CBA seeks licence to start operating in Rwanda next year

Commercial Bank of Africa, Kenya’s largest privately owned bank, has applied for a licence in Rwanda, joining a growing queue of local lenders investing in Kigali, its top management said Monday.

CBA plans to start operations in the first half of next year and will be the fifth Kenyan bank to set up in the Rwandan market, following in the footsteps of KCB, Equity, IandM Bank and GT Bank, previously Fina Bank.

The bank which currently operates in Kenya, Uganda and Tanzania also disclosed its plan to partner with a West African bank to start offering online and mobile banking services in a Francophone nation next year.

“We are in the final stages of applying for a banking licence in Rwanda with expectations to be operational in the early part of next year,” said the group managing director, Isaac Awuondo.

The bank, associated with the wealthy Kenyatta family, has made known its intentions to be operational in 10 African countries by the end of 2017. Some of the markets targeted by the lender include South Sudan, Mozambique, DRC and Ethiopia.

READ: CBA renews growth drive with 16 branches

Mr Awuondo said the lender planned to have a core business presence in all Eastern African nations, indicating plans to open branches in South Sudan and Burundi, while the others could be served through online presence.

The bank has grown to be the largest retail lender in the country on the basis of M-Shwari – a mobile phone-based product operated in partnership with Safaricom.
The mobile presence also catapulted the bank to the top-tier lender in Kenya, displacing CfC Stanbic.

READ: CfC Stanbic loses top-tier bank classification to CBA

Rwanda has proven to be a good hunting ground for Kenya lenders, accounting for approximately 20 per cent of the Sh5.5 billion profit recorded by regional subsidiaries, including in Uganda, Tanzania, Rwanda, Burundi and South Sudan last year.

CBA is also increasing its branch network in the country with a target of having 40 branches by end of 2018, up from 24 at the beginning of the year.

Monday the lender received a Sh1.1 billion loan from French investment firm AFD for lending to environmental friendly energy projects.

CBA said it had a pipeline of energy projects to be financed through the loan giving an example of a hydro-project.

Green projects

Mr Awuondo said CBA has lent out approximately Sh10 billion to the energy sector, especially geothermal projects. CBA is the second lender to receive a credit line from AFD to finance green energy projects following a S.3 billion facility to Chase Bank three weeks ago.

READ: Chase Bank to get Sbn loan for green energy lending – VIDEO

The French government through its investment arm AFD has been pushing for the financing of the green projects in an effort to fight global warming and climate change. AFD disclosed it was extending its lending to Uganda and Tanzania with plans to partner with Bank of Africa in Uganda.

Several manufacturing and agricultural firms in Kenya have been setting up their own power plants to avoid losses attributable to power outages and to control their total costs.

Agricultural firm Rea Vipingo has made known plans to set up a 48 megawatts power plant in Kilifi.

Tea firms in Mt Kenya region such as Imenti Tea Factory are setting up small hydro power plant to cut electricity expense which is a major cost element.

Other firms that have disclosed plans to set up power plants include ARM Cement and Sasini Tea.