Why Equity is making strong pitch
Mr James Mwangi, group managing director and CEO, Equity Group Holdings with group head of financial & regulatory reporting Mary Nteere last week during the announcement of a 98 percent growth in half year profit to Sh17.9 billion up from Sh9.1 billion the previous year.
Equity Group entered the Democratic Republic of Congo (DRC) in September 2015 through acquisition of 79 percent stake in ProCredit Bank.
The lender last year followed up with purchasing a 66.53 percent stake in Banque Commerciale Du Congo (BCDC) at $95 million (Sh10.35 billion).
Equity Group Chief Executive Officer James Mwangi calls the group operations in DRC—Equity BCDC— as a “juggler pipe that will change this group forever.”
Mr Mwangi is bullish on the country citing global commodity prices that seem to offer tailwinds in the Central Africa country, which has huge copper and cobalt reserves.
“If there’s one country that this group most likely will be defined by, it is the DRC. Those who call DRC the jewel on the crown, I agree with them,” said Mr Mwangi last week.
And now he wants Kenyan youth to follow the lender’s example and start looking outside the country’s borders for opportunities.
Many opportunities
Mr Mwangi specifically wants them to venture out to DRC and says there are so many opportunities waiting to be exploited there.
For Equity Group, its pie in DRC is getting bigger and Mr Mwangi wants the Kenyan youth to follow. BCDC is the second largest subsidiary of Equity Group.
Equity BCDC net profit jumped 447 percent to Sh1.6 billion in six months to June, making it the most profitable subsidiary followed by Uganda (Sh1.3 billion), Rwanda (Sh0.8 billion), Tanzania (Sh0.1 billion).
DRC has the largest reserves of Coltan—estimated at about 70 percent of global reserves. Coltan is used in manufacturing many electronic devices including mobile phones.
The country has a population of 93 million—nearly twice that of Kenya, with 45 percent of the people in urban centres, presenting consumption opportunities.
“My understanding is that DRC is at the beginning of a massive transformation. It appears that the universe has transpired to make that transformation happen,” says Mr Mwangi.
DRC has huge copper and cobalt reserves and the demand for the two minerals looks set to be accelerated by increased usage of electric vehicles and charging stations as well as the shift to renewable energy.
President Felix Tshisekedi has instituted several governance reforms to ensure political stability of the country that had a history of instability.
Mining contracts
Mr Tshisekedi has also devoted to reviewing all the existing mining contracts to ensure they are beneficial to the country.
DRC has applied to join the East African Community, a move that will deepen trade ties with Kenya and other countries in the trade bloc.
“We have seen huge opportunities in Continental Free Trade Area and the pace at which regional businesses are doing cross-border businesses,” said Mr Mwangi.
The comments mean that Equity sees an opportunity to fund Kenyan entities interested in doing cross-border businesses as far as DRC.
The Covid-19 environment has seen many African countries including Kenya, Rwanda and Tanzania start laying plans for setting up their own vaccine factories targeting other diseases.
Equity sees this as one of the immediate opportunities to pluck in with its huge dollar deposits in addition to new long-term borrowings that are above Sh63 billion.
DRC in mid-July entered into a $1.52 billion (Sh167 billion) three- year arrangement with International Monetary Fund, aimed at among other things increasing fiscal space, and promoting a private sector-led economic growth.
Kenyan market—with a population of 49 million people and served by 44 banks, 14 microfinance banks and dozens of savings and cooperative organisations and lenders— is seen as overbanked.
DRC, with 18 banks, is seen as a market that is rising from the ashes of political instability, making it among the attractive investment destinations in East and Central Africa.
