The Equity Bank Group will establish a regional head office in Kigali. According to Dr James Mwangi, the group chief executive officer and managing director, the regional head office in Kigali will oversee the bank’s expansion efforts across other parts in Africa.

With headquarters in Nairobi, Kenya, the Equity Group Holdings Limited, the parent firm of the bank group, is one of the biggest banks in East and Central Africa by market capitalisation.

While speaking during a dinner gala in Kigali last week, Mwangi said the move is driven by Rwanda’s attractive business environment.

The bank has a customer base of up 10.9 million clients spread across the six countries, and a balance sheet of over Rwf3.5 trillion. In Rwanda, Equity Bank registered a 66 per cent pre-tax profit growth last year.

According to the outgoing managing director, Samuel Kirubi, the bank’s gross profit increased to Rwf2.1 billion, up from Rwf1.2 billion recorded in 2014.

Kirubi attributed the bank’s performance in the past four years to a steady growth trajectory on its customers’ deposits, which expanded from Rwf4.3 billion in December 2011 to Rwf68.5 billion in 2015.

A source at Equity Bank, told Business Times that the decision to establish a regional centre in Kigali was in line with the bank’s strategy to expand to other parts of the continent, especially in central and west Africa.

"Equity Bank seeks to expand and strengthen its footprint across the continent. Therefore, the bank is looking at using Kigali as a base to achieve the objective,” a source at the bank noted.

The development will boost efforts geared at turning Rwanda into a financial hub, Felicite Nyampundu, an economist at Business Professionals Network, noted.

"It is a manifestation of Rwanda’s business friendly environment, which has been at the heart of attracting investors into the country. It also lays a strong foundation and sets the pace for other companies to follow,” Nyampundu said.

Rwanda ranks second best place in Africa to do business, according to World Bank doing business report for 2015.

Financial sector players are optimistic such a move will enhance innovation and competitiveness, resulting into better and customer-oriented services and products.

Some of the pulling factors

Meanwhile, experts attribute the move by companies like Equity Bank to relocate to Kigali to the new business friendly investment code. Nathan Rugamba, a Kigali-based businessman, said the new investment code unveiled last year, and political stability are the key ingredients attracting more investors into the country. "The size of the market may not matter since most companies are actually looking at Rwanda to be able to tap into the growing regional market; this include DRC, Central Africa Republic and South Sudan.”

In 2015, the Rwanda Development Board (RDB) unveiled a new investment code that elucidates potential investment opportunities in the country, as well as the key areas the government is marketing to investors. The new investment code aims at bringing in over $1.12 billion worth of foreign direct investments (FDIs) by the end of the year. The code is equally designed to increase levels of investments by 20 per cent, and exports by 28 per cent annually, as par the second Economic Development and Poverty Reduction Strategy (EDPRS II).

A strong financial sector

The Rwandan financial system remains sound and stable and all its sub-sectors have been growing. The local banking sector is composed of 12 commercial banks, three micro-finance banks, one development bank and one cooperative bank.

The entry of new banks in the banking sector in Rwanda and the extension of the banking network have increased competition and innovation in the banking industry.

The increasing competition in the banking industry has brought innovation in terms of products and services. As banks strive to grow their customer base, they have been forced to introduce tailored products that meet the needs of many Rwandans.

business@newtimes.co.rw