Deep-pocketed Kenyan banks eye Somalia, EthiopiaBy XINHUA | Wednesday, August 8 2012 at 11:15
Several commercial banks in Kenya are eying new acquisitions and partnership deals in the Ethiopian and Somali markets in regional expansion plans made possible by their high capital reserves, the head of the banking industry lobby group said on Tuesday.
The Kenya Bankers Association chief executive officer Habil Olaka did not however disclose names of the banks that are planning to venture into the two markets due to confidentiality considerations.
Kenyan banks are already playing a dominant role in the five-member East Africa Community region with plans to expand outside the common market.
The lenders have an asset base of $25 billion making the industry the fifth highest capitalised on the continent, according to the African Development Bank.
Kenyan players in the regional markets include KCB, Equity Bank and Diamond Trust Bank.
Some of the banks like KCB and Equity already have an experience of hostile environments from their operations in South Sudan even before the country attained independence last year.
Central Bank of Kenya governor Njuguna Ndung'u attributed the regional expansion by the Kenyan banks to innovation within the industry that has helped growth.
"[The] open space for innovation has helped sustain growth in the banking industry and the larger financial sector," said Prof Ndung'u on Tuesday during celebrations to mark 50 years since the formation of Kenya Bankers Association.
Ethiopia and Somalia are offering some of the best opportunities for the commercial banks here as they are highly under-banked and are closer--the two countries share borders with Kenya.
Addis Ababa and Nairobi have been making rapprochement after many years of hostile diplomatic relations with the planned signing of a new bilateral trade agreements and planned cross border infrastructure projects including the already commissioned Lamu Port and the high voltage power transmission line that will link national grids
The appetite for Somalia is based on the improving security situation in a country that has had no central government since 1991.
The African Union Mission in Somalia (Amisom) has reported successes in liberating most of the country from the fundamentalist Al-Shabaab militants that had made it impossible to trade in the country.
Amisom released a statement Tuesday on the day marking a year after the liberation of the capital Mogadishu from the Al- Shabaab committing itself to contend support of restabilising the country.
"Mogadishu has experienced a construction boom as residents return to rebuild their homes and businesses. Markets have been reopened, schools and hospitals established, and roads repaired," said the statement.
The country's Aden Adde International Airport has been refurbished and international carriers, such as Turkish Airlines, are operating regular flights into and out of the capital. The peace process has been invigorated and last week, a National Constituent Assembly adopted a provisional constitution which will pave the way to the next election of parliamentarians, a decisive step for the country.
The Special Representative of the Chairperson of the African Union Commission (SRCC) for Somalia, Ambassador Boubacar Diarra, said the African Union Mission in Somalia will continue to work with the Somali authorities to create conditions conducive to the deepening of the national dialogue and reconciliation process. (Xinhua)
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