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    Father of Kenyan banking relives Equity Group’s three-decade journey

    08 Apr 2018

    Celebrated Kenyan banker, group managing director and chief executive of Equity Group Holdings Dr. James Mwangi has transformed the financial institution from a loss making building society in the early 1990s to a regional behemoth that posted an estimated $188 million in net profit for the year ended December 31, 2017.

    In an interview with CNN programme, Marketplace Africa, Mwangi explained his journey with Equity Bank began in the early 1990s when it was a building society “condemned for closure” after experiencing losses of 33 million shillings.

    He outlined the first step in his strategy for turning the building society around after being hired as Equity’s strategy finance and operations director: “We asked the staff whether they would accept 25 per cent of their salaries be paid in terms of shares because we were still struggling to pay their salaries. Looking back, it was one of the best decisions because the shares today are worth much, much more and I’ve made those who held those shares fairly significant, wealthy people in society.”

    Selling shares to their staff was immediately successful for Equity and so Mwangi and his team decided to expand this idea: “In 1997, we started to ask customers to convert some of their savings into investment shares. That has become maybe the biggest gift to our customer base in moving and engaging them in the turnaround of the building society.”

    Mwangi further told the programme that big investments in the early 2000s was the turning point for Equity: “By 2002, we got the first micro finance specialised fund in Africa to invest in the building society. They gave us 1.6 million dollars for 16 per cent of shareholding of the building society. That capital injection allowed us to grow for the next three years. In 2004, we did a private placement and asked our customers to invest and that year we raised 10 million dollars. That enabled us, on the last day of 2004, to [convert] Equity Building Society into Equity Bank. We became a full-service banking institution.”

    Once Equity made its first billion shillings in profit in 2007, the bank established itself in the Nairobi stock exchange and was listed with a market value of 4.7 billion shillings.

    Mwangi describes how this enabled Equity to expand: “With the listing in the stock exchange, we were [able] to seek international capital to support our growth. In 2008, we started regional expansion, which for the first time saw us go to Uganda, South Sudan, Rwanda, Tanzania and the Democratic Republic of Congo.”
    Mwangi reflects on how far the bank has grown since its’ expansion.

    “The customer base has moved from 27,000 customers to 12.1 million customers. The number of staff has moved from 27 to 9,000. And looking back to last year, we made 24 billion shillings, so it has been an incremental journey.”

    Looking to the future, Mwangi is determined that the bank will act as “a catalyst for social economic transformation of the continent.” The programme hears what’s next for the bank: “The biggest future plan is to use Equity’s brand to draw and leverage on foundations and multilateral organisations that want to impact Africa, by providing them with a foundation platform and the infrastructure of a corporate bank. Because of Equity’s brand and its’ resource capabilities, it has a unique opportunity to provide direction and leadership to see that transformation of Africa during our lifetime.”

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