In an announcement published by the Central Bank of Kenya (CBK) on April 4, 2024, the Bank of Kigali (BoK) has ceased operations at its Nairobi Representative office.
Rwanda's largest bank pulls marketing & liaison office from Kenya
Bank of Kigali attained its authorisation to operate an office in Nairobi at the end of President Mwai Kibaki's tenure in February 2013 and has been operational for 10 years.
Bank of Kigali closes Representative Office in Nairobi
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Representative offices of foreign banks act solely as promotional and communication branches for their overseas parent banks and affiliates, and are not authorised to conduct any banking operations.
BoK attained its authorisation to operate an office in Nairobi at the end of President Mwai Kibaki's tenure in February 2013 and has been operational for 10 years.
At the time, its entry into Kenya was touted as a mark of increased regional integration in the East African community of nations and a catalyst toward Kenya's Vision 2030.
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"The entry of Bank of Kigali into the Kenyan market is timely given the on-going East African Community integration process. With the on-going East African regional integration, Bank of Kigali’s presence in Kenya stands to greatly benefit from the business opportunities that are expected to increase tremendously across the East African Community member states," read a CBK statement at the time.
Why Bank of Kigali closed Nairobi Representative office
The CBK notice issued on Friday indicated that the action was voluntary on BK Plc's part and would be effective April 2, 2024.
"The voluntary termination of BoK's presence in Kenya follows a strategic decision taken by the Bank of Kigali Group Plc BoK's parent company) to focus more on digital service delivery channels," the notice read in part.
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Competitive Kenyan banking market
BK had initially sought to establish presence, with the 2013 CBK notice stating: "The Bank of Kigali Limited through its Representative Office in Kenya seeks to explore potential business opportunities in the country with a view to evaluating the prospects for a long-term presence in Kenya."
However, the entity begun to reckon with the challenges of regionalisation soon after, stating in 2015 that high capital requirements was a barrier to entry in the regional markets.
"It is quite expensive to venture into the regional market, and we have decided to change plan and consolidate the gains on the local market," then-COO Lawson Naibo stated.
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The closure strategy also follows a prior statement by BK Group's CEO Diane Karusisi in 2018 that expressed a modulation in interest to launch full operations in Kenya.
"We still have a lot of opportunities within our home market (Rwanda). It’s a market that we know very well.
“The Kenyan market is already highly competitive. So, we really want to satisfy the needs in our market before thinking of venturing into new markets in the region,” she was quoted by the Business Daily.
Growth strategy toward digital banking
At the time, BK Group allocated a large share of its growth budget (Sh6.9 Billion) to its banking wing, the Bank of Kigali.
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With a Sh1.03 Billion investment toward building digital systems, BoK then embarked on an 18-month journey toward strengthening its digital banking infrastructure.
Bank of Kigali is Rwanda's largest bank by assets with the Government of Rwanda as its majority shareholder. BoK is also cross listed on the Nairobi Securities Exchange.
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