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Investment - October 13, 2022

How Kenya’s Wealthiest Families Plan to Diversify Fintech Portfolio

Financial service conglomerate National Commercial Bank of Anguilla Ltd (NCBA) Group, owned by some of the wealthiest families in Kenya, has disclosed its plans to spin out its fintech division, which includes M-Shwari. 

The process will involve creating a standalone business that will offer better digital banking services to its customers.

The wealthiest families include Kenyatta, Merali, and Ndegwa, who own a portion of the Kenyan banking company that is planning on diversifying into fintech. 

The Group holds operations in 109 locations in five countries, this includes Kenya, Uganda, Tanzania, Rwanda, and Ivory Coast. 

The NCBA  was created in 2019 with the union of the Commercial Bank of Africa Group and the NIC Bank Group.

Having its headquarters in Nairobi, the NCBA Group manages its extensive network of subsidiaries in five countries as a non-operating holding.

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Partnering with Safaricom

As the creator of Kenya’s first mobile phone-based lending platform, M-Shwari, in partnership with telecom giant Safaricom in 2012, NCBA has reaped enormous rewards.

In 2018, it also launched a solution to quicken payments for services delivered by suppliers via an internet platform.

The decision to divide its fintech company recently came at a time when banks are moving away from the conventional branch-based model to accommodate the digital transformation of the financial services industry through the disruptive models of fintech companies throughout Africa.

Kenya’s Wealthiest Families Plans on Diversifying their Fintech Portfolio 

According to NCBA Group CEO John Gachora, who made the strategic decision to do so, the group would house its digital loan platforms in Kenya and the other five countries where it has active operations under a separate fintech entity.

The fintech company will function under NCBA as a separate organisation with its own CEO and board of directors.

“What we are now discussing is how we package our business as a fintech so that it can get the right valuation,” Gachora said. “I understand from what I have seen in some write-ups that people don’t know the details of Fuliza and M-Shwari but we can package it in a way where we can report on all these details.”

“The vision is to have a separate fintech where we put all these businesses together, get the right valuations, give the right disclosures and therefore get some more shareholder value,” he added.

Following plans to construct seven new branches by the end of the year in accordance with its retail expansion targets and branch growth programme, which were unveiled last year, the company has decided to divide its fintech businesses.

As a result of this new approach, 18 additional branches have opened in the previous 18 months. The company has launched four branches in Kenya so far this year alone. 

By the end of the year, it hopes to have added seven more, bringing the total number of branches from 104 at the beginning of the year to 115.

NCBA Group

As of December 2019, the assets of NCBA Group Plc, a sizable provider of financial services in East and West Africa, were estimated to be worth approximately $4.43 billion. 

At that time, the value of shareholders’ equity was roughly $661 million.

The organisation serves as a non-operating holding corporation for its regional subsidiaries. 

The company provided service to 40 million consumers as of October 2019 in four East African and one West African nation.

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