Focus on the Banking Sector:KCB: A $10m green field entry into the Rwandan banking sector

With a wide network of correspondent relationships totaling 200 banks across the globe, KCB customers are assured of seamless facilitation of their international trade requirements. KCB Bank Group is a world class Bank, established 113 years ago along the East African coast. The Bank has seven subsidiaries including Savings &Loans Ltd the best Mortgage Finance company in Kenya. The group has an unparalleled presence in five East African countries, providing banking services to over 120 million people across East Africa and Southern Sudan. KCB Bank Group provides its customers with the widest branch network of over 150 outlets across the region, backed by an expansive network of 280 Automated Teller machines. With a wide network of correspondent relationships totaling 200 banks across the globe, KCB customers are assured of seamless facilitation of their international trade requirements. The bank has employed over 3,000 staff from the different countries in which it operates. Owing to its popularity in the market and unique position as the regional bank, KCB has experienced immense growth both in infrastructure and business volumes in the recent past. The bank serves close to one million customers spread across the region and with a balance sheet of over US$2 billion, has the largest balance sheet of any indigenous commercial bank. In 2008, KCB Shares were cross listed on the Uganda Securities Exchange, and Dar es Salaam Stock Exchange. It has become one of the most sought after investments across the region’s bourses. The KCB Brand’s corporate social Responsibility programsThe KCB Foundation is a charitable organization set up in 2007 to facilitate Corporate Social Responsibility initiatives for the KCB Group. It is a key vehicle for implementing sustainable community support programmes on behalf of the bank. The KCB Foundation supports community programmes in the markets where the bank operates in Kenya, Uganda, Tanzania, Southern Sudan and now Rwanda. This is driven by a strong belief that thriving communities lead to thriving businesses, underpinned by focus on economic, social and environmental sustainability. The Foundation has identified the following key areas to which it dedicates its resources at an annual basis. These are Health, environment, entrepreneurship, education and welfare. The objective of the setting up the KCB Foundation is to position the bank as a leader in corporate social responsibility. Looking at the global scenario and best practice for Corporates, Corporate Social Responsibility is no longer an optional thing for companies and businesses; it is an obligation. Organizations are being challenged to be sensitive to the needs of the communities around them as they do their business and KCB has taken up this challenge. Regional expansion drive. ‘The KCB Group’s regional expansion strategy is aligned with the regions economic aspirations of becoming a single economic block. The protocol for establishment of the East African Community Customs Union was signed and ratified by the partner states in 2004’,Gloria Nyambok Head of Business KCB Rwanda said. Thus one of the value drivers of the KCB expansion has been the progression of the EAC affairs. For instance its Rwandan entry was largely informed by the East African Community members (EAC) granting membership to Rwanda and Burundi. ‘This brings optimism that the region has chances of becoming a single big economic block in the long term. It was in this atmosphere that KCB created the Vision of being the premier bank in the region to support the dream of regional cooperation and promote regional trade. We had already opened a subsidiary in Tanzania, and Southern Sudan, thus we needed to consider business in Uganda, Rwanda and Burundi to complete the fit’, Gloria added. Gloria further explained that the role of KCB in the Kenyan economy remains unquestionable, and one of the key success factors was the branch network. This track record can be replicated to deserving areas in other countries in the region. ‘Ultimately our dream is to make KCB a Pan African Bank, supporting growth and development for a majority of people in Africa into the foreseeable future’,she further added. The Rwandan market entry I asked her about KCB’s entry strategy into Rwanda. ‘KCB has opted for a Greenfield entry strategy into the Rwandan Market rather than going for acquisition as the other entrants into the market have done’,she started off. ‘ This means that we are starting to create our network and build our customer base from ‘scratch’. Whereas we opted for this strategy, we are not closed to opportunities for integration. Mergers and Acquisitions are a worldwide phenomenon for example in Nigeria where many of the banks merged and brought greater efficiency and profitability into the market’, she added. Gloria revealed that the KCB’s entry saw the brand bring in an investment into the banking industry in Rwanda of over US$ 10m. The local value addition from this investment would entail making an expansion of the financial sector, creation of employment opportunities for Rwandans, and business opportunities for local suppliers of goods and services to the bank among other effects. She revealed that KCB Rwanda is a fully owned subsidiary of the KCB Group, meaning that at the moment there is no local shareholding. ‘We are, however, in the process of appointing two local Rwandan directors to the Board of KCB Rwanda. In addition, as is our practice in the other markets in which we operate, we plan to exploit the opportunity to cross list our shares in the Rwanda OTC market in 2009. This means that ordinary Rwandans will also have an opportunity to be shareholders of KCB Group, alongside our Kenyan, Ugandan and Tanzanian shareholders. Our shares are among the most sought after shares in the Region’, she revealed. Ends