Kenya’s Equity Bank is expected to start operations in Rwanda in the first quarter of 2011, as the National Bank of Rwanda (BNR) has received their application for a license.
According to Francois Kanimba, the Governor of the central bank, Equity Bank’s entry is anticipated to boost lending to Small and Medium Enterprises (SMEs) that are currently struggling to access financing from the existing commercial banks.
“We have been processing it (application) and it is almost complete. “I do expect their operations in Rwanda putting a lot of pressure in the banking system because they will increase competition,” Kanimba said during a press briefing on Thursday after the launch of its Monetary Policy and Financial Stability statement.
“From their (Equity Bank) experience in other markets where they operate, generally their average lending rate is below the market rate by 2 percent which is a good thing as well,” he added, indicating that the bank mainly targets the lower segment of the population with its relatively lower lending rates.
The Governor said the final decision to grant a banking license to Equity is high on the agenda on the forthcoming meeting of the central bank’s board in March.
“Knowing that Equity Bank is an innovative bank, very dynamic we have already provided consent that they can already start preparing themselves for the operations,” Kanimba revealed.
The Bank is reported to have started recruiting staff, with approximately 100 Rwandans expected to be trained in Kenya.
“They do not want to create a distortion in the labour market by poaching staff from other commercial banks; they want to recruit young people from universities and train them intensively to go into their business due to the skills gap that we have,” the Governor said.
According to the central bank, currently the banking sector remains dominated by 4 commercial banks representing 69.1 percent of the total deposits of the industry and 46.7 percent of loans.
Equity is the largest bank in terms of customer numbers in Kenya with an estimated 5.3 million accounts, slightly more than half of the total in the country.
The Bank already has operations in Uganda, Southern Sudan and is expected to open shop in Tanzania by the end of this year.