Why cross-border banking is crucial for Africa’s growth

CRDB pic

CRDB Bank Group CEO Abdulmajid Nsekela speaks during a panel discussion organised by the bank on the sidelines of the 2024 Annual Meeting of the African Development Bank (AFDB) in Nairobi.  PHOTO | COURTESY

What you need to know:

  • This was the key message at one of the panel discussions during this year’s Annual Meeting of the African Development Bank (AfDB)

Nairobi. Cross-border banking services are crucial for Africa’s growth, a major conference heard in Nairobi on Tuesday.

This was the key message at one of the panel discussions during this year’s Annual Meeting of the African Development Bank (AfDB).

The meeting, which opened on Monday and is scheduled to end tomorrow, has drawn at least 3,000 participants, including key figures such as heads of state, government leaders and representatives from financial institutions across Africa.

Tanzania’s CRDB Bank, which also operates in Burundi and the Democratic Republic of Congo (DRC), hosted a panel discussion on the sidelines of the conference.

Speaking during the discussion, CRDB Bank Group chief executive Abdulmajid Nsekela said financial institutions, especially banks, play a significant role in the development of the African continent, hence the need for lenders to extend beyond their countries’ borders.

“Having crossed national borders and establish subsidiaries in Burundi and the Democratic Republic of Congo, we feel great pride and honour to have the opportunity to organise this discussion aimed at inspiring financial institutions in our African countries to expand their services beyond our national borders to stimulate economic transformation in Africa,” he said.

Mr Nsekela elaborated the bank’s expansion journey, emphasising that it is ongoing.

In addition to its presence in Burundi and the Democratic Republic of Congo, CRDB Bank is currently in the feasibility study stages for other African markets. The Bank also plans to establish strategic offices in some countries outside Africa, demonstrating its commitment to continuous growth and expansion.

One of the participants in the discussion, Norfund Director for East Africa William Nyaoke, posed a challenge to African governments to have stable policies that do not frequently change to attract financial institutions to invest beyond their home countries’ borders and thus stimulate economic transformation in Africa.

In addition to participating in the 2024 Annual Meeting of the African Development Bank (AfDB) and organising a discussion aimed at stimulating economic transformation in Africa, the CRDB Bank delegation has held several meetings with international financial organisations, including Afreximbank and the African Guarantee Fund (AGF).

These strategic meetings aimed to strengthen relationships between these institutions, which are already partners with CRDB Bank, enabling the Bank to provide loans in sectors with significant financing needs, including agriculture and business, while also targeting youth and women’s groups.

Additionally, these meetings aimed to expand collaborations with these institutions in CRDB Bank’s subsidiaries in Burundi and the Democratic Republic of Congo.

Mr Nsekela said during the CRDB Bank Annual General Meeting in Arusha that the lender was finalising the integration of its systems to enable seamless banking across Tanzania, Burundi and the DRC.

This, he said, will enable a seamless banking experience for a customer who holds an account in Tanzania when he/she travels to Burundi or the DRC and vice versa.

He said the Burundi subsidiary has grown to become the most profitable lender in that country, with assets reaching Sh985 billion and a total of Sh538 billion in customers’ deposits.

Burundi contributed Sh30.2 billion to CRDB Bank Group’s net profit for 2023.

This comes as available data show that banks that have gone regional are now some of the most profitable companies in east Africa.

For instance, KCB has announced a 69 percent growth in net profit to Ksh16.06 billion ($122.59 million) in Q1 of 2024.

With that, it reclaimed its position as East Africa’s most profitable financial conglomerate.

KCB Group has operations in Kenya, Uganda, Tanzania, Rwanda, Burundi, South Sudan, the Democratic Republic of Congo (DRC) and a representative office in Ethiopia

Its total revenues during the three months to March 31 increased by 31.6 percent to Ksh48.5 billion ($370.22 million) driven by both interest and non-interest (non-funded) incomes.

It was followed by Equity group whose net profit grew by 25.1 percent to Ksh15.39 billion ($117.48 million) from Ksh12.3 billion ($93.89 million) boosted by substantial contributions from regional subsidiaries in the Democratic Republic of Congo (DRC) and South Sudan.