Convenient banking

making trades offs as convenient banking is not the same thing as cheap banking

Equity has been the fastest growing bank in the country over the last few years. It has won customers, now 1+ million, and has sent bigger banks banks back to the drawing board to woo & retain their customers.

However, while banking with them may not be cheap for a business, it is convenient, and offers finance and flexibility to an upcoming business. People coming from abroad complain about the cost of making mobile calls here – saying they are expensive. But compared to what? A taxi driver will make a 30 shilling mobile phone call to secure a 2,000 shilling job as his phone is his office.

Same with Equity their low entry minimums suit individuals and start ups. And while some of their charges are rather hefty (3% for ENC and 10% of amount for a temporary overdrafts), as a businesswoman told me today, their quick decision making and the fact that they are the only bank that can offer these facilities to her make them the optimal bank for now. Getting cheques cleared, guarantees, and payments to suppliers matter more to her now, than the cost of these services, and help her build a credit record for the future. Once she is more established,. she will look question the transaction costs and have other banks now wooing her business.

Other banking briefs

According to Africa confidential, Kenya is favored to be the new host country for the African development bank, with Botswana second in the ranking. However Ivory Coast is back in the running following the signing of a peace accord. More on homeless banks.

The CBR Bank rate was lowered from 10 to 8.5%

The Government has commissioned a study to look into the low uptake of youth enterprise fund and agriculture development funds. They are blaming banks for asking borrowers for collateral and 3 month bank statements – terms which were not spelt out in the funds. from an offline story from the East Africa:

CFC Stanbic bank pre –merger comparisons

Diamond Trust acquired a majority shareholding in Diamond Trust in the just concluded rights issue.

Equity Bank
– Looking to enter the money transfer business
– To buy Housing Finance bank – what do the bloggers say?

Family bank got admitted to the CBK bank clearing house earlier in June, just a few weeks after being licensed. Family took advantage and pressed for an exemption (on a two year waiting period), similar to that granted to Equity Bank when it also became a bank. from an offline story from the standard

National Bank is seeking to commit Ketan Somaia to civil jail over a 17 million debt

Pyramids schemes continue to
thrive despite numerous warnings. However, some schemes feeling a cash pinch are passing the blame to the central bank who are limiting the interest they can pay depositors to 10% p.a. – before they were paying over 10% per month.

10 thoughts on “Convenient banking

  1. toiyoi

    Mobile charges:
    Charges are still high. You do not have to compare with anything, but if you need a benchmark, just use the US rates of 6ksh/minute (after all the equipment/operations for making these systems work should be similar. Better still, compare with cost of a reasonable lunch meal that the majority of safaricom customers eat, and you will see just how expensive these calls are)

    Pyramid Schemes:
    Did you say the CBK is limiting the interest rate the Pyramid schemes should be paying? That means the CBK is a partner in their business (might explain why they have been left to operate for so long).

    You know what? I believe (my con theory) that these schemes operate with full permission of Minister Kimunya (i.e. Govt) and are a fundraising tool for the Kibaki team for election. How evilly sad and clever!

    Another clever one i saw here:
    -pushing the elections to Feb, when the parents(electorate) will be jubilant for not having paid school fees.

    These plus others= winning assured for the President!

  2. Mimmz

    OK, about high mobile charges and comparing them to the US, that’s apples to oranges. All prices are always a factor of the overall economy. When we narrow this down to technology, in Kenya compared to the US, I think the mobile charges are reasonable within that context. The point is to establish a growing economy. Technology and technology related services are areas where prices drop as the economy grows. Reverse inflation thanks to new technologies being out every 6 months and economies of scale being realized to great margins as demand grows. So I guess all I’m saying is Kenyans need to practice patience and keep a vigilant eye on how the economy is being run.

    With the banks, my opinion is find what the market niche is and reap profits to high heaven. Which calls for adaptability because as the economy grows, that niche is going to be in constant movement.

    That’s my 2 cents!

  3. 3N

    Toiyoi, I really doubt any relationship between Kibaki’s campaign for presidency & the pyramid schemes. Maybe ministers & other government officials are privately benefiting from but I don’t see Kibaki needing pyramid schemes to get re-elected.

    As a matter of fact these pyramids were also vibrant in places like Boston and Dallas a few years back among Kenyans. Most of them eventually bottomed up.

    On mobile phone fees I have heard that internet access via cell phones is significantly cheaper than here in the US. Maybe with time and infrastructure growth as well as competition for SafCom & Celtel, airtime charges will be reasonable as well.

    Thanks Bankele for the business briefs

  4. E-Nyce

    If I remember correctly (which I probably don’t), a small bowl of sliced-up, stewed golf-balls…er, um, nyama and slice of decent ugali is 40 shillings at City Market. So if that mobile call really does pull in over a grand, I would skip lunch.

  5. toiyoi

    -its been documented that data com products are as much as 900% more expensive in Africa than the rest of the world. As we all know, its due to lack of competition. While it is Ok for corp to seek profits at all costs, the govt should always look at the big picture and put measures to enable competition
    -What i meant is that they are most likely raising campaign contributions from the pyramid schemes

  6. MainaT

    Mobile phone charges-reflect the dire lack of compe in the mkt. Pyramid schemes-they are a menace but I suspect GoK doesn’t really know how do deal with them politically.
    Question I had is re the CBR,assuming this will be the weapon CBK will be using to control inflation, why are they reducing it at a time when inflation is still going up?

  7. mmnjug

    Mobile phone charges are still on the higher end even with Safcom’s new raft of tariffs. What i think is that in a very short time, they will have to go lower and maybe even start having free call weekends! What is not in doubt, is the fact that mobile phones have now becom a way of life here. That explains why M-Pesa has moved more that 0.5B in three months! Its also a clever way for Safcom to get cheap credit for expansion!

    click to

  8. Anonymous

    Hi. Like your blog. Can you do something on real estate for the common mwananchi? Like the Langata phase two that National Housing Corporation is offering for booking. Is it a good deal at 3.9 to 4.1 million? Are houses over-priced right now and should one wait till after elections to take up an offer? What influences housing prices for middle-class housing and how can one tell a good deal?

  9. Anonymous

    The Ubuntu Group
    PO Box 45213, 00100
    Nairobi, KENYA
    Tel: +254 – 20 – 3876400
    Fax: +254 – 20 – 2724996
    19 June, 2007

    Dear Bakelele;


    We wish to express our interest to work with you.

    We are Ubuntu Investment Group, a pan-African investment outfit that primarily focuses on micro-finance, private equity and capital markets investment. As a Group we have consistently operated for over 1 ½ years using this period to horne our investment philosophy, grow our client base and expand our investment options.

    The Group was recently incorparated as a limited liability company in
    Kenya and has since inception, received growing interest from like -minded investors (businesspeople) expressing their desire and willingness to work with the Group.

    Our Website (, has since its launch in September 2006 grown exponentially (by 3,570.83%) in its web traffic as shown by the stats below:

    October – 24
    November – 93
    December – 152
    January – 184
    February – 202
    March – 350
    April – 408
    May – 726
    June – 881

    As a Group, we are also impressed by the content and quality of your Blog and we see an opportunity for synergy in working together. We offer our website for listing on your Blog site. We expect that we will both gain from the relevance and similarity of our web content, not to mention the burst in increased web visits.

    We await your response in kind.

    Mwenda Ntalami.
    Marketing Director,
    Ubuntu Investment Group

    Kind Regards,

    Mwend Ntalami,
    Ubuntu Invesment Group.

  10. The National Centre for Research on White Collar Crime

    Equity is a super knows what the common person wants and its great for business persons…show me another Bank that is open for business at 8:30 in the morning Monday to Saturday and closes at 4pm in the evening.

    For heavens sake, I had to write an article in the Watchman complaining about Barclays only opening for 2 hours on the first and last saturday of every month, before they grudgingly complied….too late, I had already moved (and so had many others).

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