The prolonged conflict in South Sudan has seen regional banks scale down operations in the country, and look for opportunities outside the East African Community (EAC).

The banks have halved their branches in South Sudan, initially one of the promising markets, since the war started in 2016.

However, as the South Sudan market shrinks, the commercial banks in the East African nation’s biggest economy have sought new business or scaled up operations in other countries that include Congo DRC, Malawi, Burundi and Botswana.

Some nine banks have subsidiaries outside Kenya, with the institutions increasing the number of the branches to 306 in 2017, up from 297 in 2016, the latest sector report from the Central Bank showed Wednesday.

From about 40 branches in South Sudan, regional banks most of them Kenyan have only 20 branches, with a majority having closed them down.

"Kenya Commercial Bank (KCB) Group continued to scale down its operations in South Sudan following the deteriorating security condition that started in 2016. The bank cut its branch network to 11 from 17 in 2016,” said the report.

Cooperative Bank has four branches while Equity Bank has five, with the number of branches by the two remaining flat.

The banks have, however, spread to Malawi, Botswana, the Democratic Republic of Congo (DRC) and Burundi, markets that initially looked distant when South Sudan was promising.

"Equity Bank scaled up its operations in Congo DRC in 2007 from 31 to 39 branches. The bank has 79 percent ownership of ProCredit Bank of Congo DRC,” said apex bank.

I&M Bank Kenya Ltd and Prime Bank (Kenya) Ltd are the other institutions with subsidiaries outside East Africa region.

I&M Bank has 50 percent shareholding in Bank One Limited in Mauritius while Prime Bank acquired 11.24 percent shareholding of First Merchant Bank Ltd in Malawi and 11.46 percent shareholding of Capital Bank of Botswana.

editorial@newtimes.co.rw