Category Archives: bank service

The Equity Story

Equity founder, Peter Munga, worked for the Ministry of Agriculture. He would go to work then come back home after a while, the same way most of us visit upcountry. His mother, among other villagers of Kangema worked in the tea farms.

They would get paid in cheques. There was no means to cash the cheques in the village. So they would wait for Munga to come visit home and give him the cheques. He would then go to cash them and bring the tea farmers their money the next time he visited home. This went on for a while until he felt the need to help his community.

Back then, to own a bank account had strict regulations. One had to have several referees to open an account, maintain a minimum balance of Kshs 10,000 and on top of that were storing bank charges. Withdrawal from an account took 7 days. Therefore most people preferred to store their hard-earned money at home, under their mattresses, where it was easily accessible.

Equity has had a few phases. The first one being 1984 – 1993. This is when Munga begun pursuing this dream to help his people. Within this period, the company made losses. But since his goal was more than just profit-making, he carried on.

The second phase which begun in 1994 had James Mwangi, the current Group CEO and MD, come in. Between 1994 – 2003, the company improved its business model and even begun mobile banking. That is going to people’s homes to offer banking services and financial education. It’s in this phase that they begun computerizing their operations.

The art gallery at the #equityat35 party had Equity staff explain to the guests the Equity history wonderfully.

The third phase (2004-2013), which they refer to as take off, had them become listed on the NSE (Nairobi Stock Exchange) and USE (Uganda Stock Exchange). In this phase, they incorporated mobile banking (phone banking) and were the first bank to introduce agency banking. They went on to win awards among them being The Best Bank in Kenya, The African Business of the Year and The Global Vision Award in Microfinance. 

Today, Equity is also listed on the RSE (Rwanda Stock Exchange). The bank owns branches in 9 African countries; Kenya, Uganda, Tanzania, Rwanda, South Sudan, DRC, Ethiopia, Zambia and Mozambique. Their goal is to become a Pan-African Bank with 10 countries under their sleeve by end of the year. In the beginning, their main competition was mattresses and banks, but today, their main competition is cash, fintech and telcos. 

They are big on community social responsibility (CSR), hence the Equity Group Foundation. This has been evident through their Wings to Fly program which has over 16,000 beneficiaries. Equity runs FIKA (Financial Knowledge for Africa), which is a free program that equips the beneficiaries with financial management skills. The Foundation finances the Equity Afia Clinics which are run by the Wings to Fly graduates. The clinic currently has branches in Ongata Rongai, Buruburu, Kawangware, Kayole, Thika, Ruiru, Nyeri and Nakuru. 

A guest post by @themkare 

CBK launches Stawi SME pilot credit facility

The Central Bank of Kenya has launched a pilot credit facility targeting informal unbanked traders in partnership with local institutions.  This will be through an app, marketed under the name “Stawi”, that will initially be managed by five banks – Commercial Bank of Africa, Cooperative Bank, Diamond Trust, KCB Bank and NIC Group.

The pilot phase lasts two weeks and will involve 3,500 traders without bank accounts, who have turnover of Kshs 30,000 to Kshs 250,000 (~$2,500) per month and who are at least six months old. To register, besides providing their ID details, traders will need a valid business permit and an email address to create an account – this is an unusual as mobile apps just require a national ID number to match with the phone number of the loan applicant.

The businesses will be able to borrow between loans of Kshs 30,000 to 250,000 (~$2,500). Loan charges are at an interest of 9% per annum, plus a facility fee of 4%, insurance fee of 0.7% and excise tax on the facility fee – all adding up to about 14.5%.

Other features of Stawi:

  • Loans are repayable between 1 – 12 month and borrowers can top up loans once 80% has been repaid. Loans are only disbursed through the app as will all repayments be done
  • The loan rates are not cheap, but they are mild, and this program is targeted at the unregulated lenders who charge as much as 300% p.a. There was a draft financial markets conduct bill formulated to protect consumers from such practices.
  • There are also transfer fees and Stawi customers can also link up with Pesalink which allows much greater daily transfer amounts (up to Kshs 1 million) than the mobile money wallets.  
  • For now, there is no Stawi in the Google store as the program is still in a test phase. (There is an app called Stawika that has no affiliation)
  • A second round of the pilot will target 10,000 other traders.

While trying to forestall the arrival of interest rate caps back in 2016, banks, through their umbrella Kenya Bankers Association committed to set aside Kshs 30 billion for lending to SME’s including Kshs 10 billion to micro-enterprises owned by women and youth and lend to them at no more than 14%. They also committed to rank borrowers by high, medium and low risk and to work to reward low-risk borrowers with low-interest rates. To date, the credit reference bureaus piling up data on loan defaulters which good borrowing records are ignored or not rewarded with lower interest rates.

Financial Sanctions for South Sudan? Part II – The Profiteers

The Profiteers is a documentary by Africa Uncensored that was unveiled in Kenya this week. It was to air on television but was cancelled a few hours before airing on Kenya Television Network (KTN) a local TV channel. The producers confirmed the network’s abrupt decision to pull the broadcast, and then went ahead to release the feature on their own, on Youtube in three parts, and with links and commentary on Twitter.

The Profiteers production by Africa Uncensored follows other work by The Sentry Group and are featured in the latest Sentry report on the situation in South Sudan. Sentry continues to run a watch on events in South Sudan, corruption, the growing refugee population, and complicity of foreign organizations such as banks in Kenya and security forces in Uganda.

The Profiteers investigative team led by John-Allan Namu extensively document, both with straight and under-cover reporting, stories of South Sudan leaders luxuriating in other countries and cutting deals for weapons, logistics, security and valuable wood as they purchase luxury houses and real estate properties in Kenya, Uganda, Ethiopia and Australia, flashy cars and are flush with cash which is the basis of their profligate lives and which does not match their official modest salaries. They are able to freely travel and operate bank accounts and transact vast sums through them, even though some of them face international sanctions.

The Profiteers and The Sentry mention several institutions including banks like KCB, Stanbic and Equity bank, and money transfer services such as Dahabshil, and Amal. Some activities look questionable but are understandable such as the decision by the Bank of South Sudan to hold the bulk of its reserves outside the unstable country while soldier battle.

Sentry Recommendations
  • Kenya and Uganda should strengthen regulatory bodies to track money and enforce sanctions.. compliance departments in Kenyan and Ugandan banks should not wait for financial regulators to request information and should immediately find and flag high-value transactions, all real estate transactions, and the accounts of South Sudanese politically-exposed persons (PEPs)
  • Law Enforcement Should Investigate South Sudanese property without political interference
  • Trade Associations should improve standards for investments
  • Businesspeople should share investment information.
Also mentioned in the Sentry report is a wave of posts by Kenyan bloggers: In mid-2018, a group of Kenyan bloggers garnered significant attention when posting photos on Twitter of luxurious homes owned by South Sudanese elites or images of top officials’ family members living extravagant lifestyles in Kenya and Uganda. Referencing the impunity apparently enjoyed by these well-connected South Sudanese, the bloggers labelled their tweets with the hashtag #SouthSudanUntouchables. The same day that hashtag went viral, a high-level U.S. government official spent the day in Kenya, addressing government agencies, financial institutions, and civil society to deliver a related message: that South Sudanese officials should no longer enjoy impunity and that their ill-gotten gains should not be welcome in Kenya and Uganda.

Chase Bank Reopens as SBM Kenya

Monday saw the conclusion of the receivership of Chase Bank as SBM Kenya, part of a Mauritius financial group, completed a carve out of assets, staff and branches of Chase Bank that was overseen by the Central Bank of Kenya and the Kenya Deposit Insurance Corporation.

CBK Governor Patrick Njoroge said this was a historic event in Africa, not just in Kenya, as previously when banks were shut down, they stayed closed – but that since Chase closed and was reopened in April 2016, 97% of its depositors had been paid in full, and the remaining (large) depositors could now get structured access to 75% of their deposits through SBM (including 50% of their deposits immediately) over a three-year period during which they will earn interest.

He said this had been accomplished as a private sector-led initiative, supported by KCB, and that the process had been transparent throughout, with a unique EOI (expression of interest), done to maximise value for depositors and stakeholders. He added the remaining 25% of the assets would remain with Chase Bank (in receivership) and that CBK and KDIC would continue working to pursue the full recovery of the assets that were illegally taken from Chase Bank.

Kee Chong Li Kwong Wing, Chairman of SBM Holdings, said that they would work with local staff and management of the bank, first to get it back to $1.5 billion assets it was before the closure and then to double in size in 3 to 5 years. He said the vision was for SBM Bank Kenya to have its own local investors, board and management and eventually be listed on the Nairobi Securities Exchange. He added that the model of managing overseas subsidiaries by remote control had not worked in Mozambique and Zimbabwe and that they would not repeat that in Kenya which had potential to be a key partner with Mauritius.

SBM Kenya now moves from being a Tier III to Tier II bank as SBM will also invest an additional $60 million (Ksh 6 billion) for the bank’s growth, taking its investments in Kenya to $86 million. The bank has taken on and rebranded 50 of 62 previous Chase branches and absorbed 825 staff into SBM Kenya.

Credit Cards Moment: AmEx and MasterCard take on Visa in Kenya

Central Bank of Kenya (CBK) statistics from the first quarter of 2018 show that there are 120,000 locally issued credit cards and 18 million debit cards/ ATM cards. With interesting patterns of credit cards usage over the last few years, for various reasons, there are some new entrants out to take on ubiquitous Visa-branded cards in Kenya.

MasterCard: GT Bank Kenya is rolling out a series of World MasterCard credit cards. The Gold and Platinum cards come with perks of travel and rewards including international airport lounge access, complimentary nights at 175 Starwood Hotels, luxury apartment discounts and Hertz Gold Plus car rentals along with enhanced insurance benefits that are easy to claim and a 24/7 concierge who offers personalized travel services. There are also tailored dining offers for Diani, Kisumu, Malindi, Mombasa, Nairobi. Ukunda and Watamu as well as towns in Nigeria.

Previously, one of the most-popular MasterCards on the market was the prepaid global card by Nakumatt that was supplied by KCB and Diamond Trust banks. They have been inactive since early this year following Nakumatt’s difficulties that started before the supermarket chain went under voluntary administration.

American Express: Also, Equity Bank and American Express have just extended their 2013 partnership. The bank which issues the American Express Green Card and Gold Card is the sole issuers of the globally accepted American Express cards in East Africa. With the signing of a now exclusive merchant acquisition agreement, Equity will be the sole merchant acquirer of American Express card transactions and will manage all aspects of merchant relationships including acquisition, statements, and marketing. Equity Bank earned Kshs 278 million in AmEx commissions last year, a 54% increase from 2016. The Bank also issues Union Pay, Diners, and JCB cards in addition to Visa and MasterCard.