Contactless SME payments: Fast, easy payments, preferably without any physical contact or exchange, are a holy grail in e-commerce especially for fast-paced urban lives and for in-person shopping during Covid-19. Now Pesapal, which has quietly locked up key territories and partnerships in the SME payments space in Kenya enabling them to easily accept all forms of e-commerce payment from customers, whether card or mobile money, has launched a new tap service.  

Food distribution: Logistics is a big part of e-commerce and last week Twiga Foods, one of the best-funded organizations in the space, had Kenya’s President William Ruto launch a logistics hub at Tatu City in Ruiru, near Nairobi. The company has a Twiga Soko Yetu platform and 200,000 square-foot automated warehouse and distribution centre that can handle 8 million kilos a day of fresh produce, food and retail commodities for Twiga to distribute to its 140,000 customers across Kenya and Uganda.  

edit Now Jumia has closed its offices in Dubai and shifted its senior staff to work in Côte d’Ivoire, Kenya and Morocco, in a cost-cutting move. Via Tech Trends KE.

Previous insights on e-commerce in Kenya from Jumia and Chap Chap Go.