# Equity Group's Q3 2024

An episode of [The Mwango Capital Podcast](https://invisiblenetwork.ai/podcast/1583367792), 28 Nov 2024, 45 min.

Audio: https://api.substack.com/feed/podcast/152274298/77423a6d85583f94571d1607ae030e4f.mp3

In this episode recorded on 20.11.2024, we are joined by Brent Malahay - Chief Strategy Officer at Equity Group, Willy Mulamba - Ag. Managing Director at Equity BCDC, and Paty-Paterne Mushagalusa - Commercial Director at Equity BCDC to unpack Equity Group's Q3 2024 results and the DRC strategy. Subscribe to get notified when we make a new post. Key Quotes “Let me give you four statistics which may give you a sense of the true problem statement of Africa. The first statistic I'll give you is 3%. 3% is the share of wealth that Africa has if you use GDP. The second statistic is 8%, and this is essentially the supply of food net of exports that Africa has. And then importantly, the third statistic is 17%. And this is the share of Africa's population, and the last or the fourth statistic I'll give is 25% and this is the population of Africa by 2050. So the real problem statement for Africa is how we close the gap of the 3% to the 25% by 2050.” Brent Malahay “Our subsidiaries, which include DRC contributed 48% to our asset base. DRC contributed a third to the total Group in terms of total assets or balance sheet. In terms of profit before tax, our subsidiaries contributed 53%. And if we just look at the DRC, it contributed also about a third to the Group's profitability.” Brent Malahay “Any investors coming from Kenya or any other country in Eastern Africa where it's a bit developed, we can only believe food and agriculture, I think internal transformation can present a quick conversion in terms of opportunities and then returns on any investment. The other one will be education and health. Kenya has quite an impressive network in terms of schools, in terms of education we believe that industry itself can also present great opportunities for any investor coming. Health as well I think is a critical and basic need in the DRC, specifically in big hubs of which Kinshasa would be number one, and other areas such as Lubumbashi, even Eastern DRC, and Bukavu. This would be, I think, the three or four where you can see a quick low-hanging fruit for conversion into opportunities and in PNL.” Willy Mulamba “As a group, we intend to have 100 Million customers by 2030. So maybe not so much 5 years, but call it in the next 7 years, we expect to have a hundred million customers. For us, the focus is more about the customer target than necessarily the number of flags we plant, our map.” Brent Malahay Show Notes 00:00:00 Introduction 00:04:34 Equity Group’s Strategy 00:10:04 DRC's Role and Its Economic Potential 00:19:24 The DRC Strategy 00:21:33 Kenya's Economic Landscape 00:25:03 Economic Challenges, Consumer Trends, and Diversification 00:26:01 Opportunities in the DRC 00:28:51 Regional Strategies 00:32:01 Security Concerns in the DRC 00:36:38 Equity Group's Vision and Future Plans 00:41:38 Closing Remarks Get full access to The Mwango Weekly at mwangocapital.substack.com/subscribe

## Transcript

[0:00] SPEAKER_02: Thank you for joining us this evening on Mwango Spaces,
[0:02] SPEAKER_02: where we hold conversations on capital markets,
[0:04] SPEAKER_02: especially in East Africa.
[0:05] SPEAKER_02: My name is Eric Mukai.
[0:06] SPEAKER_02: I'm the founder of Mwango Capital.
[0:08] SPEAKER_02: Today, we are focusing on equity group Q3 results and the DRC strategy to help us dissect that.
[0:14] SPEAKER_02: We have three able speakers.
[0:16] SPEAKER_02: We'll start with Brent.
[0:16] SPEAKER_02: Perhaps you could say a little bit about yourself,
[0:18] SPEAKER_02: what you do at equity,
[0:20] SPEAKER_02: and a little brief on your career so far.
[0:22] SPEAKER_02: Great.
[0:22] SPEAKER_03: Thank you, Eric, and good day, everyone.
[0:24] SPEAKER_03: So my name is Brent Malahy.
[0:25] SPEAKER_03: I'm the Chief Strategy Officer at Equity Group.
[0:28] SPEAKER_03: I've been with the group for almost nine years,
[0:30] SPEAKER_03: and prior to that,
[0:31] SPEAKER_03: I've had a sense of experience across financial services,
[0:34] SPEAKER_03: working at Standard Bank,
[0:35] SPEAKER_03: JP Morgan,
[0:36] SPEAKER_03: Fitch Ratings,
[0:37] SPEAKER_03: and Investec Asset Management,
[0:38] SPEAKER_03: which is now called the 91.
[0:40] SPEAKER_03: I'm also a board member on our Equity BCD subsidiary in the DRC,
[0:45] SPEAKER_03: as well as our technology business called GRID.
[0:48] SPEAKER_03: What brought you to Equity Group, if you may ask?
[0:50] SPEAKER_03: I've known Dr. Mwangi prior to joining Equity Bank for a number of years.
[0:54] SPEAKER_03: As I mentioned,
[0:55] SPEAKER_03: I worked at some financial institutions,
[0:58] SPEAKER_03: which I was able to cross paths with Dr.
[1:00] SPEAKER_03: Mwangi,
[1:01] SPEAKER_03: and we've been engaging continuously,
[1:03] SPEAKER_03: whether on
[1:04] SPEAKER_03: the business of Equity Bank, banking, telcos.
[1:07] SPEAKER_03: And after those many years of interactions with Dr. Mwangi and Equity Bank, I found myself at the bank.
[1:12] SPEAKER_02: I'll come back to you, so you can give us a bit of a brief on the strategy.
[1:15] SPEAKER_02: I'll allow the other two to introduce themselves.
[1:17] SPEAKER_02: I'll start with Willy.
[1:18] SPEAKER_02: Maybe you can introduce yourself and say what you do and how you ended up at Equity Group.
[1:21] SPEAKER_02: Thank you very much.
[1:22] SPEAKER_01: I am the CEO of equity subsidiary in the DRC.
[1:28] SPEAKER_01: We go here by EBCDC.
[1:29] SPEAKER_01: I've been appointed as a DMD since 10 days,
[1:32] SPEAKER_01: but I spent a few months at equity group in Nairobi and acting with senior management.
[1:38] SPEAKER_01: Prior to equity,
[1:39] SPEAKER_01: I was with Citibank in the DRC where I was sitting there as the MD of the
[1:46] SPEAKER_01: subsidiary in the DRC for the last seven years.
[1:48] SPEAKER_01: Before the seven years, I was the deputy director.
[1:51] SPEAKER_01: MD,
[1:51] SPEAKER_01: and then prior to the deputy MD role,
[1:54] SPEAKER_01: I was the country treasurer combined with the global markets activities,
[1:58] SPEAKER_01: both on fixed income and then on foreign exchange.
[2:02] SPEAKER_01: 17 years spent with Citi, but I did also spend time in various roles in financial services in the U.S.
[2:08] SPEAKER_01: So why did I join Equity?
[2:10] SPEAKER_01: But I'm from the DRC.
[2:12] SPEAKER_01: I have a lot of passion for my country, which I think is one of the countries where the natural resources
[2:19] SPEAKER_01: Being so massive,
[2:20] SPEAKER_01: but at the same time,
[2:21] SPEAKER_01: the impact on the living conditions on the DRC population remains quite insignificant.
[2:25] SPEAKER_01: And I believe the equity, that proposition to address the critical needs of the DRC people.
[2:32] SPEAKER_01: And this is the main reason why throughout my discussions with the group,
[2:35] SPEAKER_01: including a group CEO,
[2:36] SPEAKER_01: James Swange,
[2:37] SPEAKER_01: that I made that call to join this red institution.
[2:40] SPEAKER_01: So I can also add my skills, competencies to impact my own people.
[2:44] SPEAKER_01: Thank you.
[2:44] SPEAKER_02: Thank you really for sharing that.
[2:46] SPEAKER_02: Patti, over to you now.
[2:47] SPEAKER_02: You can introduce yourself and you can tell us a bit about your journey that led you to Equity Group.
[2:51] SPEAKER_02: Thank you very much.
[2:52] SPEAKER_00: My name is Patti Chagalusa.
[2:54] SPEAKER_00: Yes,
[2:54] SPEAKER_00: with my 16 years of experience in the banking,
[2:58] SPEAKER_00: after several years as a branch manager in several provinces in this country,
[3:03] SPEAKER_00: I worked in Kassai,
[3:05] SPEAKER_00: the central provinces.
[3:07] SPEAKER_00: And I managed also the Eastern region for 10 years in BCDC,
[3:13] SPEAKER_00: the Eastern region with more than seven provinces as commercial direct of the
[3:17] SPEAKER_00: region before returning to Kinshasa,
[3:20] SPEAKER_00: the headquarter of the bank to manage the business segment.
[3:23] SPEAKER_00: And as the story after the merger,
[3:25] SPEAKER_00: I was first managing MSME's banking and the business banking in the equity business
[3:32] SPEAKER_00: here in Kinshasa.
[3:33] SPEAKER_00: And now I'm in charge of commercial projects
[3:36] SPEAKER_00: in the Democratic Refabric of Congo,
[3:39] SPEAKER_00: which the main mission of the department is to ensure the execution of the bank
[3:44] SPEAKER_00: general strategy,
[3:46] SPEAKER_00: which the main relates to the African recovery and resilience that you know very well.
[3:51] SPEAKER_00: I think we manage the implementation of this strategy.
[3:54] SPEAKER_00: with a particular focus on the pillar three related to trade and investments.
[3:59] SPEAKER_00: We also take care of the development of the bank and the network of branches across
[4:05] SPEAKER_00: the country in accordance with our strategy to establish five regions by the bank.
[4:09] SPEAKER_00: We also ensure that our whole project
[4:13] SPEAKER_00: In different segments of the bank,
[4:15] SPEAKER_00: which the public sector incorporates,
[4:17] SPEAKER_00: MSAB and retail are well carried out for the satisfaction of our partners and customers.
[4:23] SPEAKER_00: And we also act as a bridge between the foundation in PRC,
[4:27] SPEAKER_00: which was the social investment and the bank's economic engine.
[4:31] SPEAKER_00: I think I will stop by there for now.
[4:33] SPEAKER_00: Thank you very much.
[4:34] SPEAKER_02: Thank you, Prati.
[4:34] SPEAKER_02: I'll come back to Branch now.
[4:36] SPEAKER_02: Branch,
[4:36] SPEAKER_02: maybe you're going to give us a bad overview of equity group and the various kind
[4:41] SPEAKER_02: of segments that the group deals in.
[4:43] SPEAKER_02: And you can just give us a brief overview of the company and how it is and how DRC
[4:48] SPEAKER_02: fits into all that as the group strategy officer.
[4:50] SPEAKER_03: Thank you, Eric.
[4:51] SPEAKER_03: So Equity Group is essentially an integrated financial services group.
[4:55] SPEAKER_03: We have four key verticals in the group.
[4:58] SPEAKER_03: The first one is what we're historically known for around our banking vertical.
[5:02] SPEAKER_03: And here we operate across six markets,
[5:05] SPEAKER_03: essentially in East African community,
[5:07] SPEAKER_03: with the exception of Burundi and more recently Somalia that joined the EIC.
[5:11] SPEAKER_03: Our second pillar is around insurance.
[5:13] SPEAKER_03: Here,
[5:13] SPEAKER_03: over the last three years,
[5:14] SPEAKER_03: we entered as part of our diversification into different verticals into the
[5:18] SPEAKER_03: insurance space.
[5:19] SPEAKER_03: And here we operate for the last three years in the life business in Kenya.
[5:23] SPEAKER_03: And we will look to expand these licenses into property and casualty, as well as in-house.
[5:29] SPEAKER_03: And essentially,
[5:30] SPEAKER_03: wherever our banking business is,
[5:31] SPEAKER_03: which is essentially a lead for us into markets,
[5:34] SPEAKER_03: our insurance business will follow as well.
[5:36] SPEAKER_03: Our third vertical is our technology business headed by our offensive company.
[5:41] SPEAKER_03: Here,
[5:42] SPEAKER_03: it's essentially a mobile-led capability around payment and basically providing our
[5:47] SPEAKER_03: services through the mobile channel across bank insurance.
[5:50] SPEAKER_03: And then our fourth vertical, and maybe just to highlight...
[5:53] SPEAKER_03: The bank, the insurance and the technology verticals we call our economic engine.
[5:59] SPEAKER_03: It's your typical commercial activities.
[6:01] SPEAKER_03: And then we have a second engine, which is essentially our equity group foundation.
[6:06] SPEAKER_03: This is not your typical CSR.
[6:08] SPEAKER_03: This is essentially a capacity building community supporting capability of the group.
[6:14] SPEAKER_03: And it interacts and capitalizes clients that we are looking to move into our
[6:19] SPEAKER_03: economic engine,
[6:20] SPEAKER_03: which,
[6:20] SPEAKER_03: as I mentioned,
[6:21] SPEAKER_03: comprise bank insurance and our technology business.
[6:23] SPEAKER_03: So it's essentially the social engine through the foundation is a catalytic capability.
[6:29] SPEAKER_03: And given the context where we operate across Eastern Central Africa,
[6:32] SPEAKER_03: this capacity building is very important to ensure we build a customer base going
[6:37] SPEAKER_03: into the future,
[6:38] SPEAKER_03: but also to ensure that our members are knowledgeable of the products that we are
[6:43] SPEAKER_03: looking to avail to them.
[6:45] SPEAKER_03: And then more recently, we introduced or we brought out what we call the sustainability engine.
[6:51] SPEAKER_03: Again,
[6:51] SPEAKER_03: in the context where we operate in Eastern Central Africa and in Africa in general,
[6:55] SPEAKER_03: climate change does have a significant impact,
[6:57] SPEAKER_03: particularly in the majority of livelihoods of food and agriculture.
[7:00] SPEAKER_03: So this is a key part of ensuring we have sustainable households and value chains.
[7:06] SPEAKER_03: So these four verticals,
[7:08] SPEAKER_03: which essentially together with the sustainability engine,
[7:11] SPEAKER_03: our business model,
[7:12] SPEAKER_03: we believe is quite unique and differentiated.
[7:14] SPEAKER_03: And with this business model, my colleague Patty mentioned the Africa Recovery and Resilience Plan.
[7:20] SPEAKER_03: And maybe before I go into the strategic plan of Equity Group,
[7:23] SPEAKER_03: it's maybe key to highlight that our business model of the three engine model of
[7:28] SPEAKER_03: ours is somewhat differentiated.
[7:30] SPEAKER_03: And we believe we are somewhat repurposing the role of private enterprise.
[7:34] SPEAKER_03: We,
[7:35] SPEAKER_03: at least in the context of Africa,
[7:36] SPEAKER_03: private enterprise should have a developmental catalytic role in the economy.
[7:41] SPEAKER_03: So with this business model,
[7:42] SPEAKER_03: this capability,
[7:43] SPEAKER_03: we've essentially put in place a corporate strategy that is essentially a
[7:47] SPEAKER_03: developmental plan,
[7:49] SPEAKER_03: which we call the Africa Recovery and Resilience Plan.
[7:52] SPEAKER_03: This plan is essentially a social and economic transformation plan.
[7:56] SPEAKER_03: It's not your typical corporate strategy where it's to the privy of Witi Bank here.
[8:01] SPEAKER_03: We've actually published our corporate strategy on our website and it's for the public to view.
[8:06] SPEAKER_03: And the essence of this Marshall Plan of ours is essentially to develop value chains in Africa.
[8:11] SPEAKER_03: And let me give you four statistics,
[8:14] SPEAKER_03: which maybe gives you a sense of the true problem statement of Africa.
[8:18] SPEAKER_03: The first statistic I'll give you is 3%.
[8:19] SPEAKER_03: 3% is the share of wealth that Africa has if you use GDP.
[8:26] SPEAKER_03: The second statistic is 8%.
[8:28] SPEAKER_03: And this is essentially the supply of food net of exports that Africa has.
[8:33] SPEAKER_03: And then importantly, the third statistic is 17%.
[8:36] SPEAKER_03: And this is the share of Africa's population.
[8:39] SPEAKER_03: And the last or the fourth statistic I'll give is 25%.
[8:42] SPEAKER_03: And this is the population of Africa by 2050.
[8:44] SPEAKER_03: So the real problem statement for Africa is how we close the gap of the 3% to the 25% by 2050.
[8:51] SPEAKER_03: And in our plan,
[8:52] SPEAKER_03: we're looking to contribute towards this with the initial phase of our plan having
[8:55] SPEAKER_03: targets of 2030 in terms of timelines.
[8:59] SPEAKER_03: And this plan is essentially looking to close that gap of Africa's wealth of 3% to its population of 25%.
[9:07] SPEAKER_03: That is going to be there by 2050.
[9:09] SPEAKER_03: And we're going to do this by essentially connecting,
[9:12] SPEAKER_03: developing,
[9:12] SPEAKER_03: catalyzing,
[9:14] SPEAKER_03: improving productivity and driving higher value adding businesses in what is
[9:19] SPEAKER_03: currently fragmented African value chains.
[9:21] SPEAKER_03: And so on our website, you'll see this framework of ours, this plan of ours to essentially do this.
[9:26] SPEAKER_03: So with this strategic context in mind,
[9:28] SPEAKER_03: we did report 13% growths in our earnings to around 41 billion shillings for the
[9:35] SPEAKER_03: nine months to September.
[9:37] SPEAKER_03: Our loan growth was somewhat constrained because of the reporting currencies,
[9:41] SPEAKER_03: which resulted in it contracting minus 5%.
[9:44] SPEAKER_03: But if you keep the shilling,
[9:45] SPEAKER_03: because we report in shillings and the Kenyan shilling did appreciate,
[9:48] SPEAKER_03: our loan book did grow at around 4%.
[9:52] SPEAKER_03: And we're guiding for the full year to be 2% to 5%.
[9:55] SPEAKER_03: So for us,
[9:56] SPEAKER_03: in these results of 13%,
[9:58] SPEAKER_03: I think it's just one data point of what is the story behind our numbers of this
[10:03] SPEAKER_03: Marshall Plan.
[10:04] SPEAKER_02: Perhaps you could get a bit of a brief on the performance of the DRC component in the group as a whole.
[10:11] SPEAKER_02: And then that would give us a bit of a segue to go to William Patti to discuss a
[10:14] SPEAKER_02: little bit of how DRC is a sub-market.
[10:17] SPEAKER_03: Our subsidiaries, which include DRC contributors,
[10:20] SPEAKER_03: 48% to our asset base.
[10:22] SPEAKER_03: DRC contributed a third to the total group in terms of total assets or balance sheet.
[10:28] SPEAKER_03: In terms of profit before tax, our subsidiaries contributed 53%.
[10:32] SPEAKER_03: And if we just look at the DRC, it contributed also about a third to the group's profitability.
[10:38] SPEAKER_03: So we have a diversification initiative, both geographically and hence wide.
[10:45] SPEAKER_03: recent upscaling of our Rwanda business.
[10:48] SPEAKER_03: This is a part of our geographic diversification initiative,
[10:51] SPEAKER_03: but also from a business vertical perspective in terms of the product capabilities
[10:56] SPEAKER_03: we have.
[10:56] SPEAKER_03: We also diversified the group into insurance as well.
[10:59] SPEAKER_03: And as I mentioned, the bank is a lead generator for the rest of the verticals.
[11:05] SPEAKER_03: You'll find equity insurance in the DRC as well, as well as what we're doing on the technology side.
[11:11] SPEAKER_03: That will maybe give the context of the DRC and there is potential for the DRC and
[11:16] SPEAKER_03: there's a likelihood that the DRC will be our largest subsidiary given the growth
[11:21] SPEAKER_03: that it's experiencing both at the country level but also reflected in our
[11:25] SPEAKER_03: subsidiary level.
[11:26] SPEAKER_03: The DRC has the potential to be our largest subsidiary in the next 12 to 18 months
[11:31] SPEAKER_03: and we remain very positive in the near term but more importantly over the medium
[11:35] SPEAKER_03: to long term to the extent that we are doing a lot of trade missions as Patty
[11:39] SPEAKER_03: alluded to.
[11:40] SPEAKER_03: We're doing a lot of trade mission into the DRC for many of our markets where we
[11:45] SPEAKER_03: operate in,
[11:45] SPEAKER_03: but also importantly,
[11:46] SPEAKER_03: because of this Marshall Plan we have,
[11:48] SPEAKER_03: and given the global reach and connectivity Equity Group has,
[11:52] SPEAKER_03: we are bringing international investors outside of the continent into the region
[11:56] SPEAKER_03: and into the DRC.
[11:57] SPEAKER_03: So that's maybe to give you and the listeners some context to the DRC.
[12:01] SPEAKER_02: I could double click on that a little bit.
[12:03] SPEAKER_02: What do you see in the DRC as a group?
[12:05] SPEAKER_02: It's already a significant part of the balance sheet and going forward,
[12:08] SPEAKER_02: it's going to contribute a lot towards the group profitability and all.
[12:11] SPEAKER_02: But as a group, what made you think of the DRC?
[12:14] SPEAKER_03: So you get a sense of a lot of statistics.
[12:16] SPEAKER_03: So let me give you some in our region and you'd say in the corridors where we
[12:21] SPEAKER_03: operate and where we neighbor.
[12:22] SPEAKER_03: And let me call that corridor everything from the East African community, which includes the DRC.
[12:29] SPEAKER_03: Ethiopia,
[12:30] SPEAKER_03: and you can put in the south,
[12:31] SPEAKER_03: Mozambique,
[12:32] SPEAKER_03: Zambia,
[12:33] SPEAKER_03: Angola,
[12:33] SPEAKER_03: in that,
[12:34] SPEAKER_03: call it corridor,
[12:35] SPEAKER_03: and you can maybe put in from an agricultural perspective,
[12:37] SPEAKER_03: Sudan as well.
[12:38] SPEAKER_03: You have essentially 40% of the world's lives arable land.
[12:42] SPEAKER_03: So there's a big opportunity, significant opportunity in terms of agriculture and food security.
[12:47] SPEAKER_03: Also importantly is the critical minerals,
[12:49] SPEAKER_03: whether you're looking at DRC with around 70% of the world's cobalt reserves,
[12:54] SPEAKER_03: significant reserves in copper in terms of their high-grade ores,
[12:57] SPEAKER_03: as well as in lithium,
[12:58] SPEAKER_03: and then you've got Tanzania,
[13:00] SPEAKER_03: you've got Zambia,
[13:01] SPEAKER_03: Zimbabwe for the south.
[13:02] SPEAKER_03: You've got pretty much six to seven of the critical minerals for the energy
[13:06] SPEAKER_03: transition and for new technologies.
[13:09] SPEAKER_03: So you've got agriculture, you've got critical minerals, and then also importantly, by 2050,
[13:16] SPEAKER_03: 10% of the world's population and therefore labor market will be in this corridor
[13:20] SPEAKER_03: and consequentially the future consumer market.
[13:23] SPEAKER_03: So this corridor, we believe, will be one of the most sought-after corridors or regions in the world.
[13:29] SPEAKER_03: You also have in that corridor three to four of the top 10 world's fastest growing economies as well.
[13:36] SPEAKER_03: The DRC is at the heart of this.
[13:38] SPEAKER_03: And it has significant opportunities in agriculture,
[13:42] SPEAKER_03: in mining,
[13:43] SPEAKER_03: and it has about 100,000 megawatts of hydro potential.
[13:47] SPEAKER_03: It has the world's second largest carbon sink in terms of the Congo Basin.
[13:51] SPEAKER_03: So the DRC and this corridor, we believe the world will look to connect down the road.
[13:57] SPEAKER_03: And our activity,
[13:58] SPEAKER_03: our Marshall Plan,
[13:59] SPEAKER_03: our Africa Recovering Resilience Plan,
[14:01] SPEAKER_03: positions equity group at the heart of this corridor.
[14:04] SPEAKER_03: Thank you, Eric.
[14:05] SPEAKER_03: Thank you, Brent.
[14:05] SPEAKER_02: I'll quickly move to Willy.
[14:07] SPEAKER_02: Maybe, Willy, you can give us an introduction 101 to DRC for those who are new.
[14:12] SPEAKER_02: Apart from the size, what else is in the country?
[14:15] SPEAKER_01: This is an interesting question for which I think we can take a long hour just to get the good picture.
[14:21] SPEAKER_01: from where we sit in the DRC.
[14:23] SPEAKER_01: Maybe not to repeat what my colleague Rens clearly explained,
[14:26] SPEAKER_01: but again,
[14:27] SPEAKER_01: DRC sits in the middle of Africa with nine neighbors.
[14:31] SPEAKER_01: I think if you look at the map, you can clearly identify who they are.
[14:34] SPEAKER_01: And then we pretty much learn which is locked because the access to the Atlantic Ocean
[14:38] SPEAKER_01: I think it's only 27 kilometers,
[14:41] SPEAKER_01: which can present challenges in terms of trade between Africa and the DRC and the
[14:46] SPEAKER_01: rest of the globe.
[14:47] SPEAKER_01: And a guessing point,
[14:48] SPEAKER_01: as Brent mentioned,
[14:49] SPEAKER_01: I think it's good to really dimension the size of the country in terms of auto
[14:53] SPEAKER_01: markets to really step into multiple opportunities.
[14:56] SPEAKER_01: As we know, natural resources, I think, in the DRC is one of the highest potentials.
[15:01] SPEAKER_01: across the globe.
[15:02] SPEAKER_01: And then another fact is the growing population, which is quite young.
[15:05] SPEAKER_01: Today,
[15:06] SPEAKER_01: we're talking 110 million people living in the DRC,
[15:10] SPEAKER_01: scattered around major cities,
[15:12] SPEAKER_01: somewhere between 7 and 10 major cities with a high concentration in Kinshasa,
[15:16] SPEAKER_01: which is the capital,
[15:17] SPEAKER_01: Cap City,
[15:18] SPEAKER_01: around 17 million people.
[15:19] SPEAKER_01: or here.
[15:20] SPEAKER_01: As we go to the other regions,
[15:21] SPEAKER_01: particularly in the mining,
[15:23] SPEAKER_01: you will find quite a concentration of population around 10,
[15:27] SPEAKER_01: 15 million people.
[15:28] SPEAKER_01: And moving to this, you will come across the same number.
[15:31] SPEAKER_01: What else?
[15:32] SPEAKER_01: DRC is soil and land, I think, from that perspective.
[15:37] SPEAKER_01: Agriculture is one of the sectors that can drive growth with an impact on the people.
[15:42] SPEAKER_01: And then alongside,
[15:43] SPEAKER_01: also went south,
[15:44] SPEAKER_01: the Congo River,
[15:45] SPEAKER_01: which really much crosses the DRC from southeast through the north down to the west
[15:51] SPEAKER_01: and then to the ocean Atlantic.
[15:53] SPEAKER_01: About 80% of the trajectory of the Congo River can really be used as a highway to
[15:58] SPEAKER_01: transport goods and products going from Katanga region,
[16:00] SPEAKER_01: mining hub.
[16:01] SPEAKER_01: all the way through the Congo down to Kinshasa with connection via the national
[16:06] SPEAKER_01: road from Kinshasa to Banana.
[16:08] SPEAKER_01: So where there is currently an initiative to build a deep sea approach,
[16:13] SPEAKER_01: so merchandise can be shipped in and out of the DRC.
[16:16] SPEAKER_01: On another angle, the DRC remains quite undersaved in terms of infrastructure.
[16:21] SPEAKER_01: I think that one is known, but as well as financial inclusion.
[16:24] SPEAKER_01: Out of the 100 million people, if I have to only take 50%, which could be age,
[16:29] SPEAKER_01: Above 18, only 7% of that portion has access to basic financial services.
[16:35] SPEAKER_01: So banking industry remains quite embryonic given also the history and similar
[16:40] SPEAKER_01: stability going from the late 80s going to the 90s where stability really disrupted
[16:45] SPEAKER_01: the whole country and then had negative hits.
[16:49] SPEAKER_01: on the economy, and alongside, I think, the private sector pretty much collapsed the banking industry.
[16:54] SPEAKER_01: So we've observed a shift in that victory over the last 25 years with the support
[16:59] SPEAKER_01: of the international community,
[17:01] SPEAKER_01: first from stability in terms of peace,
[17:03] SPEAKER_01: in terms of getting to unite the country.
[17:06] SPEAKER_01: The country, because of political turmoil, was divided into two or three regions.
[17:10] SPEAKER_01: And then it took significant effort from the international community alongside the
[17:13] SPEAKER_01: BRC to stabilize and unify the country.
[17:16] SPEAKER_01: And then from the early 2000s to maybe today,
[17:20] SPEAKER_01: We observed sustainable growth across other industries, also the banking sector.
[17:24] SPEAKER_01: If I recall in 2001 or 2002, so the total asset for the banking sector was less than $500 million.
[17:33] SPEAKER_01: So just imagine for such a big country,
[17:35] SPEAKER_01: for such a big place,
[17:36] SPEAKER_01: so only $500 million accounted for a formal banking industry.
[17:40] SPEAKER_01: But looking at today,
[17:41] SPEAKER_01: if you check the metrics,
[17:43] SPEAKER_01: we are getting closer to $20 billion in terms of total banking assets.
[17:47] SPEAKER_01: So both in terms of total equity, for which most players believe in the opportunities in this country.
[17:52] SPEAKER_01: So we've seen also a deep increase in terms of the project, in terms of funds.
[17:57] SPEAKER_01: Inasmuch as it's still quite insignificant,
[17:59] SPEAKER_01: but we've seen a surge in activities,
[18:02] SPEAKER_01: led the banking industry into the private sector and public sector.
[18:05] SPEAKER_01: And I believe we can also mention the efforts made not only on bilateral basis,
[18:11] SPEAKER_01: but as well as on multilaterals,
[18:13] SPEAKER_01: where the IMF and the World Bank,
[18:15] SPEAKER_01: FDB,
[18:16] SPEAKER_01: And also in the EU side,
[18:18] SPEAKER_01: so other multilateral institutions really come to work along the DRC government to
[18:23] SPEAKER_01: sustain that growth.
[18:24] SPEAKER_01: So in the last three to four years, the IMF managed to disperse $1.5 billion to really help the DRC
[18:31] SPEAKER_01: reach equilibrium on most of the key metrics in terms of inflation,
[18:35] SPEAKER_01: in terms of GDP,
[18:36] SPEAKER_01: in terms of interest rate,
[18:37] SPEAKER_01: and so on.
[18:37] SPEAKER_01: Then they successfully completed that program,
[18:39] SPEAKER_01: I think,
[18:40] SPEAKER_01: early this year,
[18:41] SPEAKER_01: which led to the new agreement,
[18:42] SPEAKER_01: which was signed,
[18:43] SPEAKER_01: I believe,
[18:43] SPEAKER_01: last week,
[18:44] SPEAKER_01: where they will continue to partner with the IMF for another trench in terms of
[18:48] SPEAKER_01: support for $1.5 billion and so on.
[18:51] SPEAKER_01: So all in all, I think this is what I can say about the DRC.
[18:53] SPEAKER_01: We play quite a significant role as an institution.
[18:56] SPEAKER_01: QTBC here is a systemic bank.
[18:59] SPEAKER_01: We have within the shareholding structure,
[19:01] SPEAKER_01: the government is a shareholder,
[19:03] SPEAKER_01: accounting for 2.5% shareholder.
[19:05] SPEAKER_01: We believe the DRC government being a shareholder is an opportunity to enter in a
[19:10] SPEAKER_01: strong partnership so we can work together and create and address the challenges
[19:14] SPEAKER_01: and opportunities to really impact the people here through infrastructure,
[19:19] SPEAKER_01: education,
[19:19] SPEAKER_01: and health.
[19:20] SPEAKER_01: So let me leave it there.
[19:21] SPEAKER_01: And then if there was any other question, I'm happy to take it.
[19:24] SPEAKER_02: Thanks, Willy.
[19:24] SPEAKER_02: Patti,
[19:25] SPEAKER_02: maybe you could give us a bit of the strategy that Equity Group is employing in DRC
[19:30] SPEAKER_02: to be able to win the market and to win more market share there.
[19:32] SPEAKER_02: As commercial director,
[19:33] SPEAKER_02: you can also tell us a bit of some of the experiences that Equity Group is having
[19:37] SPEAKER_02: on the ground in terms of reception,
[19:39] SPEAKER_02: in terms of customers in DRC now.
[19:41] SPEAKER_02: How's the experience been so far?
[19:42] SPEAKER_00: Yeah,
[19:43] SPEAKER_00: our experience,
[19:43] SPEAKER_00: as my colleague Brent presented,
[19:45] SPEAKER_00: all the strategy of the bank is around our implementation of the ARP.
[19:50] SPEAKER_00: But as he said, the bank is using ecosystem strategy, which linked all the different segments.
[19:56] SPEAKER_00: We go from...
[19:59] SPEAKER_00: side,
[19:59] SPEAKER_00: the public sector and the corporate banking,
[20:01] SPEAKER_00: where we have the biggest companies and we create the link between all the
[20:06] SPEAKER_00: different segments.
[20:08] SPEAKER_00: So from the corporate side, we go through the MSMEs up to our consumer.
[20:13] SPEAKER_00: And as I told you, for instance, we are doing a lot of trade mission in DRC.
[20:19] SPEAKER_00: And for instance, now I'm in Lubumbashi leading trade mission here, which started in Kinshasa.
[20:26] SPEAKER_00: And I can just share with you one example of what we are doing in this initiative with the bank.
[20:32] SPEAKER_00: These trade missions serve as platform connecting international lock stakeholders,
[20:38] SPEAKER_00: enable them to gain firsthand insight into the DRC potential across various sectors
[20:45] SPEAKER_00: by facilitating direct engagement,
[20:49] SPEAKER_00: site visits,
[20:51] SPEAKER_00: discussion about business and with key players in the regions.
[20:55] SPEAKER_00: We aim to build the confidence and the force partnership that can drive sustainable investment.
[21:01] SPEAKER_00: Just to give an example,
[21:02] SPEAKER_00: yesterday we were discussing with two key partners from Tanzania and DRC,
[21:08] SPEAKER_00: and we had one long-term sheet which was signed as a NMOU to
[21:14] SPEAKER_00: Implement 100 authors of mails in DRC from that partnership which has made yesterday.
[21:22] SPEAKER_00: So that is what I can say,
[21:24] SPEAKER_00: but I think the role plan of our strategy is just to serve our customer and to be
[21:29] SPEAKER_00: sure that they get satisfaction of all our service.
[21:32] SPEAKER_00: Thank you.
[21:33] SPEAKER_02: Thank you, Pati.
[21:33] SPEAKER_02: So I'll come back to Brent.
[21:35] SPEAKER_02: I think people are a little worried about the Canadian economy and how it's progressing.
[21:38] SPEAKER_02: You can give us a bit of flavor in terms of doing business in Kenya and across East Africa.
[21:42] SPEAKER_02: How do you compare that in terms of the economic activities as presently is and how
[21:47] SPEAKER_02: the people across the economy are feeling?
[21:49] SPEAKER_02: Because you are a behemoth across the region,
[21:51] SPEAKER_02: so you should have a finger on the parts of the consumer and how they are feeling
[21:54] SPEAKER_02: across the region.
[21:55] SPEAKER_03: Great.
[21:55] SPEAKER_03: Thanks, Eric.
[21:55] SPEAKER_03: So to contextualize, Kenya is around 52% of our balance sheet and around 47% of our profits before tax.
[22:04] SPEAKER_03: Let's go on history.
[22:05] SPEAKER_03: So the last 20 years to 2018 about Kenya,
[22:10] SPEAKER_03: the gross levers were essentially infrastructure-led and public sector funded.
[22:15] SPEAKER_03: And what we've been going through over the last few years,
[22:18] SPEAKER_03: and we continue to transition into this new phase,
[22:21] SPEAKER_03: and it has been somewhat decolored because of
[22:24] SPEAKER_03: global inflationary pressures and subsequently high interest rates.
[22:27] SPEAKER_03: There was COVID.
[22:28] SPEAKER_03: Kenya has been transiting towards a more consumption-led growth where private
[22:33] SPEAKER_03: sector will be a big lever and it won't necessarily be fiscal driven,
[22:39] SPEAKER_03: but more monetary in terms of policy with fiscal reforms is probably,
[22:44] SPEAKER_03: as you've seen,
[22:45] SPEAKER_03: the more topical discussions of the last few years.
[22:49] SPEAKER_03: There was also the drought of
[22:51] SPEAKER_03: 18, 24 months ago that also further exacerbated the challenges that Kenya is currently experiencing.
[22:57] SPEAKER_03: And because of these, we find ourselves the economy chugging along at just about 5%.
[23:03] SPEAKER_03: It's no meager gross, but this is an economy that should be growing at least
[23:09] SPEAKER_03: It's in a half to 7%,
[23:10] SPEAKER_03: but because of these cyclical challenges,
[23:12] SPEAKER_03: there's obviously an element of contractionary fiscal policy.
[23:15] SPEAKER_03: There's very little stimulus in the economy at the moment,
[23:18] SPEAKER_03: but more recently with the central bank cutting interest rates,
[23:21] SPEAKER_03: equity bank leading the reduction in lending rates for the second time.
[23:25] SPEAKER_03: We see the economy stabilizing,
[23:27] SPEAKER_03: but pretty much at the bottom,
[23:28] SPEAKER_03: and we're starting to see some early signs of stabilization.
[23:33] SPEAKER_03: And as we go into quarter one,
[23:34] SPEAKER_03: quarter two next year,
[23:35] SPEAKER_03: we expect that the stabilization should start converting into recovery.
[23:41] SPEAKER_03: So we've seen of the last year or two, essentially consumer disposable income coming under pressure.
[23:48] SPEAKER_03: If you look at the food trend,
[23:51] SPEAKER_03: The consumption trends in terms of food,
[23:53] SPEAKER_03: people have been downgrading from beef to poultry and even from poultry to eggs.
[23:59] SPEAKER_03: So that'll give you a sense of the pressures on disposable income.
[24:01] SPEAKER_03: You can also see it in the sales of Boda Boda's as well as the downscaling when it
[24:06] SPEAKER_03: comes to the beverages as well.
[24:09] SPEAKER_03: Those challenges are still there.
[24:11] SPEAKER_03: The sales of our clients in cyclical industries are still under pressure,
[24:16] SPEAKER_03: but they're starting to stabilize at these low levels and we expect them to start
[24:20] SPEAKER_03: recovering as we go into quarter one,
[24:23] SPEAKER_03: quarter two next year.
[24:24] SPEAKER_03: As equity group, we're fortunate that we quite diversified regionally as well.
[24:28] SPEAKER_03: So that has helped support our earnings.
[24:30] SPEAKER_03: Also, we've been able to diversify our revenue streams within Kenya, although there's an element of
[24:37] SPEAKER_03: correlation between our banking business,
[24:39] SPEAKER_03: insurance business,
[24:40] SPEAKER_03: given that these are generally impacted by overall economic activity.
[24:43] SPEAKER_03: The one key aspect of our business is our non-funded income business.
[24:47] SPEAKER_03: This is quite a defensive revenue stream of ours.
[24:50] SPEAKER_03: And I think the importance of the business,
[24:51] SPEAKER_03: hopefully you'll get a sense of how we look at our business in terms of the
[24:56] SPEAKER_03: different business verticals,
[24:57] SPEAKER_03: the defensive revenues that are quite annuity in nature when business cycles play out.
[25:02] SPEAKER_03: So a key part of our diversification,
[25:05] SPEAKER_03: in addition to the geographic and the business verticals,
[25:08] SPEAKER_03: is also how we look at the quality of our revenue streams through non-funded income.
[25:13] SPEAKER_03: And these are essentially transactional businesses that are quite defensive in a down cycle.
[25:18] SPEAKER_03: So our payments business, what we do in cash management, etc.
[25:21] SPEAKER_03: These are business lines that we continue to invest.
[25:24] SPEAKER_03: You would have noticed that our cost growth,
[25:26] SPEAKER_03: particularly other costs on our P&L,
[25:28] SPEAKER_03: continue to grow quite healthily at north of around 30%.
[25:32] SPEAKER_03: This is essentially investment into our capacity and in terms of our capability of
[25:37] SPEAKER_03: launching new products down the road.
[25:39] SPEAKER_03: And where we're investing is essentially in IT and is an element also of
[25:44] SPEAKER_03: of the capacity building of our staff as we look to introduce new product lines,
[25:50] SPEAKER_03: including on the insurance side,
[25:51] SPEAKER_03: and also as we look to have this ambitious plan.
[25:54] SPEAKER_03: So Kenya, it's starting to stabilize.
[25:56] SPEAKER_03: We expect some sort of recovery starting to play out in the first half of next year.
[26:00] SPEAKER_02: Thanks Brent.
[26:01] SPEAKER_02: I'll come back to Willy and Patti.
[26:02] SPEAKER_02: In terms of context,
[26:04] SPEAKER_02: for someone coming to DRC,
[26:05] SPEAKER_02: what are some of the key areas that they could be investing in?
[26:09] SPEAKER_02: Let's say if a Kenyan is seeking to do business in DRC,
[26:13] SPEAKER_02: what are some of the emerging sectors that someone should pay attention to?
[26:16] SPEAKER_02: And then that's for Willy.
[26:18] SPEAKER_02: And then for Patti,
[26:19] SPEAKER_02: in which regions is the bank operating there and how their growth is progressing in
[26:23] SPEAKER_02: those regions?
[26:23] SPEAKER_02: So we start with Willy and then Patti.
[26:25] SPEAKER_01: I think strategically the first thing to consider,
[26:28] SPEAKER_01: because looking across the DRC opportunities are pretty much in every region,
[26:33] SPEAKER_01: in every locality,
[26:34] SPEAKER_01: right?
[26:35] SPEAKER_01: But now,
[26:35] SPEAKER_01: as we simply ask,
[26:37] SPEAKER_01: so what would be that industry for any investors coming from the DRC to come and
[26:42] SPEAKER_01: then consider?
[26:43] SPEAKER_01: As has been said, agriculture has one of the greatest potential in terms of impacting the people.
[26:49] SPEAKER_01: But given the infrastructural challenges,
[26:51] SPEAKER_01: for someone coming from Eastern Africa,
[26:53] SPEAKER_01: I think to penetrate the markets given the proximity,
[26:56] SPEAKER_01: one area will be looking into agriculture in Eastern DRC because of the climate,
[27:00] SPEAKER_01: because of cultural population on both sides.
[27:03] SPEAKER_01: I think it's easier and more convenient for any investors coming from Eastern Africa.
[27:08] SPEAKER_01: Now,
[27:09] SPEAKER_01: as we're getting into the inland of the DRC,
[27:11] SPEAKER_01: I would believe hospitality also will be that sector which investments can really
[27:17] SPEAKER_01: produce results.
[27:18] SPEAKER_01: As I said,
[27:19] SPEAKER_01: in Kinshasa alone,
[27:20] SPEAKER_01: there is a high demand for basic infrastructure,
[27:22] SPEAKER_01: and it goes from building housing,
[27:24] SPEAKER_01: building hotels,
[27:25] SPEAKER_01: and so on.
[27:26] SPEAKER_01: If you see in Kenya,
[27:27] SPEAKER_01: I think they are quite ahead in terms of hospitality,
[27:30] SPEAKER_01: given the expertise,
[27:31] SPEAKER_01: given the connectivity with the rest of the globe.
[27:34] SPEAKER_01: But this is an area.
[27:35] SPEAKER_01: where I believe there could be a low-hanging fruit for investors coming from
[27:38] SPEAKER_01: Eastern Africa,
[27:39] SPEAKER_01: specifically in Kenya,
[27:40] SPEAKER_01: to come in and invest.
[27:42] SPEAKER_01: And then I mentioned also another one.
[27:44] SPEAKER_01: You will see basic needs of the population, whether it's food or pharmaceutical industry.
[27:50] SPEAKER_01: I think that is...
[27:51] SPEAKER_01: can also be looked at because most players here are also looking to investment.
[27:56] SPEAKER_01: You'll see we are still highly dependent on imports, right?
[27:59] SPEAKER_01: So if any investors coming from Kenya or any other country in Eastern Africa where
[28:03] SPEAKER_01: it's been developed,
[28:04] SPEAKER_01: we can only believe industry,
[28:06] SPEAKER_01: food and industry,
[28:08] SPEAKER_01: agriculture.
[28:08] SPEAKER_01: I think internal transformation can present a quick conversion in terms of
[28:11] SPEAKER_01: opportunities and then our returns on any investment.
[28:14] SPEAKER_01: The other one will be education and health.
[28:17] SPEAKER_01: Kenya has quite an impressive network in terms of schools, in terms of education.
[28:22] SPEAKER_01: We'll also believe that industry itself can also present great opportunities for
[28:27] SPEAKER_01: any investor coming on health as well.
[28:29] SPEAKER_01: I think it's a critical and basic need in the DRC,
[28:31] SPEAKER_01: specifically in big hubs,
[28:33] SPEAKER_01: of which in Kenya will be number one.
[28:35] SPEAKER_01: Other areas such as Gumbash, even based on the DRC, Bukav.
[28:38] SPEAKER_01: This will be, I think, the three or four, where you can see a quick low hanging foot for conversion.
[28:43] SPEAKER_01: to opportunities and P&L.
[28:45] SPEAKER_01: Thank you.
[28:45] SPEAKER_02: Thank you, Willie.
[28:46] SPEAKER_02: So those are the areas of interest in terms of investing, low-hanging fruit, you'd say.
[28:51] SPEAKER_02: But Patina, in terms of regionalization, how is it looking like in terms of reach for equity group?
[28:56] SPEAKER_02: That should be the final question before I go through a round of questions, more to do with the outlook.
[29:01] SPEAKER_02: Over to you, Patina.
[29:02] SPEAKER_00: I think my colleague Willy has made a well presentation of opportunities.
[29:07] SPEAKER_00: But regarding equity group and our strategy,
[29:10] SPEAKER_00: we divided this country in five regions and regarding the opportunities and the
[29:15] SPEAKER_00: model of economic of each region.
[29:17] SPEAKER_00: First of all, I can start by the South region where I am now in the trade mission.
[29:22] SPEAKER_00: This is a region of the mining sector.
[29:24] SPEAKER_00: In this region, we have all the biggest mining companies doing copper, cobalt,
[29:30] SPEAKER_00: and cold also so this is the mining area and in this area you have five provinces
[29:37] SPEAKER_00: in each provinces you have a lot of opportunities yes i know that in this area also
[29:41] SPEAKER_00: you can find agricultural opportunities but in the country it is known like a
[29:46] SPEAKER_00: mining area we have also a eastern region which is more near
[29:51] SPEAKER_00: in the eastern region, some countries like Uganda, Rwanda, even Tanzania.
[29:56] SPEAKER_00: In that region, we have seven provinces or so.
[30:00] SPEAKER_00: We have several opportunities in that region.
[30:03] SPEAKER_00: We have some big mining company,
[30:06] SPEAKER_00: one in the Barrick Group,
[30:08] SPEAKER_00: one of the biggest mining companies in gold in the world.
[30:11] SPEAKER_00: But that region is essentially known as an agriculture region.
[30:15] SPEAKER_00: We have all the sustainable products.
[30:19] SPEAKER_00: that area.
[30:21] SPEAKER_00: We have cocoa, we have coffee, we have maize, we have also rice in that area.
[30:26] SPEAKER_00: So that is an agricultural area.
[30:28] SPEAKER_00: We have a central region which also has six provinces.
[30:33] SPEAKER_00: I have an
[30:34] SPEAKER_00: Kuru, which is also a big region.
[30:37] SPEAKER_00: But that region in the past was a mining region.
[30:40] SPEAKER_00: That is the region when you find the diamond in this country.
[30:44] SPEAKER_00: But it is a big region also for agriculture.
[30:46] SPEAKER_00: And nowadays, we have a lot of projects in agriculture in that area.
[30:50] SPEAKER_00: And I hope the bank and all other partners will be happy to invest in that region.
[30:56] SPEAKER_00: We have the big region in terms of population, which is the west region.
[31:02] SPEAKER_00: That is the economic and politics style of DRC where you have Chassa.
[31:07] SPEAKER_00: We have also five provinces in that area.
[31:10] SPEAKER_00: Yes,
[31:11] SPEAKER_00: that area,
[31:11] SPEAKER_00: it is the area where you have FMCG because of the number of the population first,
[31:16] SPEAKER_00: but you have also
[31:18] SPEAKER_00: Infrastructure,
[31:19] SPEAKER_00: you have agriculture in a big part of that,
[31:21] SPEAKER_00: which we call,
[31:23] SPEAKER_00: you have ,
[31:25] SPEAKER_00: which is a big part.
[31:26] SPEAKER_00: You can develop also agriculture.
[31:29] SPEAKER_00: And let's finish by the north region,
[31:32] SPEAKER_00: the region where we are going to open our new branches,
[31:35] SPEAKER_00: I think,
[31:36] SPEAKER_00: at the beginning of next year.
[31:38] SPEAKER_00: That is a region where you have all the reserves in terms of environmental protection of the world.
[31:45] SPEAKER_00: And we have also agriculture in that area.
[31:48] SPEAKER_00: some mining products, but a big, big part of that is essentially agriculture.
[31:53] SPEAKER_00: I think that is the strategy of recruiting in this country.
[31:56] SPEAKER_00: That is the way we are developing our business.
[31:58] SPEAKER_02: Thank you, Patti.
[32:00] SPEAKER_02: Willie, a quick question, perhaps before I go back to Brent.
[32:03] SPEAKER_02: Our listener is asking specifically,
[32:05] SPEAKER_02: when you look at DRC as a country,
[32:08] SPEAKER_02: more often than not in the Kenyan media,
[32:10] SPEAKER_02: you hear a lot to do with insecurity in DRC.
[32:14] SPEAKER_02: Could you address that in terms of a risk for growth in DRC?
[32:20] SPEAKER_02: So perhaps you can address the fears of many Kenyans and many listeners here who
[32:24] SPEAKER_02: want to understand exactly how the security situation is in DRC.
[32:28] SPEAKER_01: This is a very good question.
[32:30] SPEAKER_01: I think I'll go back to a very simple touch point.
[32:33] SPEAKER_01: First of all, DRC is big, right?
[32:36] SPEAKER_01: I think we're talking four times the size of Kenya.
[32:39] SPEAKER_01: And then as I've mentioned in my introduction,
[32:41] SPEAKER_01: we have major cities,
[32:43] SPEAKER_01: across the DRC,
[32:44] SPEAKER_01: maybe 10,
[32:45] SPEAKER_01: counting for 60-70% of the 100 million people.
[32:48] SPEAKER_01: Across the nation, across the geography, stability, I think is the case.
[32:53] SPEAKER_01: When we...
[32:54] SPEAKER_01: issues on the security side is mainly located in Eastern DRC.
[32:58] SPEAKER_01: Looking at the area, I don't think it accounts for more than 50% of the total area of the DRC.
[33:03] SPEAKER_01: Even in Eastern DRC,
[33:05] SPEAKER_01: where it's mostly referred to stability and so on,
[33:08] SPEAKER_01: where we have security concern is isolated in remote areas.
[33:12] SPEAKER_01: Today, we go from Kisangani, south of South Sudan, all the way down to Nono in Southern DRC in Katanga.
[33:19] SPEAKER_01: I think that's close to 2,000 kilometers.
[33:22] SPEAKER_01: I think across that border, 90
[33:24] SPEAKER_01: or even 95% is peaceful, right?
[33:27] SPEAKER_01: But there's a girl going to North Kivu in a couple of counties.
[33:30] SPEAKER_01: So this is where issues in terms of security is located.
[33:34] SPEAKER_01: But we come to Kinshasa.
[33:36] SPEAKER_01: You go to Matadi, you go to Goma, even at least on the DRC.
[33:39] SPEAKER_01: You go to Mbandaka.
[33:41] SPEAKER_01: In most cities, as I said, 98% of the DRC is beautiful.
[33:45] SPEAKER_01: And then we have a trade mission.
[33:46] SPEAKER_01: There's a good number of friends from Tanzania, from Kenya.
[33:51] SPEAKER_01: They've been here in Kinshasa for a couple of days.
[33:54] SPEAKER_01: And then they flew this morning to Xi.
[33:56] SPEAKER_01: I will maybe refer to them as ambassadors to really testify what they've seen, what they've observed.
[34:02] SPEAKER_01: Kinshasa is very vibrant.
[34:04] SPEAKER_01: They managed to move across the town without any issue.
[34:07] SPEAKER_01: And then today they end Lubumbashi.
[34:09] SPEAKER_01: They can also move around Lubumbashi and neighboring areas will not be an issue.
[34:13] SPEAKER_01: So I think it's more for perception than anything.
[34:16] SPEAKER_01: But overall,
[34:17] SPEAKER_01: I can assure that anyone can come here,
[34:19] SPEAKER_01: can also explore and then set up a business without any concern on peace.
[34:23] SPEAKER_03: Maybe just to contextualize this,
[34:25] SPEAKER_03: the distance from Kiev in Ukraine to,
[34:27] SPEAKER_03: say,
[34:27] SPEAKER_03: Berlin,
[34:28] SPEAKER_03: and we all know what's happening in Ukraine,
[34:30] SPEAKER_03: is the same distance from Nairobi to Goma.
[34:32] SPEAKER_02: Could you repeat that?
[34:33] SPEAKER_02: I think it's very important for someone to understand that.
[34:36] SPEAKER_03: There's obviously the wall in Ukraine and that distance from Kiev to, say, Berlin.
[34:42] SPEAKER_03: Maybe it's slightly longer, but...
[34:44] SPEAKER_03: pretty much in the ballpark, is the distance from, say, Nairobi to Goma in the eastern DRC.
[34:52] SPEAKER_03: And similarly,
[34:53] SPEAKER_03: the distance from Goma to Kinshasa is,
[34:56] SPEAKER_03: and maybe,
[34:57] SPEAKER_03: Willie,
[34:57] SPEAKER_03: you can correct me,
[34:58] SPEAKER_03: I think it's somewhat similar,
[35:00] SPEAKER_03: just to listen to context.
[35:02] SPEAKER_03: And you have,
[35:02] SPEAKER_03: obviously,
[35:03] SPEAKER_03: you have a war taking place,
[35:04] SPEAKER_03: a full-out war between two countries,
[35:07] SPEAKER_03: between Russia and Ukraine.
[35:08] SPEAKER_02: In context, then that means that people maybe consider it a little bit too much in terms of the size.
[35:13] SPEAKER_02: They forget the size of their country in the context of the insecurity that they discuss, right?
[35:18] SPEAKER_03: No, it's something that can't be ignored.
[35:21] SPEAKER_03: And we're not saying it should be ignored.
[35:23] SPEAKER_03: But since we entered the DRC and we've invested almost $220,
[35:27] SPEAKER_03: $230 million of the last nine,
[35:31] SPEAKER_03: 10 years that we have been in the DRC and more recently about two years ago when we
[35:35] SPEAKER_03: injected a further $70 million.
[35:37] SPEAKER_03: Our investment into DRC more recently,
[35:39] SPEAKER_03: and in spite of the conflict in Eastern DRC,
[35:44] SPEAKER_03: hopefully gives a sense to investors and potential investors,
[35:47] SPEAKER_03: our sense of conviction and our sense of the risks.
[35:51] SPEAKER_01: I can add also another sentence.
[35:53] SPEAKER_01: Ourself is an investment entity.
[35:55] SPEAKER_01: We've been in the DRC for so many years.
[35:58] SPEAKER_01: So we are the second largest bank in terms of balance sheets,
[36:01] SPEAKER_01: but with the largest network in terms of physical presence.
[36:04] SPEAKER_01: So we pretty much trust the country in major cities, small cities, and localities, right?
[36:10] SPEAKER_01: Of our presence here in the DRC,
[36:12] SPEAKER_01: we've never come across an incident which will present a risk to our business.
[36:16] SPEAKER_01: We also need to remind everyone we operate in a very sensitive industry, which is called banking.
[36:21] SPEAKER_01: We are careful on where we put our feet.
[36:24] SPEAKER_01: But going back to our history of our presence in the DLC,
[36:27] SPEAKER_01: despite the infrastructure challenges,
[36:28] SPEAKER_01: despite the size,
[36:29] SPEAKER_01: but we never come across major incidents and they will continue to grow and remain
[36:33] SPEAKER_01: quite bullish in developing our network and then with an impact on the people.
[36:37] SPEAKER_02: Brent, now you could give us a bit of an outlook.
[36:40] SPEAKER_02: If you look out five years from now, where would you want Equity Group to be at, Equity Group?
[36:47] SPEAKER_02: group in the DRC itself and also Africa as a whole.
[36:51] SPEAKER_02: What's your vision and how does that fit into your overall strategy as a group?
[36:56] SPEAKER_03: As a group,
[36:57] SPEAKER_03: we intend to have 100 million customers by 2030,
[37:00] SPEAKER_03: so maybe not so much five years,
[37:02] SPEAKER_03: but call it in the next seven years,
[37:03] SPEAKER_03: we'll
[37:03] SPEAKER_03: expect over 100 million customers.
[37:05] SPEAKER_03: For us,
[37:06] SPEAKER_03: the focus is more about the customer target than necessarily the number of flags we
[37:12] SPEAKER_03: plant our map.
[37:13] SPEAKER_03: I did highlight that we are creating a very interesting corridor.
[37:16] SPEAKER_03: That corridor remains probably the priority region for us.
[37:20] SPEAKER_03: We expect our full verticals to
[37:23] SPEAKER_03: continue expanding and more importantly, to replicate across all our markets.
[37:28] SPEAKER_03: So we expect to have bank,
[37:30] SPEAKER_03: insurance,
[37:31] SPEAKER_03: technology activities,
[37:32] SPEAKER_03: and importantly as well,
[37:33] SPEAKER_03: our foundation activities across all our markets.
[37:36] SPEAKER_03: We also see the group becoming quite a significant investment ambassador for the continent.
[37:43] SPEAKER_03: And definitely already we've established ourselves for the Eastern Central Africa region.
[37:46] SPEAKER_03: We intend to be a top three player in all our markets,
[37:50] SPEAKER_03: and that'll give you a sense of the acquisition of a bank in Rwanda,
[37:55] SPEAKER_03: and hence also why we acquired BCDC and DRC.
[37:58] SPEAKER_03: In the DRC business, we will likely remain the biggest investor outside of mining in the DRC.
[38:05] SPEAKER_03: I think that needs to be strict,
[38:06] SPEAKER_03: that we are the largest investor outside of the mining industry into the DRC.
[38:11] SPEAKER_03: We've enhanced the management structure and capacity to ensure,
[38:15] SPEAKER_03: and Patti mentioned the five regions,
[38:17] SPEAKER_03: that the five regions are well represented in terms of our presence.
[38:21] SPEAKER_03: We have introduced a deputy MD structure where we have three deputy MDs in our business there.
[38:28] SPEAKER_03: And the DRC,
[38:30] SPEAKER_03: together with the group,
[38:31] SPEAKER_03: we expect food and agriculture to be essentially 30% of our business in terms of
[38:36] SPEAKER_03: the economic sectors in our loan book.
[38:39] SPEAKER_03: Manufacturing will be a big focus as we look to develop value chains.
[38:42] SPEAKER_03: And as I mentioned earlier on, drive a lot more value-adding value chains.
[38:46] SPEAKER_03: Manufacturing will be 15% of our loan book.
[38:49] SPEAKER_03: These targets are not by chance.
[38:52] SPEAKER_03: They're somewhat reflective of the GDP of the markets where we are.
[38:55] SPEAKER_03: And as I mentioned, 100 million customers.
[38:57] SPEAKER_03: And we expect to get as part of our focus on trade mission and driving connectivity,
[39:02] SPEAKER_03: intra-Africa trade,
[39:02] SPEAKER_03: regional trade.
[39:03] SPEAKER_03: We expect to be the number one trade bank in the region.
[39:06] SPEAKER_03: So we'll have licenses on the continent.
[39:08] SPEAKER_03: You would have seen we have a rep office in Ethiopia.
[39:11] SPEAKER_03: We've always signaled that we have interest in Ethiopia.
[39:14] SPEAKER_03: But importantly, beyond licenses, we more recently opened some country desks.
[39:19] SPEAKER_03: Last week,
[39:19] SPEAKER_03: we opened a German desk,
[39:21] SPEAKER_03: and we do a lot of activities outside of the continent as we look to drive activity
[39:27] SPEAKER_03: between Africa and the markets that have the factors of production,
[39:30] SPEAKER_03: whether capital,
[39:31] SPEAKER_03: skills,
[39:32] SPEAKER_03: and technology.
[39:32] SPEAKER_03: technology-stroke machinery for us to essentially mechanize smallholder farmers,
[39:37] SPEAKER_03: drive innovation,
[39:38] SPEAKER_03: and also importantly to crowd in investment into the value chains that we are developing.
[39:44] SPEAKER_03: So we remain focused on what is amongst the highest growing regions in the world.
[39:50] SPEAKER_03: And because we plan to be systemic in these markets, we mirror this growth as well.
[39:54] SPEAKER_03: Hopefully that answers your question, Eric.
[39:56] SPEAKER_02: Yes, it does.
[39:57] SPEAKER_02: Quick questions for Willy and Paddy.
[39:59] SPEAKER_02: Someone is asking how much capital they would need to venture into agriculture in Congo.
[40:03] SPEAKER_02: And another quick one is also how someone can participate in the trade mission that
[40:07] SPEAKER_02: you're having to DRC so that you can demystify the country for someone.
[40:11] SPEAKER_02: And then someone's also asking the very high interest rates that are charged in DRC, around 25%.
[40:15] SPEAKER_02: So maybe we can answer that one quickly and then we'll wind up.
[40:18] SPEAKER_01: Okay, I'll start with the first one in terms of level of investments needed to consider agriculture.
[40:23] SPEAKER_01: I think it goes from owning a small farm
[40:25] SPEAKER_01: which can go anywhere from $5,000 to any amount higher.
[40:29] SPEAKER_01: But again, potential needs are quite significant, right?
[40:32] SPEAKER_01: I think the investment that is in agriculture can easily go to the billion above mark.
[40:37] SPEAKER_01: But there is space for everyone.
[40:39] SPEAKER_01: We continue to believe the wealth model will be with smallholder farmers.
[40:43] SPEAKER_01: Opportunities can be created where the needs are in terms of people and so on.
[40:48] SPEAKER_01: No high interest rates in the DRC.
[40:51] SPEAKER_01: I think I need to remind everyone, DRC is a dollarized economy.
[40:55] SPEAKER_01: More transactions,
[40:56] SPEAKER_01: deposits,
[40:57] SPEAKER_01: and then any movement of liquidity across the economy,
[41:00] SPEAKER_01: unfortunately,
[41:01] SPEAKER_01: is dollar-based.
[41:02] SPEAKER_01: Only 10%, if not less, of activities is CES, which is a local current here.
[41:08] SPEAKER_01: On our federal metrics, it's the 25%.
[41:11] SPEAKER_01: Based on the Central Bank of Congo,
[41:13] SPEAKER_01: we discount rates on which the impacts on what most people do here remains quite significant.
[41:18] SPEAKER_01: Our lending, these are lending activities, even equity across the banking industry.
[41:23] SPEAKER_01: I think 90% of the loan portfolio are all in dollar,
[41:26] SPEAKER_01: for which it goes anywhere from 7% to 11% for corporate lending.
[41:30] SPEAKER_01: And then I usually move to SMEs and consumers around 12% to 15%.
[41:33] SPEAKER_01: A bit higher as you take more risk on the large base in terms of consumers and so on.
[41:38] SPEAKER_02: Maybe quickly maths from Willy and Patty in terms of closing thoughts for the
[41:41] SPEAKER_02: spaces and how people can reach out to you.
[41:44] SPEAKER_02: And then Brent can give us the overall closing pitch and invite listeners to join
[41:48] SPEAKER_02: them in the journey to growing DLC.
[41:50] SPEAKER_02: We'll start with Patty and then Willy.
[41:52] SPEAKER_00: Maybe before the conclusion, just a few words tell you that we have server type
[41:57] SPEAKER_00: of forms of company recognizing DRC,
[42:00] SPEAKER_00: and some of them you have no limit that is as you have a obligation.
[42:05] SPEAKER_00: So you have the establishment,
[42:07] SPEAKER_00: you have a limited liability of company,
[42:09] SPEAKER_00: you have a public limited company.
[42:12] SPEAKER_00: For the three of them, you don't have any limit to invest in DRC.
[42:16] SPEAKER_00: I'm glad to be part of this meeting and to close.
[42:19] SPEAKER_00: Yes, equity basically say is willing to be part of your next future destination in DRC.
[42:25] SPEAKER_00: When you'll be coming in DRC, we will be able to give you all support.
[42:30] SPEAKER_00: And I think we really can confirm in DRC we are going to create an investment desk.
[42:35] SPEAKER_00: which will facilitate all investors in DRC.
[42:39] SPEAKER_00: So thank you.
[42:40] SPEAKER_00: I think we are going to share our contact.
[42:42] SPEAKER_00: I will share my contact on the chat so that everybody can contact if there is any
[42:48] SPEAKER_00: question and need of support.
[42:50] SPEAKER_00: I will finish by there.
[42:51] SPEAKER_00: Thank you.
[42:52] SPEAKER_01: And on my side, my words of conclusion.
[42:54] SPEAKER_01: So we are in the DRC for long term as we believe we can sustain the growth,
[43:00] SPEAKER_01: the impact on our population that despite the challenges
[43:05] SPEAKER_01: sponsored by the DRC, environment, and so on.
[43:07] SPEAKER_01: So the opportunities are quite massive through diversification in multiple sectors.
[43:12] SPEAKER_01: So we believe we can sustain support into agriculture, infrastructure, and so on.
[43:17] SPEAKER_01: And then there was a concern on stability,
[43:19] SPEAKER_01: but we believe political stability and improving economic conditions will play a
[43:24] SPEAKER_01: role in our success,
[43:25] SPEAKER_01: the impacts on the investors.
[43:27] SPEAKER_01: Maybe another sentence is,
[43:29] SPEAKER_01: so we believe creating our environment,
[43:31] SPEAKER_01: social,
[43:31] SPEAKER_01: and governance factor into our strategy so we can offer our suitable products and
[43:35] SPEAKER_01: services to meet,
[43:36] SPEAKER_01: as I said,
[43:37] SPEAKER_01: multiple times,
[43:38] SPEAKER_01: the diverse needs of our customers,
[43:40] SPEAKER_01: the population.
[43:41] SPEAKER_01: So we look forward really to making ourselves available.
[43:44] SPEAKER_01: If there's any question,
[43:45] SPEAKER_01: there is anything that we can do to make your journey moving to the DRC,
[43:49] SPEAKER_01: we'll be more than happy to partner.
[43:51] SPEAKER_01: So we can go create and then really see the change in the people that we serve here in the DRC.
[43:57] SPEAKER_01: And then my number and also my email will be shared to our former means.
[44:00] SPEAKER_01: So thank you again.
[44:01] SPEAKER_01: We look forward to speaking again next time.
[44:03] SPEAKER_02: Thank you, Willie.
[44:03] SPEAKER_02: Brent, now you can give us the closing pitch and perhaps invite people on the journey.
[44:08] SPEAKER_02: Great.
[44:08] SPEAKER_03: Thanks, Eric.
[44:08] SPEAKER_03: So our Africa Recovering Resilience Plan,
[44:11] SPEAKER_03: which is our strategic plan,
[44:12] SPEAKER_03: gives us clarity of direction as a group.
[44:14] SPEAKER_03: And that direction is essentially to help socially and economically transform
[44:18] SPEAKER_03: Africa through the development of value chains,
[44:20] SPEAKER_03: connecting the micro-small to the large enterprises,
[44:23] SPEAKER_03: connecting farmers to agro-processes to global markets.
[44:27] SPEAKER_03: Our three engines model gives us execution capability,
[44:31] SPEAKER_03: a very differentiated capability to essentially connect and develop these value chains.
[44:37] SPEAKER_03: And the history that the bank has in terms of generating returns
[44:42] SPEAKER_03: earnings growth,
[44:43] SPEAKER_03: as well as the challenges of the last few years from interest rate caps to COVID to
[44:50] SPEAKER_03: the global inflation interest has also caused for learnings in management in the
[44:55] SPEAKER_03: board that only makes us better as we go into the future.
[44:59] SPEAKER_03: So we will continue to learn from the past.
[45:01] SPEAKER_03: We have a track record and we operate in what will be one of the most sought after
[45:06] SPEAKER_03: corridors regions,
[45:07] SPEAKER_03: one of the highest growth regions,
[45:09] SPEAKER_03: and we should hopefully reflect that.
[45:11] SPEAKER_03: Thank you very much.
[45:12] SPEAKER_03: Thank you so much, Brent Willipati, for joining us.

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