Interview with Robert Kiboti CEO & MD of EQUITY Bank Tanzania

Interview with Robert Kiboti CEO of Equity Bank Tanzania

TanzaniaInvest interviewed Robert Kiboti CEO & MD of EQUITY Bank Tanzania, the local subsidiary of the EQUITY group with presence in Kenya, Uganda, Rwanda, DR Congo, and South Sudan.

Kiboti shares EQUITY’s promising results in 2021 and the expansion strategy for 2022, based on the bank’s increasing support to regional trade and small and medium enterprises, and overall increased financial inclusion of the Tanzanian population to accompany its economic growth in the years ahead.

Since the new administration of President Mama Samia, there is a new impetus in promoting investments in the country via a more conducive business environment. What is your sentiment on that so far? Do you already see tangible improvements? 

So far so good. We can see tangible improvements and a heavy dose of political goodwill to improve cross-border trade relations and improve the business environment to raise Tanzania’s global competitiveness.

The biggest opportunity at the moment that every African nation needs to pursue is the recent launch of the African Continental Free Trade Area (AFCTA).

The biggest opportunity at the moment [for Tanzania] is the recent launch of the African Continental Free Trade Area (AFCTA).

Tanzania like all other African nations has to make its contribution in helping Africa lift the share of intra-Africa trade from 15% of total trade by Africa to the level of EU and USMCA (United States, Canada, and Mexico – formerly NAFTA- North American Free Trade Area) at over 60%.

President Mama Samia Suluhu Hassan has traveled and reached out to other countries to let them know that Tanzania is open for business and generally seeking to reset trade relations.

In May this year, she traveled for a 2-days state visit to Kenya aimed at improving trade relations between the two East African neighbors; she met and engaged President Uhuru Kenyatta and also addressed Kenya’s before signing an agreement to eliminate tariff and non-tariff trade barriers including Covid-19 containment protocols at the border points. 

Kenya is the biggest investor in Tanzania and Tanzanian exports to Kenya have been rising over the last 10 years. 

But the Covid-19 pandemic is hampering FDI (Foreign Direct Investment) and GDP growth. The panacea or solution to this is vaccination. No one is safe in the world unless everyone is vaccinated. 

Accelerating the speed and magnitude of access to vaccines and vaccination will be accompanied by higher investors’ confidence and hence higher levels of investments. 

President Mama Samia has struck the right tone on Covid-19’s management and vaccination and this will pay dividends in increasing the number of foreign tourists; expanding the tourism and hospitality industries, and boosting FDI.

After years of high ratios of NPLs (non-performing loans) and the more recent impact of the Covid-19 pandemic, the banking sector has shown record profits in 2021 so far. How do you explain it? Is this applicable to EQUITY too? 

Headwinds leading to the underperformance of some economic sectors, the impact of the Covid-19 pandemic on the general economy and in particular tourism industry coupled with a decline in underwriting and loan recovery standards could be some of the reasons leading to the rise in NPLs.

These, however, declined to around 7.5% in December 2020 but it’s still above the maximum threshold set by the Bank of Tanzania (BOT) of 5% and the industry is thus not out of the woods.

NPLs require banks to increase provisions for bad loans expense which eats on bank profitability and so reduction of NPLs helps reduce provisions and thus boost profitability. 

EQUITY Bank Tanzania has suffered NPLs but we have instituted a raft of measures to contain the problem and we are now seeing green shoots of recovery during the Year on Year (YOY) results to June 2021 with NPLs dropping by 12% and PAT (Profit After Tax) rising by a whopping 176%. 

During the Year on Year (YOY) results to June 2021 NPLs dropped by 12% and PAT (Profit After Tax) rised by a whopping 176%. 

The Tanzanian market is crowded with 48 licensed banks, though the number is decreasing with the late mergers. What is EQUITY’s core market in terms of clientele and sectors of the economy? What are your competitive advantages? How do you leverage your presence in six other countries in East Africa? What new markets or initiatives are you pursuing? 

It is true Tanzania has many banks and we have also seen mergers in the industry. However, we believe that the market is large enough for everyone and that what matters is the development of the financial sector. 

There is still room to increase the percentage of Tanzanians who are financially included formally and informally, whereby this stood at 72% in 2017 (Finscope Survey by FSDT– Financial Sector Deepening trust Tanzania).

There is still room to grow Tanzania’s domestic credit to the private sector as % of GDP, whereby this was 13.14% in Tanzania as opposed to 129% in South Africa at 149.6% globally in 2020.

There is still room to grow Tanzania’s domestic credit to the private sector as % of GDP, whereby this was 13.14% in Tanzania as opposed to 129% in South Africa at 149.6% globally in 2020.

Equity Bank champions a financially inclusive business model that serves all individuals from low income to medium, up to high-net-worth individuals, and businesses from micro to small, medium, large, up to corporates and multinationals.

Our competitive advantage and unique selling proposition-USP is creating a unique, emotional bond with our customers.

Our customers can benefit from our presence in Eastern and Central Africa because we can support them to seamlessly do business across all of those countries in terms of cross-border loans, payment solutions, trade finance, treasury forex products as well as advisory services. 

Medium enterprises need a champion who is prepared to connect them to the national and regional economies, and EQUITY can help them take their business to the next level: “Equity is ready to walk with me side by side as a family member.”

Corporates need a trusted advisor to support their growth into Africa and the world. For these customers, EQUITY will provide comfort that we are a true business partner: “As a fellow African, Equity understands what it takes to do business in Africa.”

In addition, we are investing heavily in digital payments solutions for MSMEs; deepening our distribution footprint via agents and other payments channels; extending loans for MSMEs and retail customers, and facilitating Tanzanian businesses to take advantage of ACFTA and most recently the DR Congo market. 

In October 2021, Mama Samia launched the Government’s Economic Recovery Plan and Response to the Covid-19 pandemic worth TZS 3.62 trillion, and the IMF has recently reviewed upwards its economic forecast for Tanzania for 2022 and 2023. Which role do you aim to play in the socio-economic development of Tanzania over the next few years? 

Covid-19 indeed reversed gains the world achieved since 2015 towards the realization of the 17 United Nations Sustainable Development Goals and also compromised the probability of achieving them by 2030.

It is therefore imperative and a responsibility of EQUITY Bank Tanzania to join hands with the Government, households, and the private sector to finance the building of a better economy-more inclusive and sustainable-creating jobs, reducing poverty and inequalities, and ensuring that no one is left behind.

The future looks very bright for Tanzania and EQUITY Bank Tanzania.

Better days lie ahead as the GDP growth rate is forecasted to be robust driven by strong performance in agriculture, services, mining, the Government’s investments in mega infrastructure projects, and increasing regional trade with the East African Community (EAC) and DR Congo. 

GDP growth rate is forecasted to be robust driven by strong performance in agriculture, services, mining, the Government’s investments in mega infrastructure projects, and increasing regional trade

EQUITY Bank Tanzania intends to remain true to its corporate purpose and the reason we exist: “Transforming lives, giving dignity and expanding opportunities for wealth creation”, with always in mind our vision “To be the champion of the socio-economic prosperity of the people of Africa” and our mission: “Offer integrated financial services that socially and economically empower consumers, businesses, enterprises, and communities.”

In the next few years, EQUITY Bank Tanzania is committed to playing a key role in accelerating financial inclusion in the country, providing access to finance to MSMEs and individuals, driving innovations, especially in payments, digitizing businesses and governments, and becoming an essential lubricant to driving the implementation of ACFTA to grow intra-Africa trade in EAC and the Great Lakes Region.

EQUITY Group Holdings Plc recently announced a USD 5 billion post-Covid-19 Economic Recovery and Resilience “Marshall” Plan to work with governments and like-minded development partners to drive financing and capacity building of 5 Million MSMEs in EAC and the Great Lakes Region to create 25 million direct jobs especially for the youths who are unemployed. 

EQUITY Group Hrecently announced a USD 5 billion post-Covid-19 Economic Recovery and Resilience Plan to create 25 million direct jobs especially for the youths who are unemployed. 

EQUITY Bank Tanzania will play its role here in Tanzania to support the recovery of the economy and transform many lives, and socially and economically empower consumers, businesses, enterprises, and communities.