Kenya KCB Bank opens 2ed branch in south Sudan
June 16, 2006 (NAIROBI) — Kenya’s biggest retail bank, Kenya Commercial Bank (KCB), has opened another branch in Rumbek in South Sudan, making it a double in less than a month as it moves to meet the immense demand for banking services in the vast region, bank officials said on Thursday.
Last month, KCB opened its first branch in Juba, the capital of the vast region, making history as the first international bank to set shop in Southern Sudan.
The opening of operations in Juba ended speculation that the grand entry into vast region was facing problems and could be headed for failure, said KCB deputy chief executive officer Martin Oduor-Otieno.
According to KCB deputy chief executive, business opportunities have sprung up in the bombed-out capital of South Sudan, increasing the demand for banking services.
He said the delay was due to the need for the Bank of Southern Sudan to put its own modalities and facilitating instruments in place first before licensing commercial banks.
Rumbek serves as the headquarters of the United Nations and various aid agencies working in southern Sudan and the economic activity seen there has been concentrated on the work of aid organizations.
“KCB Sudan has two branches, in Juba and Rumbek and has plans to expand to other viable business centers of Southern Sudan such as Yei and Yambio in a short period of time to come,” said Oduor- Otieno by telephone.
Oduor-Otieno also announced plans to open two more soon in remote western towns close to the border with the Democratic Republic of the Congo (DRC).
“As part of this strategy, KCB is exploring the prospects of establishing other subsidiaries in Uganda, Rwanda and possibly, Burundi,” he added.
“This is very exciting news for us. It also marks a major step in our efforts to increase our footprint in the region and grow the KCB group business. With our presence in Tanzania where we installed a new managing director a few days ago and the licensing of KCB Sudan, we are set to become a major player in the regional banking scene,” he said.
Oduor-Otieno said the bank first ventured in the untapped market in May after receiving a license from the deputy governor of the Bank of Sudan, Elijah Malok Mayen, becoming the first international bank to be licensed to offer conventional banking services in the war ravaged Southern Sudan region.
He said the bank is now set to become a major player in the regional banking industry following the commencement of its operations in Sudan last month.
The KCB deputy chief executive admitted that there were many challenges to be overcome by the Kenyan giant due to the fragility of the legal and regulatory framework.
“The process of setting up in southern Sudan was long and very challenging but we had the patience to pursue our dream. We will continue to explore opportunities in the region as we see to increase our footprint in the Greater East Africa,” said Oduor- Otieno
“Southern Sudan has just come out a devastating war that has left the infrastructure completely destroyed and people desperate for support. We are prepared to partner with the people of Southern Sudan to begin the reconstruction process by availing necessary banking and financial services to them,” he said.
African firms including the international ones have been positioning themselves to exploit opportunities in southern Sudan, focusing on sectors as diverse as construction, oil, banking and farming, and hoping to share the billion of dollars pledged by donors.
Kenya, which hosted peace talks that led to January’s peace agreement, is particularly keen to beat South African rivals in the race for opportunities in southern Sudan and aims to build a railway to connect its neighbor to its Indian Ocean port city of Mombasa.
“We have established two branches, one in Juba and the other in Rumbek. Juba has been operating for about a month and Rumbek for a slightly shorter time. The subsidiary is adequately capitalized and open for business,” said KCB Chief Executive Terry Davidson.
“Our initial focus will be transactional banking, including basic cash management and foreign exchange. This is a big step for KCB and opens up an avenue into an exciting new frontier that we believe has great potential for our business and takes us towards an important goal of being the Best Bank in the Region,” Davidson said on Tuesday while inaugurating the southern Sudan branch in Nairobi.
The Kenyan indigenous bank, which already has another subsidiary in Tanzania, is now one of the only two banks operating from the region, the other being Nile Commercial.
The bank officials acknowledged that the bank would face challenges in Southern Sudan especially due to the “fragility of the legal and regulatory framework.”
The bank’s chairman Susan Mudhune acknowledged that services such as provision of loans would require time to develop modalities especially under conditions that would-be borrowers may not have collateral for loans.
But Mudhune said KCB would spearhead the establishment of a modem financial system and infrastructure that would support the growth of the economy.
“We also believe there are sufficient opportunities in Southern Sudan for us to grow our business through this expansion in order to increase shareholder value,” she said.
“The potential for growth in agriculture, manufacturing, mining and construction sectors is great and all players there would need a bank that would provide them with international quality service, ” KCB chairman said.
Oduor-Otieno said the Sudanese entry is part of KCB’s ambitious expansion into the region.
“Expect exciting times ahead for this bank. Our quest for increased regional presence would continue following this great breakthrough. We will continue to look at other markets in the region into which expansion is viable,” he said.
“Payments and cash transmission as some of the key services we expect to be mostly required especially by development aid agencies and non-governmental organizations but all the other services that we offer in the KCB Group will be available our customers there,” said KCB deputy Chief executive.
Addressing investors during the celebrations to inaugurate KCB Sudan early this week, Trade Minister Dr. Mukhisa Kituyi asked local banks to open up branches in the region.
“The potential there is enormous now that the bullets have stopped flying following a peace agreement between SPLM/A and the Khartoum government,” Kituyi said.
The minister encouraged regional banks to invest in the region before multinational banks got interested in tapping the vast resources in the area.
KCB is Kenya’s largest retail bank with branches spread throughout much of the country.
The bank also has a subsidiary in Tanzania and plans to open branches in Uganda in 2006/07 and Rwanda in 2007/08.
KCB’s first quarter pre-tax profits jumped 85 percent to 733 million shillings (about 10.3 million U.S. dollars), driven by revenue growth.
(Xinuha/ST)