00:00James Mwangi, Equity Bank CEO, it's nice to have you here.
00:03Thank you for having me.
00:04It's been a while. Yeah, it's been a busy week for you.
00:06Very active.
00:07Maybe you can just talk about some of the progress that you've seen from your perspective
00:12as an East African executive, financial executive, over the past few days.
00:19The last five days of this week, we've seen a lot of movement on the African country.
00:27There is a focus on urgency of doing things in Africa.
00:32I think it's a recognition and realization of the opportunity Africa has.
00:38And lastly, there seems to be appreciation that the world is resetting.
00:44And Africa wants to be involved.
00:46Africa doesn't want to be on the menu.
00:49It wants to be on the table.
00:50So you could see people anxious about doing something to reposition Africa.
01:00So it has been a very interesting conversation.
01:02But there's also recognition that Africa can't do it unless it does things on scale.
01:08So we'll find private sector all talking about how do we scale.
01:13And together, how do we move Africa forward?
01:17How do you leverage this opportunity as a bank and as an institution from your position?
01:24This has given us the best opportunity because everybody wants to be facilitated.
01:33Everybody wants to get access to finance.
01:38And we can orchestrate this movement.
01:42We can be a catalyst for this movement of people wanting to do something.
01:49People wanting to scale their operations.
01:52And that really provides us with this opportunity.
01:55I've also seen the international community, particularly the private sector,
01:59seeing the window of opportunity to enter and invest in Africa.
02:05And that really gives us a huge opportunity.
02:07So as a financial institution, both at banking level and insurance level,
02:13the opportunity is sizable because we provide people with a platform
02:19on which to leverage their capital through debt.
02:24And I know there were a few MOUs that were signed with the French government.
02:27Outside of that, are you looking at any other partnerships or deals with other European banks
02:32or Gulf partners?
02:33Where does that stand?
02:34Yes, it's true.
02:36Yes, it's true.
02:36Earlier alone, in the week, we signed three agreements.
02:40One with SILAD, the research center for France.
02:45We signed with Pallidite for offtake of tea across the European market.
02:51And then we signed with the PROPACO, a credit facility.
02:56Here in Rwanda, we have signed four agreements.
03:00One with the Gates Foundation to champion digital public infrastructure.
03:06We have signed with PISA to strengthen and to remove friction in payments across the African continent.
03:15And we have also signed one with UNICEF about providing opportunities for young people
03:23and creating job opportunities so that we can convert the African demographic into dividends.
03:31How does this, James, fit into the resumption of your expansion plans on the continent?
03:36That's something you announced earlier this year.
03:38Talk about how this fits into that execution, I guess.
03:43The conference in Kigari is all about scaling.
03:47So it really confirms the strategy that equity has pursued for the last 15 years have been liked.
03:55We were convinced 15 years ago that there was no future for start-alone financial institutions
04:03because scale was everything.
04:06The cost of risk management and technology was too high for start-alone institutions.
04:14So at the moment we are in five countries and we have ambition of being in 15 countries by 2030.
04:21Simply because we are a leader and a champion of financial inclusion.
04:27To date we have 23 million customers and we have an ambition using technology,
04:33in particular digital public infrastructure and digital financial services,
04:38to reach 100 million customers by 2030.
04:42Have you identified those countries that you want to add, outside of the ones that have been named?
04:46I think it's Mozambique, Zambia.
04:48It is true we are in DLC, Rwanda, Uganda, South Sudan, Tanzania, Kenya, and Ethiopia.
04:56But those don't constitute Africa.
04:58They are just part of Africa, East and Central Africa.
05:02So the ambition is to ensure we are in the whole of Africa.
05:06We are facilitating the African continent of free trade area trade.
05:12And that will require us to have capability.
05:15We are approaching that in a twin approach.
05:19The first one is entering countries.
05:23And we have here marked Ethiopia, Zambia, Mozambique, and Angola in the short and medium term.
05:33And then we could pick another five countries.
05:36Have you identified those other five?
05:38They will be part of the remaining countries on the African continent.
05:42It may be another cluster.
05:44But as you can see, we have approached this from trade weeks.
05:48So we prioritize on where is the highest volume of trade from where we are.
05:54The first huge trade traffic was with Uganda.
05:59Then we went to Tanzania.
06:01Then we went to South Sudan.
06:02Then DLC became a huge corridor.
06:05We are now realizing that the hottest corridor is the Robito corridor between DLC, Angola, Zambia, and Mozambique.
06:13So that is how we evaluate.
06:15So as African trade takes shape, it will give us the priority.
06:20But the ultimate objective is to be an African bank banking the entire Africa.
06:25The second one is the use of technology.
06:28We have realized we don't have to use brick and mortar.
06:30And we have seen the opportunity to hive off payments away from banking so that we can be technology-led.
06:41We can enter those markets initially with the payments and then follow through with banking.
06:49Payments can be accompanied by digital financial services.
06:53So that is the twin approach to ensure we provide services to the entire continent.
07:01So a technological platform would be able to do that very easily without the constraint of brick and mortar.
07:09I see.
07:10How much of it will be determined by M&A activity potentially in some of these markets?
07:17Because you're taking a dual approach, right?
07:20But you're also going into markets where there's already competitors that are operating there.
07:25Given our size as the largest bank by market cap in sub-Sahara Africa, outside South Africa,
07:33we have a very strong currency of share source.
07:38And so mergers and acquisitions seem the most preferred strategy.
07:42In DLC, we acquired the pro-credit, the German bank, and then BCDC, the Belgian bank, and that gave us
07:5224% of the market.
07:54And then you have significant impact in the country from day one.
07:58That is the best approach.
08:00If you look at here in Rwanda, we scaled ourselves by acquiring Koja Bank, and it went all the way
08:09to 18% of the market share,
08:11becoming the second largest bank in Rwanda.
08:14So that has worked for us, and we think it's the way to move forward.
08:21Even in some of those countries you mentioned, Angola, Ethiopia, you're still looking at that model?
08:26It's the preferred strategy.
08:27It's the preferred strategy.
08:29When you talk about scaling as well, James, I wonder how much you think about currency, right,
08:36and the markets that you're going into, and how currency risk, currency trade factors in.
08:41And when I talk about that, I'm thinking about the dollar and the yuan,
08:45and how that factors into your thoughts on entering a specific market.
08:49I think African countries have had volatility in terms of exchange rates,
08:55and that always affects planning and budgeting on the African continent.
09:01Increasingly, we are seeing emerging solutions to cure two problems.
09:07That volatility, but more important, the multiple currencies that you have to deal with in Africa,
09:18nearly 54 different currencies.
09:20I think the coming of virtual assets is likely to provide a very strong solution.
09:28Like CBDCs or Bitcoin?
09:30Like maybe a Pan-African stable coin that then is pegged to a very stable currency.
09:38And then you have one currency in a stable coin facilitating African continental free trade area.
09:46And then the challenges that we have of conversion, losses of conversion,
09:53exchange rates, integration, because of volatility can be minimized or at least managed.
10:01Is that something you're championing to central bankers or to the market participants that you're speaking with?
10:08It's something we have got experts.
10:11We have hired a chief technology officer focused on blockchain.
10:20And Brodery is then to start conversations with the central bank.
10:25How we could go around to ensure we overcome that challenge of cross-border trade
10:32where the currencies are different and where there are no depth of markets.
10:39That's where the problem is.
10:40And where the regulations are very different from one market to the other.
10:45And where approvals, sometimes most of the markets don't have a fraction.
10:53Some markets have regulated foreign exchange regulations.
10:57So we can overcome all that by ensuring we promote a Pan-African stable coin.
11:04How much are you tapping into this idea of a Chinese interbank system,
11:08tapping into the yuan over the dollar?
11:10I've been talking with some executives who are looking at that as an option.
11:13I think those are things we can't even know.
11:17Traditionally, the dollar was the currency for oil trading, petroleum dollars.
11:25We know that agreement exited.
11:29UAE and generally the Gulf region has been the dominant traders on oil.
11:38So, of course, their currency becomes a significant currency of consideration for settlement of oil.
11:46China and India have become dominant partners in terms of trade with Africa
11:52because of the specific, particularly China,
11:55because of the free trade arrangement which has signed for Africa.
12:01So it's currencies you can't even know.
12:04And one would consider a basket of most popular currencies in terms of use cases.
12:12So it's a diversified mix for the bank at this point.
12:16It should be a diversified, or a basket of currencies.
12:19A basket of currencies.
12:20And especially, last question, I know you've talked about expanding into the Gulf as well.
12:24I mean, how much of that has been, how much progress have you had in those uphoards?
12:29I don't know how the crisis in the Middle East will affect the UAE.
12:38But before that crisis, the UAE had become a magnet of trade.
12:42And it was emerging as the new global trade orchestrator
12:50because of getting it right with air traffic logistics.
12:56And for that reason, we set an office in UAE very, very successfully in facilitating trade,
13:05connecting people.
13:06And it was also not close to us that UAE was very keen in investing big on the African continent.
13:16So we wanted to be the facilitator, the catalyst of that, those investments, the trade,
13:24and position Africa to a market that is close to it.
13:28Is that still the plan?
13:30That is still the plan, but we are still analyzing the long-term effect of the current crisis.
13:37So you can't say...
13:37Because it has exposed the least.
13:39We are already there, so we continue to facilitate trade from there.
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