NAIROBI (Xinhua) -- Several commercial banks in Kenya are eying new acquisitions and partnership deals in Ethiopia and Somalia markets as part of their regional expansion drive made possible by their high capital reserves, the head of the banking industry lobby group, a banking official said on Tuesday.
Friday, August 10, 2012
The Kenya Bankers Association CEO Habil Olaka did not however disclose names of the banks that are planning to venture into the 2 markets because of the confidentiality considerations.
Kenya banks are already playing a dominant role in the East Africa Community region with plans to expand to expand outside the common market.
Kenya banks are well capitalized with an asset base of 25 billion U.S. dollars making the industry the fifth highest capitalized in the continent according to the Africa Development Bank.
Kenya players in the regional markets include the Kenya Commercial Bank (KCB), Equity Bank and Diamond Trust Bank.
Some of the banks like KCB and Equity already have the experience in operating in hostile environment like Somalia from their operations in South Sudan even before the country attained independence last year.
Central Bank of Kenya Governor Njuguna Ndung’u attributed the regional expansion by the Kenyan banks to the open space for innovation within the industry that has helped growth.
“Open space for innovation has helped sustain growth in the banking industry and the larger financial sector,” said Ndung’u on Tuesday during the celebrations to mark 50 years since the formation of Kenya Bankers Association.
Ethiopia and Somalia are offering some of the best opportunities for the commercial banks here as they are highly under banked and are closer the two countries share borders with Kenya .
Ethiopia and Kenya have been making rapprochement after many years of hostile diplomatic relations with the planned signing of a new bilateral trade agreement and planned cross border infrastructure projects including the already commissioned Lamu Port and the high voltage power transmission line that will link the national grinds of the 2 countries.
The appetite for Somalia is based on the improving security situation in a country that has had no central government for two decades now.
The African Union Mission in Somalia (AMISOM) has reported successes in liberating most of the country from the Al Shabaab militants that has made it impossible to establish trade in the country.
AMISOM released a statement on Tuesday, on the day marking a year after the liberation of the capital Mogadishu from the Al- Shabaab, committing itself to contend support of restabilizing the country and detailing successes that have resulted in gains of normalizing business life in some parts of the country.
“ Mogadishu has experienced a construction boom as residents return to rebuild their homes and businesses. Markets have been reopened, schools and hospitals established, and roads repaired,” noted the statement.
For instance, the Aden Adde International Airport has been refurbished and international carriers, such as Turkish Airlines, are operating regular flights into and out of the capital.
The peace process has been invigorated and last week, a National Constituent Assembly adopted a provisional constitution which will pave the way to the next election of Parliamentarians, a decisive step for the country.
Special Representative of the Chairperson of the African Union Commission (SRCC) for Somalia , Ambassador Boubacar Diarra said the African Union Mission in Somalia will continue to work with the Somali authorities to create conditions conducive to the deepening of the national dialogue and reconciliation process.