WARNING: This is Version 1 of my old archive, so Photos will NOT work and many links will NOT work. But you can find articles by searching on the Titles. There is a lot of information in this archive. Use the SEARCH BAR at the top right. Prior to December 2012; I was a pro-Christian type of Conservative. I was unaware of the mass of Jewish lies in history, especially the lies regarding WW2 and Hitler. So in here you will find pro-Jewish and pro-Israel material. I was definitely WRONG about the Boeremag and Janusz Walus. They were for real.
Original Post Date: 2010-09-09 Time: 15:00:01 Posted By: News Poster
By Paul Wafula
A synchronised selling rhythm from the shouting hawkers in their quest to grab the attention of potential customers is perhaps the best welcome note a visitor gets in Gikomba, the largest informal open air market in Kenya.
A quick sweep through the market, and you will understand why fire brigades hardly access the place in time incase there is a fire outbreak.
Once in a while you will hear a shout of “thief” along the market’s busy ‘streets’, then the noise that comes from artisans making their wares, small music bands wooing customers and much more.
But of late, a new breed of investors is arriving at Gikomba – banks.
As most banks initiate products that favour the small and medium enterprises (SME), attention has shifted to the fringes of urban centres which host informal businesses that oil the wheels of the economy.
A few years ago, areas such as Gikomba, Kariobangi and Dandora were considered a no-go zone for security and other business considerations.
But analysts said competition in the banking sector is pushing banks to such areas with the institutions opting to invest on security systems, but tap into the thousands of customers.
The recent entrant is CFC Stanbic bank, an institution largely seen aligned to corporate clients opened a branch in Kariobangi, joining the likes of Cooperative Bank and Equity who have already pitched tents in the area.
Cooperative Bank recently opened a branch in Dandora and another in Gikomba.
Mr Samuel Waweru, a trader recalls how different the market was four years ago when he had to close his shop for a journey to town to access banking services.
“Banks have realised where the money is. For years, it has been a daunting task to get banking facilities, ” said Mr Waweru.
“We were always scared of how to get our daily sales safely to banks. But today, I don’t have to worry any more of having to carry money all the way to the CBD (Central Business District) to deposit my money,” said Mr Waweru.
The trend for banks to venture into such markets, residential areas and suburbs coincides with an increasing number of investors moving away from the CBD to the suburbs and outskirts.
From supermarkets, to mobile phone firms; the low end market is the new investmet hotspot.
“CFC Stanbic Bank did not take me by surprise when they opened a branch in Kariobangi. Such areas attract huge volumes of small retail transactions that in the long-run are more attractive than the corporate clients at the CBD,” said Mr Wycliffe Masinde, an investment analyst at Kestrel Investment Bank.
“High traffic areas are better bets in terms of their ability to deliver faster break evens, but unfortunately for banks the suburbs and such markets form the chunk of these catchment areas,” said Mr Masinde.
He says the move by banks to woo the small retail transactions is partly being fuelled by the need to have numbers today that attract more transaction fees than just the traditional deposits from a small group of people as the case of banks operating in the CBDs.
“Such small transactions happen to form majority of transaction related revenues today. With numbers, banks can then spur the uptake of their value-added services like mobile banking, money transfer, airtime purchases among others to a larger pool of customers,” he said.
Most active
Co-operative, KCB and Equity banks have been among the most active in branch expansion, with some expanding as far as into the East African region.
Co-operative Bank this year increased its branch network by 50 per cent to increase its footprint in Kenya.
The bank, Kenya’s fourth-largest by assets, that saw its net profits grow to Sh2.4 billion in the six months to June, compared to Sh1.4 billion in a similar period last year, says it has increased its branch network by 27 in the same period.
But the bank said only 12 of them contributed to the bottom line in the first six months.
The bank has also come up with a customer growth strategy where every employee has been tasked to bring on board at least five accounts every month, a move that will see the bank further penetrate the suburbs that contribute significantly to the unbanked population.
“A key focus has seen growth in our customer numbers to over 1.2 million accounts and this has driven a lot of our transaction-based income in the bank,” said the managing director, Mr Gideon Muriuki.
The banks’ loan book increased to Sh70 billion from Sh62.2 billion in December, making it the second biggest jump after KCB that added 9.6 billion in the six months.
While most banks have grown their lending books, Standard Chartered and Barclays have seen theirs drop by Sh6.4 billion and Sh2 billion respectively, a situation analysts say would be reversed once they decide to diversify deep into the retail banking business.
“Banking hours happen to be the most productive hours of the small transaction customers business and it becomes very difficult for such people to sacrifice such times for the sake of banking. This keeps off a good proportion of potential customers and banks that will establish their presence in such areas will be the first to benefit,” said Mr Timothy Kosuri, a marketing consultant at Alibhai Shariff, a construction firm.
Beyond borders
KCB Group recently opened a branch in Juba, Southern Sudan, adding up to eight the total number of branches the group operates in Southern Sudan.
KCB Group operates in Kenya, Uganda, Tanzania, Southern Sudan and Rwanda and has a total of 204 branches with the largest Automated Teller Machine (ATM) network of 325 Quickserve ATMs.
The bank plans to establish presence in all the 10 States in Southern Sudan as demand for banking services increases making it the first foreign and the largest commercial bank in Southern Sudan.
On its part, by moving to Kariobangi last month, CFC Stanbic bank signalled a major shift in its strategy to increase its share of the retail market and shake up its sluggish loan book.
“We have been slow to capture the retail market. But this will change as we get the benefits of our new IT system installed in May,” said a senior official of the bank who requested anonymity.
CFC Stanbic changed its banking system to attack the retail banking business- -that is emerging as a growth driver in Kenya’s banking system.
United Bank has also indicated its resolve to roll out a massive branch expansion programme in the country.
“We are looking at opening up 150 branches in the next three to five years across the country,” said Mr Manz Denga, the regional chief executive officer of UBA Bank operations and the managing director of Kenya’s UBA operations.
Central Bank Governor, Prof Njuguna Ndung’u, however, has encouraged banks to adopt agency banking as a means of reducing the cost of doing business, and expanding their services to the unbanked population.
Expansion drive
The expansion drive will be through new brick and mortar branches and possible acquisition of existing banks.
“The agent banking model was designed to assist banks to lower their cost of offering banking services while at the same time improving their earnings as more Kenyans are offered an opportunity to access financial services,” Prof Ndung’u said.
Marketing consultants reckon that banks also have to factor in the opportunity in mobile money services that is likely to shape the future of the banking services while coming up with innovative products targeting the unbanked.
“Banks profits today are pegged on an increase in their lending services meaning that they have to be innovative and more focused on niche groups to keep momentum on growing their loan books,” said Mrs Wanjiru Kimani, a marketing executive with ToughStuff Marketing.
According to available data, banks may have billions at their disposal, but most of this goes to big corporates and high net worth clients while the majority of Kenyans remain excluded with only 23 per cent holding bank accounts.
But analysts predict that this is set to change as more banks follow in the footstep of retail driven banks such as KCB, Equity, and Co-operative Bank to shed off corporate tags that has been cited as a bottleneck in the banking industry’s pursuit of growth, to tap into the low end market.
The move to carry on with the expansion drive will result in an increase in deposit growth and rise the penetration drive of banking in the country.
An increase in deposit growth will subsequently increase loan accessibility, a move that is likely to advance businesses and households funds to finance their operations and consumption.
Original date published: 9 September 2010
Source: http://allafrica.com/stories/201009090105.html?viewall=1