Pop quiz: Who was the only foreign head of state present at the inauguration of President Félix Tshisekedi of the Democratic Republic of Congo (DRC) in 2019?
Answer: Kenya’s President Uhuru Kenyatta. Kenya is trying to enter the 85-million-consumer-strong regional market that lies to its west, and it is easy to see why. While the DRC’s GDP was in single digit billions early this century, last year it hit $50bn. The ‘peace dividend’ after years of conflict is there for the harvesting.
Equity Bank chief James Mwangi is the poster child for Kenyan expansion into the DRC, having bought two banks: ProCredit and BCDC.
He also sees the DRC coming out of the Covid-19 crisis better than other economies, “because prices of gold have gone up; prices of copper, too, because demand for these electric cars is going up. So we realised we will have a huge run with those minerals,” he tells The Africa Report.
Kenya’s financial-sector prowess is driving integration. The DRC has “low financial inclusion ratios, and a big unbanked population,” Reginald Kadzutu, project head for pensions, insurance and savings at Zamara Actuaries, Administrators and Consultants tells The Africa Report. “A lot of arbitrage opportunities exist as regulation catches up.” In 2016, Kenyan insurer Jubilee Insurance partnered with state insurer SONAS.
Kenya leads the move
While Equity Bank can ramp up its lending to DRC blue-chips thanks to the BCDC acquisition, the next stage is encouraging the leading companies it banks to head west.
They could take some convincing because Kenyans have not always succeeded there, says a report by the East African Business Council (EABC). Regional trade ties with the DRC are weak.
While Rwanda and Uganda increased exports to the DRC, Kenya’s manufacturing exports declined since 2014. The DRC imported $6.6bn in goods and services in 2018 – a third of that from China, while just 11% from East African Community (EAC) countries ($112m from Kenya). In 2019 the DRC applied to join the EAC. The request has many backers in Nairobi.
