Kenya: Equity Bank Model Wins Praise at the Clinton Global Initiative 2011 Meeting

By Staff Writer

NEW YORK---Kenya headquartered financial services provider, The Equity Bank Group has been lauded for extending financial services to the informal sector in a model singled out by global leaders attending the annual Clinton Global Initiative Meeting as a global case study.

During the annual meeting organized by former American President Bill Clinton, panelists and speakers attending the CGI 2011 Megacities, Mega Challenges session noted that Equity Bank’s model geared at ensuring financial inclusivity for the unbanked masses has revolutionalised banking in a developing nation.

Speaking in New York at the sidelines of the just concluded meeting, Equity Bank Group Managing Director Dr. James Mwangi acknowledged that the recognition cites how the bank has facilitated access to credit enabling entrepreneurs to expand their businesses in ways that benefit their communities as a whole such us through job creation.

Dr. Mwangi who addressed the meeting on the private sector’s role in helping and supporting the most economic and socially marginalized populations highlighted Equity’s role in bridging the financial gaps in the formal and informal sector, wealth creation and poverty alleviation.

The Hunger Safety Net Program (HSNP) program in partnership with UKaid and Government of Kenya, he pointed out is one such initiative which has revolutionalised food relief by replacing it with social payment solutions.

Besides providing the technology enabled social payment solution, Equity Bank, Dr. Mwangi said, trains the beneficiaries on financial management and the use of technology so that they can easily access their allowances. The program has empowered the rural communities in Northern Kenya to embrace agriculture and entrepreneurship due to the growth of a hitherto stifled cash economy.

In Kenya, the low-income banking industry, he added has also continued to rely heavily on emerging technologies based on mobile phone platforms.

And as Equity Bank continues to spearhead an accelerated roll out of Equity Agents countrywide, Dr. Mwangi passionately advocated for a concerted effort to address challenges posed by rapid urbanisation.

“At Equity, we are addressing these challenges through innovative products and services and have already rolled out an Agency banking model where the agent represents the bank and is in a position to do much more than the customer can do over their phone,” Dr. Mwangi explained.

And added: “Equity has rolled out over 2500 agents throughout the country to complement our mobile banking solutions which include: Mkesho, Orange Money and Eazzy 2-4-7  and which makes banking easily accessible and very convenient for a range of financial services - such as savings, insurance and credit products.”

In Kenya, Dr. Mwangi also singled out the success of the Financial Knowledge for Africa (FiKA) initiative which is a partnership program between Equity Bank, Equity Group Foundation and The MasterCard Foundation. The FiKA initiative is providing free financial education to a target 1 million youth and women in Kenya by 2013.  Through financial literacy modules, the FiKA programme builds the financial capacity of youth and women through a comprehensive 12-week financial education program - covering budgeting, savings, debt management, financial negotiations and banking services.

By using a “social rating” determined by the community rather than traditional credit ratings to provide credit to informally employed, unbanked individuals, Equity paved the way for millions of Kenyans to enter the formal economy. 

Dr Mwangi who also chairs the delivery board of Kenya Vision 2030 which aims to turn Kenya into a middle-income country with high standards of living said that Equity has enlarged its role beyond that of micro-lender/creditor to help drive job growth in Kenya, particularly in Nairobi by embracing and developing products targeting the SMEs as well as the institutions and sectors that have the  potential to contribute to the country’s Gross Domestic Product (GDP) and the attainment of the goals of Vision 2030.

The bank recently partnered with China Development Bank on a Ksh 4 billion SME support facility. The facility will allow Equity Bank advance long –term development loans to the SME sector in the country at affordable interest rates in a bid to spur the sector which plays a crucial role in the social economic development of the country.