Kenya Commercial Bank eyes south Sudan expansion

By benim
In Business
Jan 2nd, 2011
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Kenya Commercial Bank (KCB) expects a successful referendum in southern Sudan and an improved investment climate to allow it to double its branches there in the next five years, its chief executive said.

Political stability and security in the south are likely to attract international investors who for now await the outcome of the referendum due on January 9, in which southerners are widely expected to choose independence.

“If that happens, then the outlook should be positive and the investment climate more predictable and you will see a much higher level of sovereign investment coming into south Sudan,” Martin Oduor-Otieno told Reuters in an interview.

“There will be more business and greater returns for KCB, if all goes well.”

Ranked the largest bank in Kenya by assets, KCB hopes to have around 30 branches across the semi-autonomous south of Sudan by 2015 and 100,000 customers in the next three years, up from around 10,000 currently, he said.

The lender expects to have 19 branches in the south by June, up from the present 15.

Relations between the north and south Sudan have been tense in the build up to the referendum and analysts have warned that both armies have been re-arming, stoking fears of a return to war.

“I think there is a lot of pressure from the international community that will lead to stability rather than a return to war,” Oduor-Otieno said.

KCB, which also operates in Rwanda, Tanzania and Uganda, was the first international bank to be licensed to operate in southern Sudan in 2006 and sees the best opportunities there for investors in agriculture, telecommunications, construction, education and health.

“It’s virgin territory … It has got the potential to be the biggest economy in the region in the next 10-20 years,” he said.

The more fertile south suffers from a lack of basic infrastructure such as paved roads linking its states’ capitals. Dirt roads crisscross the country, but these quickly deteriorate when it rains.

Much of the investment in Sudan — a large proportion of which is from the Gulf — is focused in the largely arid north, in and around Khartoum, the country’s capital.

KCB has so far focused its business in the south on money transfer services, trade finance backed by governments and loans backed by assets in neighbouring countries.

It has a limited mortgage service and needs to see an improved legal and regulatory framework before expanding its services there, Oduor-Otieno said.

The bank has more than 200 employees in branches in towns across the south, including Juba, the region’s capital, Rumbek and Yambio. Reuters

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