NAIROBI, May 24 (Reuters) - Kenya’s Equity Bank Group has closed more than half of its branches in war-ravaged South Sudan because of a mix of hyperinflation, a battered local currency and an economic slowdown, its chief executive officer said.
James Mwangi, Equity’s chief executive, told a shareholder meeting the bank had closed seven of its 12 branches in South Sudan, which has one of sub-Saharan Africa’s lowest banking penetration rates.
“Because of uncertainty, and because of a lack of peace, we have been forced to reduce those branches,” Mwangi told investors on Tuesday and later posted online. “I think we now have five.”
Equity follows another Kenyan bank, KCB Group, which earlier this month said it was temporarily closing some branches because of the tough operating environment and economic conditions.
South Sudan’s three-year civil war has sharply reduced oil output, the main source of foreign exchange, causing the pound to plunge in value and inflation to soar to above 800 percent last year.
“Last year, that devaluation caused us to write off a loss of 6 billion Kenyan shillings ($58.14 million). It is not performance; it is what you could call an economic meltdown.”
The conflict erupted when President Salva Kiir fired his deputy, Riek Machar. The violence, fanned by ethnic rivalries, has sparked Africa’s worst refugee crisis since the 1994 Rwandan genocide and plunged part of the country into famine.
Even so, Mwangi ruled out a complete exit from the country.
“It’s like hibernation - let’s retain the licence until peace returns.”
Mwangi said an exodus of foreign workers, especially Kenyans and Ugandans, had also hurt business. ($1 = 103.2000 Kenyan shillings) (Reporting by George Obulutsa; editing by Richard Lough)