BUILDING BACK BETTER

Banks must take greater leadership role in COVID-19 Recovery

How financial institutions can lead in ensuring economic recovery

In Summary

• Banks are at the center of the economy and must now take the lead in ensuring economic restart and recovery

• At the global level, financial institutions have been active in the mitigation process

KCB Group chief executive Joshua Oigara
KCB Group chief executive Joshua Oigara
Image: KCB Group

The news about the COVID-19 vaccine by Pfizer/BioNTec, Moderna, and Oxford/AstraZeneca marks a first significant step and renewed hope for the world that an end to the Covid-19 pandemic is finally in sight.

While life might gradually get back to normal as interactions become less restricted, the economic impact may take a longer recovery time, going by our experience with less hostile financial crises, such as the one in 2008/2009.

Banks are at the center of the economy and must now take the lead in ensuring economic restart and recovery— what is now popularly referred to us building back better. 

 

At the global level, financial institutions have been active in the mitigation process, either through philanthropic initiatives or innovative financing solutions to meet the needs of uncertain customers.

For our customers, this means supporting their aspirations and business dreams, and supporting and boosting their confidence to spend and invest.  This can be achieved through multi-pronged approaches, such as accelerating the platform economy, digitization, and initiating public-private partnerships to ensure the flow of money into the economy, especially to the Small and Medium Enterprises (SMEs).

Small businesses have played a key role in the global economy for decades. These businesses play an outsized role in economies and employ an estimated 80 percent of the workforce in both the formal and informal sectors, but during times of crisis, they are often the least resilient. This is partly because they have limited cash reserves, smaller client bases, and less capacity to manage commercial pressures than do larger companies.

Unfortunately, the pandemic has hit them hard and many of them face an existential threat, mostly a lack of liquidity and operating capital, and need real and urgent interventions.

We must scale-up lending to these enterprises including women and youth-owned businesses.

Because of their critical role in job creation and growth, protecting and enabling SMEs during this period of economic turbulence is important not least because their survival and recovery is likely to be a bellwether for the economy as a whole. We remain committed to supporting the business community to reinvent to thrive.

At KCB, with our Go Ahead clarion call, we are forging partnerships with various stakeholders, communities, and as a country to build a brighter future for all our stakeholders in which no one is left behind. 

 

We view this season as an opportunity for us to lay the foundation for long-term prosperity.

Through our shared value initiatives, Young Africa Works under the 2jiajiri programme, we have propositions for the youth that are focused on unlocking the youth unemployment challenge.

Through strategic partnerships with county governments, development partners, and other private enterprises, we are able to develop forward-looking solutions to meet the challenges presented by the pandemic and other 21st Century economic and social challenges including urbanization, poverty, transport in line with the United Nation's Sustainable Development Goals (SDGs).

In the immediate past, we have entered into strategic partnerships with Mastercard Foundation, National Treasury, International Finance Corporation, Central Bank of Kenya, Safaricom, and the Green Climate Fund. The shift towards partnership is an appreciation that restoring economic growth requires a concerted effort.

KCB Group chief executive Joshua Oigara
KCB Group chief executive Joshua Oigara
Image: KCB Group

As a Pan-African bank with deep roots in Kenya, we embrace our dual responsibility to our home country and as a force for regional prosperity. We are well-capitalized and positioned to play a key role in the revival of businesses affected by the effects of the COVID-19 pandemic across the countries we operate in— Tanzania, South Sudan, Rwanda, Uganda, and Burundi. Part of these efforts includes ensuring regional financial stability.

We have recently made moves in Rwanda and Tanzania, where we propose to acquire Banque Populaire du Rwanda Plc (BPR) and African Banking Corporation Tanzania (BancABC).

The transaction fits within our expansion strategy and will see us increase our market share and distribution network across Rwanda and Tanzania and improve our operating leverage by enabling us to deliver our existing product offerings to a wider base of customers while positioning the bank for sustainable growth in the long-term. Once the transaction is completed, the Group’s Rwanda and Tanzania businesses are expected to have stronger financial credentials to support business growth in the post-covid-19 macroeconomic recovery.

We believe as a people our resilience and entrepreneurial spirit and the vibrancy of our bulging youth will see us through the pandemic. We will emerge from this stronger. Go ahead!

The Writer is KCB Group CEO& MD.