CFC Bank, Cooperative Bank and British America Investment Company yesterday announced plans to open shop in South Sudan in the race by local companies for a larger regional presence.
The newly independent South Sudan is emerging as next frontier for Kenyan companies seeking to cut their reliance on Kenya and tap the virgin market.
Cooperative Bank said it will open its first branch in the next six months after receiving regulatory approvals to start operations in the volatile country. Insurer British American Investment Company is targeting to open a branch in South Sudan’s capital Juba before June while CFC Stanbic bank will open corporate banking service branch in quarter three. “The establishment of Co-operative Bank South Sudan as a joint-venture has been approved by the government of South Sudan. We expect to play big ,” said Gideon Muriuki, the CEO of Cooperative Bank.
Greg Brackenridge, the managing director of CFC Bank said it is moving closer to serve its corporate clients such as the UN and other international organisations, which they currently serve from Kenya and hope it will allow CFC to break even faster.
They will join KCB and Equity Bank, which has seen their South Sudan subsidiaries emerge their best performing regional shops. For instance, KCB last year generated a profit of Sh580 million from South Sudan compared to losses of Sh409 million in Uganda, Rwanda (Sh317 million) and Tanzania (Sh110 million). Kenyan companies have been venturing into South Sudan in the past few years following the country’s peace deal with its northern neighbour in 2005.
Peace deal lures investors
In July last year, the South formally broke away from the north, ushering in independence that further raised its attraction as an investment destination. Donors such as UK are also extending millions of dollars as grants and soft loans to the new government to develop education and health facilities and setup administrative structures. Besides the bankers, East African Breweries Limited (EABL), UAP Insurance and Kenya Airways are some of the Kenyan companies that have operations in South Sudan while companies such as DT Dobie, Uchumi Supermarket and Nakumatt are planning to set shop there.
The increased flow of donor money and the rising interest of Kenyan companies is what is egging local banks to set shop in South Sudan.
South Sudan is currently locked in row with the north of transit fees for its oil and the impasse has cut the flow of petro dollars to Juba and prompted the country to seek alternative logistic routes.
The row is threatening the optimism Kenyan firms have about opportunities in the infant state since oil accounts for 98 per cent of all government revenue and goes to support state salaries and the army—which soaks up 40 per cent of spending.