Not much more than a year into his term as Nedbank CEO Jason Quinn decided to refocus the bank’s non-South African footprint from West to East Africa. It never had control of the West African-based Ecobank, which was Nedbank’s primary investment in the rest of Africa.
South Africans have always felt more comfortable in East Africa, which has a lot more cultural similarities, whether it’s the climate, cricket or game viewing. In Kenya they even drive on the left-hand side of the road, while Nigeria and Ghana drive on the right, even though they are part of the (British) Commonwealth.
Charles Russon, who runs Absa’s rest-of-Africa portfolio — which for decades operated as Barclays Africa — says from a risk-adjusted perspective East Africa has delivered consistently higher and more stable economic growth than some other markets, including many West African countries, with generally lower inflation and currency volatility. This creates a more predictable environment for deploying capital and building up banking operations.
It takes many years to establish a banking franchise in an emerging market, so Nedbank has decided to get into the market buying a controlling 66% stake in NCBA Group for R13.9bn — more than chump change considering that Nedbank is the smallest bank in South Africa by market capitalisation at R127bn.
The 34% free float will be available to Africa and Frontier fund investors through the Nairobi Securities Exchange (NSE). While the record of South African clothing retailers investing into Europe and Australia has been poor, SA banks have a decent track record regarding investing in Africa. Just look at Standard Bank. The return on equity in its Africa regions is substantially better than in Mzansi.
Nedbank’s bid for NCBA is nothing like as controversial as Mr Price’s bid for NKD in Germany, for example, and it looks logical. Nedbank is just about a perfect South Africa Inc share, with almost all its income coming from SA and its neighbours. It needs to diversify to grow and to become more attractive to investors.
Quinn says NCBA offers a strong brand presence, an extensive regional network, advanced digital capabilities and deep customer reach. He argues that this aligns with Nedbank’s established corporate and investment banking expertise, cross‑border structuring capabilities and strong balance sheet. By combining NCBA’s substantial local presence and Nedbank’s capital base, expertise and “enduring commitment to Africa” (does it have an alternative plan?) Quinn sees a compelling platform for sustainable growth in the region.
Quinn says East Africa is underpinned by strong macroeconomic fundamentals; the size of its economy; a large and growing population; attractive growth prospects; and the primary trade corridor that links Africa with the Middle East, India and Asia.
The British bank Standard Chartered (which until 1987 was the parent of SA’s Standard Bank) has closed its retail banks in several African countries but remains committed to Kenya. It says Kenya is one of the continents fastest growing, most diversified economies, with growth projected at about 4.9% in 2025–27, above Africa’s average.
Standard Chartered has operated in Africa for 170 years. Its group chair is former Absa CEO Maria Ramos.
Read: EDITORIAL: East Africa beckons as lessons temper a big banking gamble
Standard Chartered says that with a young, rapidly rising population, and its pivotal role as the business and financial hub for East Africa, Kenya has long-term potential, even as the country manages challenges such as high public debt and tighter financing conditions.
NCBA is headquartered in Nairobi but operates across Kenya, Uganda, Tanzania and Rwanda. And it has digital banking services in West Africa, Ghana and Ivory Coast. NCBA is thus a substantial player that was formed in 2019 after the merger of NIC Group and Commercial Bank of Africa: it serves more than 60-million customers and has 122 branches.
It’s not too surprising that Quinn chose Kenya as his acquisition target. Absa has also identified it as a priority growth region but is much further down the track than the Green Machine in its Africa strategy.
It has R84bn in assets and provides more than R127bn in digital loans annually, and has a highly credible return on equity of about 19% — similar to Standard Bank’s Africa regions.
It’s not too surprising that Quinn chose Kenya as his acquisition target. Absa has also identified it as a priority growth region but is much further down the track than the Green Machine in its Africa strategy. Africa regions already contribute just more than a third of Absa Group earnings. Kenya plays an important role in growing the bank’s non-South African earnings given its scale, regional influence and above-trend economic growth.
Russon says the Kenyan banking model mirrors that of South Africa in that both operate full service offerings, corporate and investment banking, business banking, retail banking, payments and wealth solutions. NCBA competes with Absa across the waterfront.
But Russon points out that Kenya’s financial ecosystem is mobile-money led, with platforms such as M-Pesa deeply embedded in daily economic life. Payments, collections, lending and merchant acquiring are often delivered via mobile wallets rather than traditional savings accounts or debit cards.
South African banks operate in a more card- and account-centric environment, with advanced digital banking apps and real-time payments — it’s no surprise that M-Pesa never took off in SA.
Echoing Quinn’s and Standard Chartered’s argument, Russon says macroeconomic stabilisation has improved Kenya’s investment case. Inflation has moderated, interest rates are declining, and the country has successfully re-accessed international capital markets under an IMF-supported reform programme.
This has reduced near-term sovereign risk and improved the operating environment for banks.
• Cranston, a financial journalist, is author of ‘The Mavericks’, a new book about South African fund management.
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