Kenyan banks struggle to grow in Tanzania

A customer is served at a bank branch. FILE PHOTO | NMG

Kenyan banks are struggling for market share in Tanzania despite a decade-plus presence in the country, underlining the challenges Kenyan businesses face in that market.

Equity Group, KCB and DTB hold a market share of less than four percent each in Tanzania, in contrast to shares of between five and 24 percent in other jurisdictions such as Uganda and the Democratic Republic of Congo (DRC).

Equity, which is the biggest lender in Kenya by assets and earnings, says in its latest annual report that it held a market share of just 1.7 percent in the Tanzanian market by the end of 2020.

KCB’s Tanzania market share in the period stood at 2.1 percent, and DTB’s at 3.8 percent.

Equity’s Tanzania unit has in the past suffered under the weight of high non-performing loans. It was also negatively affected by the Covid-19 pandemic and the government’s decision to shift to Dodoma from Dar es Salaam, where most of the bank’s branches are situated, which resulted in a loss of State-related business.

The bank, however, said in its 2021 full-year briefing in March that it is confident of a turnaround, saying it is reviewing its leadership and business model for the unit, and that the operating environment has improved post-Covid.

In other East African countries, the Kenyan banks enjoy a larger share of the market, the biggest being Equity’s DRC subsidiary at 24.7 percent, where it trades as EquityBCDC and is the second-largest lender in that country by market share.

In Rwanda, KCB is now the second-largest lender with a market share of 17 percent, behind Bank of Kigali at 37.5 percent, while I&M and Equity are the third and fourth-largest lenders respectively with market shares of 11.3 and 11 percent,

In Uganda, Equity and DTB account for 6.9 percent and five percent of the market respectively.

Kenyan lenders have partly relied on acquisitions to drive market share growth, such as Equity’s takeover of BCDC in the DRC and KCB’s acquisition of Banque Populaire du Rwanda Plc (BPR).

Equity and KCB have however recently failed in proposed acquisitions in Tanzania after they walked away from proposed deals to acquire BancABC Tanzania from Atlas Mara in 2020 and 2021 respectively.

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Note: The results are not exact but very close to the actual.