Equity boss on loans cost, Ethiopian expansion and 2026 outlook

Dr James Mwangi, CEO Equity Bank. [File,Standard] Equity Group chief executive officer Dr James Mwangi shared his confidence in lower lending rates, detailed plans for entering new markets like Ethiopia, and explained how Equity is evolving from a bank into a comprehensive financial services group. Excerpts of the interview below: Thank you for your time. As we approach the New Year, our readers are keen to understand the broader economic landscape. Could you start by giving us your summation of 2025 and your outlook for 2026, from a regional, global, and banking perspective? Certainly. We are ending 2025 on a very strong note for the East African Community region. The data up to June shows that Ethiopia, Kenya, Tanzania, and Uganda attracted nearly 80 per cent of all foreign direct investment (FDI) in Africa. This signals that the international community recognises the underlying, long-term growth story of Eastern and Central Africa. The drivers are clear: mining in the DRC and Ethiopia, agricultural transformation in Ethiopia and Tanzania, oil investment in Uganda, and services in Rwanda. Crucially, the region has a population of over 350 million, with GDP per capita rising, creating a sizable, youthful market with increasing consumption power. When you add significant government infrastructure investment across these nations, the foundation for sustained rapid growth is solid. Globally, we see positive signals: inflation is coming down, and interest rate cuts have begun, with the US cutting three times this year. The weakening of the US dollar against regional currencies also makes our markets more attractive for investment. For 2026, we can be optimistic. Of course, we must monitor constraints like climate change, the pace of renewable energy investment, and geopolitics. However, positive developments like the peace agreement in the DRC, supported by regional leaders, provide an essential ingredient for trade and collaboration. All these points point to a year with almost all the ingredients for sustained rapid growth in the region. Focusing on the private sector and your bank's strategy, Equity has championed an "Africa Recovery and Resilience Plan." What does this plan entail for 2026? Our plan is a recognition that development in the region will be private sector-led. It's a collaborative platform built on seven pillars. First, productivity gains in agriculture will move from raw exports to agro-processing, creating jobs and adding value. Second, the beneficiation of natural resources, like moving from exporting copper ore to copper cathodes and, eventually, to manufacturing cables here in the region. To achieve this, we need massive capital. So, the strategy involves attracting global investment and linking African producers to world markets. This is why we conduct major trade missions-like the recent one with 450 participants from 35 countries-and have opened an office in Dubai to coordinate trade and investment. We must formalise and support SMEs to populate these value chains. Furthermore, none of this happens without significant investment in renewable energy to power manufacturing sustainably. Finally, we must leverage technology and financial innovation, helping businesses adopt AI and data analytics. This framework is about consolidating what we've built and positioning Equity to facilitate this transformative journey. Speaking of positioning, you've often said Equity is no longer just a Kenyan bank but a regional financial group. What are your expansion plans, particularly regarding Ethiopia and potential acquisitions? Our commitment to becoming a systemic bank in all our markets remains. We have hubbed the region financially in Nairobi and are number two in Kenya, the DRC, and Rwanda. Growth will be both organic and through mergers and acquisitions, as demonstrated by our purchases of Banque Commerciale du Congo (BCDC) and Cogebanque in Rwanda. We have a stated goal to be in 15 countries by 2030. We have had a representative office in Ethiopia for seven years and now see a pathway to entering with a full banking license, which we are actively exploring. Beyond Ethiopia, we are looking at countries that connect our trade routes, such as Angola, Zambia, and Mozambique. Given our current scale, acquisition is the most effective entry strategy into new markets. Two final questions from our Kenyan audience. Firstly, with Kenya signing various zero-tariff deals (with the EU, UK, and UAE) and China offering similar access, how can local businesses truly benefit? Market access is one thing; the capacity of SMEs to meet international standards is another. That's why a core part of our strategy is capacitating SMEs. Through our trade missions, we create people-to-people linkages. Through our foundation, we provide financial literacy and entrepreneurship training. We have also established specialised desks (UK, EU, German, French) and bolstered our trade finance and treasury services to handhold our SMEs, helping them with quality, packaging, and the financial tools needed to compete globally. Signing agreements is the first step; building exporter capability is the crucial next phase. Lastly, Kenyans are always keen on the cost of loans. Equity has been proactive in lowering rates following CBK cuts. What's the outlook? The new interest rate pricing mechanism has made the transmission of Central Bank signals very effective. The Central Bank Rate (CBR) is a key factor in our pricing model. Therefore, when the CBK lowers the CBR, it automatically reflects in our lending rates. We are aligned with the CBK to ensure its monetary policy signalling is efficiently transmitted to the market, which provides predictability for borrowers. A quick bonus on your diversification: how is the insurance arm fitting into the "financial group" vision? Our second growth strategy is product diversification-moving from a bank to a full financial group. Insurance is a critical pillar. We have a life, general, and health insurance license. Our approach is innovative and micro-insurance sympathetic; we've already sold over 17 million policies. The logic is simple: the person whose wealth we help build needs to protect that wealth, their health, and their life. Insurance protects the dignity and assets we help create, and we see it becoming a major part of our business by 2030.

Equity boss on loans cost, Ethiopian expansion and 2026 outlook

Get Full Access for Ksh299/Week.

Related Topics

Similar Articles

Latest Stories

The Standard Insider

Digger Classified

GET OUR NEWSLETTER

CONNECT WITH US

FOR THE LATEST JOB ADVERTS

Similar Articles

New commerce lobby to strengthen Australia-EAC business ties

Technology and green energy powering China's Ningbo Zhoushan Port

Senate puts Kagwe to task over milk shortage

Treasury faces Sh245b refund bill in bungled Safaricom shares sale

DIGGER JOBS

Digger Motors

Digger Real Estate

Equity boss on loans cost, Ethiopian expansion and 2026 outlook

Get Full Access for Ksh299/Week.

Related Topics

Similar Articles

Latest Stories

The Standard Insider

Digger Classified

GET OUR NEWSLETTER

CONNECT WITH US

FOR THE LATEST JOB ADVERTS