Commercial banks are racing to open shop in Nakuru in search of deposits and lending opportunities in a town that has witnessed increased growth in the last three years.
At least 10 banks, including CFC Stanbic, Diamond Trust, Ecobank and Commercial Bank of Africa have opened branches in the town in the last six months.
Others are Chase Bank, First Community Bank, ABC Bank, Bank of Baroda, Dubai Bank and Fina Bank—pushing the number of those operating in the town to 33 branches from less than 10 five year ago.
Analysts and banking executives attribute the growing interest to increased economic activity that recently saw UN-Habitat rank it the fastest growing town in East and Central Africa.
The Central Bank of Kenya is also looking to open a cash centre in Nakuru, highlighting the cash generation and consumption capacity in the town.
Mr Isaac Awuondo, the managing director of Commercial Bank of Africa, said he moved to open shop in the town two weeks ago to capture the growing volume of business from corporate clients, whom they have been serving from Nairobi.
“The town is quite attractive for business, looking at its evolving demographics,” said Mr Awuondo in an interview on Wednesday. Other banking executives expressed similar views.
“Our analysis indicated that Nakuru had the capacity to support an independent branch because the town is transforming from traditional farming town to a commercial hub,” Shamaz Savani, the managing director of ABC Bank said in an earlier interview.
The increased activity of the new players look set to re shape the balance of power as banking operations in Nakuru has remained at the hands of Barclays Bank, KCB, Cooperative Bank and Standard Chartered Bank—who preferred to serve the farming community and companies such as Pyrethrum Board of Kenya and Eveready Batteries.
But the town is diversifying from being predominantly agriculture to commercial hub—driven by small and mid-sized enterprises.
Analysts attribute its growth to the effects of the bloody post-election turmoil in December, 2007, rapid population growth and its central location—which has made easier for business leaders to serve western, Central and Nairobi regions easily.
This is best captured by the vibrancy of real estate in the town as rapid population growth has seen the prices of land and homes grow four times in the last five years.
Rents have also more than doubled in the last three years.
For the once small town in the heart of South Rift, the events of the post-election violence of 2008 became a blessing in disguise, as anxious business owners shifted in big numbers into the town from affected regions like Kericho, Eldoret and South Rift and immediately set up shop.
“There was an influx of people into the town, mostly business owners who had investments elsewhere, and did not wish to go back, choosing instead to invest here,” said Mr Charles Kariuki, valuer and land development consultant with Applecross Surveyors.
Retail chains such as Tuskys and Ukwala have also in to capture the new demand.