By JAMES ANYANZWA
The rush by financial institutions to set up in South Sudan has gained momentum with CfC Stanbic opening a branch in Juba early this month.
CFC joins several regional and Kenyan banks that have rushed to set up in the newly formed African state. Other Kenyan banks already with a presence in Juba include Equity Bank and Kenya Commercial Bank (KCB).
Similarly, Cooperative Bank and Family Bank are eyeing the budding market, whose oil reserves have stirred up overwhelming investor interest.
Oil production accounts for 98 per cent of the budget in South Sudan, which became independent in July 2010 under a peace deal with Sudan that ended decades of civil war and opened up a potentially lucrative new frontier market to the international business community.
Plans by Kenya’s Cooperative Bank Group to open up a subsidiary in South Sudan are now at an advanced stage after the region’s government approved the transaction.
Joint venture
The move is part of the bank’s strategy to expand its footprint in the wider East African market with a view of growing its revenue base.
“The Government of South Sudan has approved the joint venture with Cooperative Bank. Issues to do with the shareholding and modalities of rolling out are now being discussed,” said Gideon Muriuki, the Group’s managing director and chief executive.
“We are expecting to play big in SouthSudan.”
CfC Stanbic Bank is seeking to raise additional capital through a rights issue to support its expansion into South Sudan, whose oil revenues net more than $2 billion.
CfC Stanbic, a member of South Africa’s Standard Bank Group, expects to pump about $15 million as start-up costs into its operations in South Sudan.
“The rights issue is fundamental to support the bank’s expansion in South Sudan,” said Greg Brackenridge, the CfC Stanbic Bank’s managing director, adding the bank’s anchor shareholders are willing to take up their rights.
The bank hopes to issue 200 million new shares with a par value of Sh5 to its shareholders. The conclusion of the transaction is expected to increase the company’s share capital from Sh1.3 billion to Sh2.3 billion.
