17 January 2011

East Africa: Equity Bank Plans Further Expansion in Southern Sudan

Nairobi — Equity Bank is set to open two new branches in Southern Sudan this month even as the outcome of the referendum is awaited, chief executive officer James Mwangi said.

"Our opening of the branches is a deliberate move to show that as an investor in Southern Sudan, Equity Bank is confident that the region will stay peaceful and gain independence creating vast opportunities", he said.

The results of last week's referendum will be known next month, while, in the event that the South breaks away from the North, the split will be effected in July.

The two branches - in Juba and Yambyo - are the first in what Mr Mwangi calls a rapid expansion in Southern Sudan "as soon as the country settles into nation building after the referendum."

"We intend to establish a branch in all the major towns across the country," he added, but he did not disclose how the expansion would be done. "It could be through greenfields, mergers or acquisitions," he said, reflecting the main methods Equity Bank has employed in its pursuit of regional expansion.

Equity ventured into Southern Sudan in 2008 but only made profits last year - some Ksh130 million ( ($1.6 million).

The breakthrough encouraged the bank to seek further expansion in a region characterised by a low banking culture - out of a population of 12 million, only 50,000 have bank accounts.

It has presence in three towns- Juba, Hai Malakal and Yei. It intends to expand to the main towns of Yambyo, Wau, Kaya and Nimule.

Mr Mwangi said that due to low real estate development in the country, substantial money and time goes into developing premises.

People who fled more than two decades of north-south civil war have been slowly returning after a 2005 peace deal, but the region remains under-developed.

The bank's expansion in Southern Sudan is part of its plans to expand to at least 10 countries in Africa in the next five years.

Equity Bank will be venturing into Tanzania and Rwanda this year to tap into the growing opportunities brought about by the East African Community's Common Market.

Free trade area

It is planning to roll out its operations into the Common Market for East and South Africa (Comesa) region as the Tripartite agreement slated for April brings together the EAC, Southern Africa Development Community and Comesa to create a grand free trade area.

Equity is the largest bank in terms of customer numbers in Kenya with an estimated 5.3 million accounts, slightly more than half of the total in the country.

The group acquired Uganda's Microfinance Ltd in 2008 at a cost of Ksh1.66 billion ($25.3 million).

The deal saw Equity take up 100 per cent of the bank's share capital. In Sudan, a subsidiary was launched last year.

Besides targeting a huge money transfer market that is coming up in the EAC, the bank has its sights trained on the rural areas in the expanded market especially the youth, women and the agricultural sector.

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