Equity Bank’s Kimathi Street branch in Nairobi. The bank plans to unveil agency banking services with 200 agents at its Rwanda subsidiary. File
Top Kenyan banks are replicating the agency banking model in Rwanda as they seek to firm their operations after years of dismal earnings associated with new operations.
Kenya Commercial Bank (KCB) and Equity Bank launched agency banking in Rwanda this year targeting larger client numbers. “We have rolled out about 200 agents starting this month in our intention to grow our deposits and client base with the least resources possible,” KCB managing director for Rwanda Maurice Toroitich told the Business Daily in a telephone interview Tuesday.
In Kenya, Equity Bank had 3,339 agents by January while KCB had 2,608 agents by end of last year.
Mr Toroitich said that the Rwandan subsidiary is targeting to grow its customer base to 100,000 this year from the current 65,000. KCB Rwanda managed to break even this year after two years of loss-making, booking a profit of Sh100 million last year compared to a loss of Sh300 million in 2010, according to Mr Toroitich.
He said that Kenyan banks were the first to roll out agency bankiing after the institutions were given the green light to start the model in the country.
The agencies conduct basic transactions including money transfers, deposits and withdrawals.
“This year, Equity Bank is also set to introduce agency banking services in Rwanda with an initial target of 200 agents to serve its growing clientele,” said Equity Bank in a statement posted on its website.
Equity Bank Rwanda has over Sh700 million in deposits and more than 30,000 customers.
According to the latest figures available around 21 per cent of Rwandans access financial services with 26 per cent using formal banking facilities.
Kigali government wants to increase financial inclusion to 80 per cent of the total population by 2020.
Mr Toroitich said: “The product is in the pursuit of the bank’s financial inclusion strategy and in support of the government’s vision to enhance the level of financial inclusion in the country.”
It is not clear though how soon commercial banks can roll out similar models across the region where they have subsidiaries since this will depend on the regulatory environment.
The Equity Bank chief executive James Mwangi had said the Rwandan government is one of the most business friendly in the region. The agency banking model was launched in Kenya in 2010 as part of the efforts by the government to improve financial inclusion by roping in the unbanked.
Banks rolling out the agency model in Kenya were faced with challenges such as inadequate liquidity among the agents and security issues.
The services also came when mobile money transfer had snapped up a number of potential agents.
Kenya has become a model in financial inclusion with the agency banking and mobile money services playing a major role.
