African Banks Expand Presence in Kenya

African lenders are increasing their investments in Kenya’s banking industry, attracted by the country’s profitability and its role as East Africa’s financial centre despite strong competition from established local banks.

Financial institutions from Egypt, Nigeria and South Africa, including Commercial International Bank (CIB), Access Bank, Nedbank and Absa, have expanded their operations through acquisitions and increased shareholdings as part of wider regional growth plans.

Kenya remains an attractive market because of its position within the East African Community, its well-developed mobile money ecosystem and a regulatory environment that supports banking growth.

Absa recently announced plans to raise its stake in its Kenyan subsidiary to as much as 85%. Earlier this year, South Africa’s Nedbank agreed to acquire a controlling interest in NCBA Group, while Nigeria’s Access Bank completed the purchase of National Bank of Kenya last year.

The expansion comes as several international lenders reduce their footprint across Africa, creating acquisition opportunities for regional banks seeking to strengthen their presence on the continent.

New entrants, however, face competition from dominant local institutions such as Equity Group and KCB Group, which have extensive customer bases, advanced digital banking services and operations across the region.

Kenya’s central bank said the banking sector recorded about USD 2 billion in pre-tax profit in 2024. Despite the sector’s profitability, smaller foreign lenders continue to account for a limited share of the market.

Commercial International Bank, which entered Kenya through the acquisition of a local bank six years ago, controls about 0.3% of the market but says its assets and earnings continue to grow. Industry executives also expect Kenya’s plan to increase minimum bank capital requirements from one billion shillings to 10 billion shillings by 2032 to encourage further mergers and acquisitions. The timing of any additional deals remains uncertain.

SOURCE: Reuters