Equity Targets $4.2 Billion of Loans in Mobile-Banking Venture

NAIROBI (Capital Markets in Africa) – Equity Group Holdings Plc expects to lend as much as 420 billion shillings ($4.2 billion) during the next five years through a venture with Kenya’s largest mobile-phone operator by targeting small businesses.

The nation’s biggest lender by market value and Safaricom Plc said last month they agreed to collaborate on financial services for their combined base of more than 30 million customers, ending a nine-year-long rivalry.

Safariom “will support us to do business-to-business and person-to-business lending and the biggest area of operation would be SMEs” Equity Chief Executive Officer James Mwangi told investors in an earnings briefing. Kenya’s biggest lender by market value held a loan book of 305.5 billion shillings by the end of the first quarter.

Safaricom, East Africa’s biggest company by market value, and Equity have the largest agency banking network in the East African nation. They intend to make their mobile-money services, M-Pesa and EazzyPay, “completely interoperable,” Mwangi said.

Small- and medium-sized enterprises make up 60 percent of Equity’s loan book, he said. “That’s where the oxygen is required,” Mwangi said.

Income Slows
Equity, which recently agreed to a share swap with Atlas Mara Ltd. in exchange for four African operations, plans to enter five more markets by 2024, Mwangi told investors.

Equity increased provisions by 14 percent to 409 million shillings in the first quarter as loans in Tanzania soured. Profit rose by 5 percent to 6.15 billion shillings, slowing down from 22 percent growth posted a year earlier, after yields from government securities declined and the central bank cut its benchmark rate.

“We are hard pressed from both ends,” the CEO said.