Kigali bank entry boost to Nairobi’s financial hub claim

Nairobi’s status as a regional financial hub got yet another boost with the licensing of the seventh representative office of a foreign lender, Rwanda’s Bank of Kigali.

The Central Bank of Kenya (CBK) announced Tuesday it had granted Bank of Kigali approval to open shop in Nairobi, a day after the Central Bank of India was given a similar license.

READ: State-owned Indian bank gains entry for trade deals

Other international lenders that have opened similar offices in Kenya include HSBC, Nedbank, First Rand, Bank of China, and HDFC Bank.

Representative offices help the banks to source for trade financing deals, but they are not allowed to collect deposits.

Bank of Kigali becomes the first lender from Eastern Africa to have a presence in Nairobi, further boosting the Kenyan capital’s claim to the status of a regional financial centre.

“The increasing interest supports Kenya’s aspiration under Vision 2030 to make the country an international financial centre. The entry of foreign banks into the Kenyan financial sector will promote competition and diversity of financial products and services on offer,” said the CBK in a statement.

Bank of Kigali will seek to capitalise on the expanding trade opportunities within the 130-million people strong East Africa Community (EAC) bloc.

CBK said the authority was granted pursuant to Section 43 of the Banking Act which allows setting up of such offices with limited mandates in Kenya.

Bank of Kigali is a public commercial financial institution regulated by the National Bank of Rwanda, which is the country’s banking sector regulator.

“The bank engages mainly in personal banking, business banking and micro-lending,” said CBK statement.

Currently, Bank of Kigali has 40 branches in Rwanda and is listed on the Rwanda Stock Exchange, having gone public in an initial public offering towards the end of 2011.

“Representative offices of foreign banks only serve as marketing and liaison offices for their foreign parent banks and affiliates and are not permitted to undertake banking business,” said CBK.

The bank is seeking to explore potential business opportunities in the country with a view to evaluating prospects for a long-term presence in Kenya.

CBK said the entry of the bank into the Kenyan market was timely given the on-going EAC integration process.

“With the on-going regional integration, Bank of Kigali’s presence in Kenya stands to greatly benefit from the business opportunities that are expected to increase tremendously across the EAC member states,” said CBK.

The monetary authority noted that the Kenyan banking sector has continued to attract increasing interest from Pan-African, regional, and global banking brands.

CBK said it would continue to provide an enabling legal and regulatory environment to spur growth and stability of the banking sector.

A strong banking sector will play a key role in financing Kenya’s economic growth blueprint expected to lift the economy to middle income status by 2030.

Monday’s licensing of the Central Bank of India, a state-owned commercial bank, reflected the growing trade links between Kenya and the emerging Asian economy.

India has recently become the biggest source for Kenya’s imports. India’s exports to Kenya stood at Sh174.6 billion in the first 11 months of last year or 15 per cent of total imports.

READ: India topples UAE as chief exporter of goods to Kenya

Indian companies are also bagging mega deals. India’s Global Procurement Consultants won a contract to monitor the implementation of a Sh11.4 billion World Bank-funded project to fight HIV and Aids in Kenya.

An Indian firm is among those that will supply equipment and technical skills for the Sh20.8 billion 127-kilometre power transmission line in Kenya funded by the African Development Bank.

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