Equity: Foreign forces caused shilling slide

Kenya’s second largest commercial bank on Monday blamed the rapid slide of the shilling in the last quarter of last year on external forces. (READ: Parliament summons Kenya spy chief in shilling probe)

Mr James Mwangi, the chief executive of Equity Bank, told MPs that there were no forces within the local economy that could have generated the sharp decline of the currency.

“This was an external shock; it didn’t come from Kenya,” Mr Mwangi told the House committee investigating the rapid fall of the value of the shilling.

He said that at the time the shilling was going south in Kenya, other regional economies were also taking a beating, with Ethiopia’s inflation hitting 42 per cent.

Mr Mwangi denied MP’s assertions that the bank enjoyed political patronage and could have influenced the inordinate delay by the Central Bank governor to intervene to stop the run on the shilling.

He said the bank had Sh125 billion in deposits and had a capital of Sh31 billion. He added that the bank had 7.5 million customers.

He said the bank did not accept dealings with State corporations so as to thwart the perception that it was thriving on government money.

“Equity thrives on the number of its customers. We don’t enjoy any patronage,” he said, noting that the bank had far much better credit ratings not only on the local scene but also in the international scene.

The CEO said that the USD20 million that Equity had loaned out to Rift Valley Railways, and the USD70 million it had given out to Kenya Power could not affect the shilling and if anything it “would strengthen or help stabilise it”.

Dr Mwangi, who is also the chairman of the Vision 2030 Board, denied that he was among the influential people in the industry who had pushed the Central Bank Governor into raising interest rates.

“I have never been asked to offer any services on that and I have never volunteered,” he said.

Earlier, the committee vowed to censure the Central Bank Governor, Prof Njuguna Ndung’u, after he failed to appear before it.

MPs refused to listen to the emissaries and demanded that the governor appears on Tuesday morning.