Equity Bank has shut down seven branches in South Sudan and declared the subsidiary as dormant, leaving hundreds without jobs and its operations there on shaky ground.
The future of the Ksh11 billion operation that contributed Ksh1.1 billion to the group’s pre-tax profit only four years ago now hangs in the balance.
Political upheaval which has hit Africa’s youngest country since 2013 has depressed the economy and made businesses operations nearly impossible.
South Sudan, which had become a major attraction for Kenyan banks and other businesses has now turned into a graveyard, with many closing branches and others pulling out.
Equity chief executive James Mwangi said Tuesday that the company has only five branches operating in that market.
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“I would like to ask shareholders to treat South Sudan as a dormant company. We are just maintaining a licence and you can’t maintain a licence unless you’re open,” Mr Mwangi said at the company’s annual general meeting (AGM).
Recently, KCB announced it had closed five out of its 15 branches in South Sudan.
Mr Mwangi said Equity would keep some bank branches open to meet regulations. In the year to December 2016, Equity held assets worth Ksh11.1 billion in South Sudan.
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However, the business was operating in the red, recording net interest loss of Ksh55 million and a loss before tax of Ksh528 million. Customer deposits fell 50 per cent in the year to Ksh7.4 billion.
Mr Mwangi said that he does not expect the South Sudan unit to make any money for at least two more years.
“I don’t want to say that this is a cow that we bought and then it died. But we’re saying it’s a cow that might not give us milk for the next two years,” he told shareholders.
[crp]
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