Equity Bank borrowed KSh. 22 Billion to Support South Sudan clients amidst dollar crunch

Is South Sudan's oil flowing? (image: Africanarguments.org)

A while back, Jetlink grounded it's planes after the company ran out of funds. The problem was caused by inability of the company to access South Sudanese dollars paid to the firm in South Sudan, to US dollars. It therefore exhausted its cash reserves from other countries, while having money in South Sudan, but in a currency hard to convert to other currencies.

The crunch is due to stopping of oil exports, South Sudan's main export, thus stopping the flow of dollars into the country. The country still continues importing goods and services (such as Jetlink's), but fewer and fewer people could access the foreign currency needed to continue importing these goods and services. (See: South Sudan dollar control grounds Jetlink flights http://www.the-star.co.ke/news/article-95995/south-sudan-dollar-control-grounds-jetlink-flights )

James Mwangi, Group CEO, Equity Bank in December explained how the bank was able to assist clients facing a dollar crunch in South Sudan continue operating amidst the crunch.

“We are very lucky that we bank all the missions in South Sudan, literary all the embassies in the country, most of the NGOs in South Sudan, so when they bring their cash, we use that to support our customers, because they are bringing dollars, they want South Sudanese pounds. I’m not saying there’s no crunch, but we have come out of the position best positioned simply because of that ability,” Mwang says.

Mwangi says that a second advantage is that it is the biggest bank in the country in terms of customers, and it has developed a good working relationship with both citizens and the government there. This means the bank is able to deal with emergencies and “critical situations” with the government’s support.

The bank borrowed a US dollar equivalent of KSh. 22 billion from the China Development Bank, IFC and FMO to support clients in the country doing regional trade. “That’s why you have not heard of any of our customers complaining. I still have $ 150 million still available for SMEs. We know the situation is temporary, we could still lend those people and hold the dollars in South Sudan as collateral and lend them US dollar facilities here. When they start exporting oil, that is the collateral,” he says.

“You saw when everyone shrunk their balance sheet, our loan book as of September went up by 20 percent. We became creative and provided the facility that supported those who had strains in dollars,” says Mwangi. Companies though have set limits for what they can borrow.

We used their accounts (South Sudan) to lend them in US dollars in the Kenyan market. “That is why you will find Equity is so popular, it understands and comes up with a crafty solution, “ Mwangi quips.

As for plans to establish in Ethiopia, Mwangi says the bank is studying the special trade arrangement to see what the bank can and can’t do. The Special Trade Arrangement allows Kenyan banks to open representative office, but not roll out fully fledged operations (See, Ethiopia locks out Kenyan banks as it opens up market http://www.businessdailyafrica.com/Corporate-News/Ethiopia-locks-out-Kenyan-banks-as-it-opens-up-market-/-/539550/1627020/-/12y02cpz/-/index.html) He however believes that once Ethiopia joins the World Trade Organisation, the market will be wide open.

Comments

Beers in Kenya: A sober opinion

Note: This is a dated post and has since been mostly passed by events. SAB Miller beers including Castle and Peroni are no longer widely available in Kenya after their exist. Sirville Brewery was bought out by Brew Bistro before being permanently shut in a tax dispute. Kenya is a land of milk, honey, beaches and taxes. I have penned, or is typed, a newer post here . Peroni - One of the best beers in Kenya. Did a taste of canned and bottled Italian, and bottled Tanzanian I like the tangy flavour and body in Tanzanian Peroni. The can is close. Heineken drinkers will like the Italian one. I have had a short beer swigging stint in my life. It has however been long enough for me to share my opinion of Kenyan beer. Interestingly, over the course of sharing such opinions with other drunkards connoisseurs, I have found that we all have different views as to what beer is the best, which one makes you too drunk, or which one gives one free, extra hangover for every ha...

Visiting Watamu

Getting to Watamu: Flight to Malindi Airport. Jambojet flies here and so do other airlines from Wilson. You'll then need a Cab to Watamu (KSh. 1,700 to KSh. 2,000 - many apps are inaccurate) or matatu just outside the airport (KSh. 100) SGR to Mombasa, then shuttle to Watamu. There are about 2 regular shuttles and they charge KSh. 1,500 to KSh. 2,000 one way Bus to Watamu. Tahmeed and other buses operate regular schedules to Total Watamu Drive: It's faster branching through Mariakani to Kaloleni then to Kilifi. The route through Tsavo is not any faster and has park fees. Takes 9 hours Things to do Beach Sunbathing : Watamu has some of the world's best beaches, with white sand. The left side from Watamu Village has a bay with shallow water during low tide, you can wade and swim in the ocean even if you don't know how to swim! Ocean is warm in July - August but very windy. Watamu beaches have lots of seaweed but this shouldn't deter yo...

Nairobi's Top 4 Texas Brisket Places Reviewed and Ranked

Brisket on a bed of roast vegetables with barbecue sauce at Texas Brisket, Kikuyu This review has been updated after a number of you suggested I try the brisket at County2County. What's the best place to have Brisket in Nairobi? What's even brisket? Brisket is one of the toughest cuts in a cow, from around the belly. It is so tough that it has to be smoked for about 16 hours to tenderise. But that there, is the catch. 12 to 16 hours later, it is the most flavourful and softest cut you will ever have. So full of flavour and so soft you can pick it apart with your fingers. However, due to the long cooking time involved, only a few places offer brisket in Nairobi. The best so far is Texas Brisket which is located within Kikuyu Railway station. They do the meat for a proper 16 hours, and will usually have a fatty or non-fatty portion. The fatty portions are more tasty. A 500 gram serving goes for KSh. 900 and a 1 KG order comes with a serving of fre...

Beers of Kenya. The Ultimate 2019 Guide

Four years ago, precisely in 2015, I wrote about beer in Kenya in what has gone on to be my most popular post this year with more than 5,000 people reading it. It seems that there is a lot of interest in exploring beer in Kenya, which is understandable. The brewing sector has grown since then and we now have lots of options, which means it is time for another review. Back in 2015, Kenya had one major brewer - EABL/KBL, challenged by Keroche and Sierra which is more of a small volume craft brewer, and arguably Kenya’s first craft brewery. It had also been joined by Brew Bistro which mostly sells its malted stuff at its outlets in Nairobi and later by Sirville, a bar located at Galleria Mall. Sirville was later sold to Brew Bistro and converted to the latter for a while, before shutting down in what is alleged to be a tax dispute.

Why Humanity Hasn't Learned From the Covid Pandemic

In 2020, the Covid-19 pandemic began ravaging the world, succeeding the 1918 flu pandemic. Many found it unbelievable that despite all the scientific progress that the world has made since 1918, from composite jets to modern healthcare to going to the moon, the world was still susceptible to a pandemic. Ironically, some of these advancements largely played a role in the spread of the pandemic. Thousands of global flights every hour and air conditioning fanned its spread like a dry wind would in a forest fire. There was even further disbelief in mid-2020 when it became apparent that many countries were even struggling to keep a pandemic in check. Developed countries, supposed to have the best healthcare, suffered the worst outbreaks amidst disagreements on measures such as quarantines and wearing of masks. In yet another twist, technology advancement finally came to our rescue with the speedy development of vaccines, including the safe pioneering of never-tried-b...

Dennis Kioko

Search This Blog