What is Equity doing about fraudsters posing as bank agents?

In this series in the Nation we invite readers to send questions to select public figures. Answers will be published in the next print and online editions. This week Equity Bank chief executive James Mwangi responds to your questions.

You are the CEO of Equity Bank and one of its majority shareholders. Don’t you think there is conflict of interest?

Paul Mburu, Gatundu

Thank you for your concern. I share your ethos that governance and avoidance of conflict of interest is a prerequisite for success, scalability and sustainability.

I have played the role of an entrepreneur in an executive position where authority is exercised through effective management and leadership structures with non-executive board committees exercising oversight and a very effective board of directors providing policy and oversight. I am happy to say Equity has strong governance that doesn’t allow board members to trade or borrow from the bank and as a result are able to retain their independence and reduce positions of conflict.

My shareholding is within the regulatory threshold of not more than 5 per cent for any executive director and does not qualify for majority shareholding. As a publicly listed and regulated company, we subscribe to high levels of transparency and disclosure under the oversight of the Central Bank of Kenya, the Nairobi Securities Exchange and the Capital Markets Authority among other regulators.

As a global leader in innovations, financial inclusion and mobile banking, we are under strong scrutiny for purpose of ranking and rating. Equity Group was named by Euromoney Awards of Excellence as Africa’s best bank 2016.

Global Credit Rating maintained Equity’s investment grade AA- with a stable outlook while The Banker ranking of the top 1,000 world’s banks 2016 ranks Equity Group as the 8th best bank in the world on Return on Assets for the second year running and 43rd best bank in the world in Soundness as measured by capital asset ratio while being ranked the 34th best bank in terms of Return on Capital.

I am encouraged by Equity Bank’s efforts to embrace Information and communications technology. Why can’t your institution become a full-fledged telecommunications company to offer voice, data and financial services on mobile for all your customers?
Peter Ongera, Kisii

I am glad to say we’ve gone beyond ICT to a convergence of banking, telecommunication and Fintech (financial technology). These capabilities have enabled us to digitise financial services and deliver freedom of choice and control to our customers so that they can enjoy banking telecom and fintech services as a lifestyle. We have called this Eazzy banking.

Banking anytime anywhere through the Equitel mobile line that allows access to all banking services in addition to voice, data, and SMS telecom products. For those without Equitel lines but have smart phones, they can enjoy the same from their mobile phones by downloading EazzyBanking App from the Play Store or Apple Store.

For those with feature phones we encourage and invite them to take an Equitel Regular or thin SIM which is free of charge to enjoy modern stress-free digital banking 24/7.

What is Equity doing to safeguard customers against fraudsters who pretend to be loan agents since many Kenyans, including me, have been conned out of a lot of money? How, for example, do the fraudsters get the Equitel numbers of the customers?

Mark Odongo, JKUAT

Thank you for raising this real concern. As Kenyans might have noticed, you can’t be conned by a person using an Equitel line — 0763, 0764 and 0765 and 0766 — because we strictly follow Know Your Customer guidelines when issuing Equitel SIM cards. We also want to bring to your attention that Equity Bank never promotes loans on phone and has no partnerships with telecoms to do loan promotions.

Equity Bank would never call a customer to enquire about their SIM card, PIN or password or give instructions on the phone to customers. We are also concerned about this social hazard and wish to encourage customers never to respond to such and always forward such suspicious numbers and messages to 333.

Our staff are willing to help our customers but would be unable to do so because the fraudsters use numbers that are outside our network and hence we have no control. In addition, fraud is a police case and should always be reported for investigation. We constantly remind our customers and encourage them not to share details with anyone and when uncertain to call or visit their branch.

Mr CEO, I applied for an Equi-loan three weeks ago but up to now it has not been disbursed despite having been approved.  The branch has been giving all manners of reasons for the delay. Why does it take this long to process and disburse a loan?

Susan Ng’ang’a, Ol Kalou
I am happy to let you know that the loan has been disbursed. I was made aware that the delay was as a result of change of process of filing loan deductions with the employer. I apologise for the inconvenience caused by that delay.

We are streamlining this process of check off loans with employers and look forward to making the loan processing more efficient and timely.

Why have you resisted trade unions to represent vulnerable workers at the bank yet worker representation is a principle that is enshrined in our Constitution? Duncan Thuita Kahiga, Nairobi

We have signed a Collective Bargain Agreement (CBA) under the Kenya Bankers Association. It is also important to highlight here that our policy as an institution regards staff not just as employees but critical stakeholders and as a result are extended the opportunity to be core owners (working for themselves under the Employee Share Ownership Programme, which currently is the largest in East and Central Africa).

We go beyond the provisions of the CBA and provide staff with additional benefits including group life insurance, medical accident cover over and above National Hospital Insurance Fund, subsidised staff loans for both development and lifestyle, pension contributions over and above the National Social Security Fund, a benevolent fund and a staff Sacco. In addition, the bank also invests in training and development for staff.

Mr Mwangi, are you aware of the slow process of issuing loans to self-help groups since the implementation of the interest rate capping law?
Ken Kariuki, Nairobi

We are aware that all banks are adjusting. The self-help groups have been put in the same risk category with the blue chip category and the risk-free borrowing by government.

The yield curve of the public debt and private sector debt has merged and as a result banks are struggling to adjust their systems as credit is tenure and risk priced and it is the adjustment process that may be making clients to experience the teething challenges.

I must start by congratulating you for your good work. I am a Kenya Defence Forces personnel deployed outside the country. I have salary advance loan that I’m servicing. Ever since the interest rate dropped, whenever I check my balance account for the loan there is no change in balance that I was to clear and the instalment of amount I am paying has remained the same. What could be the problem?

John Onyango

Thank you for sharing with us this information. I confirm that we reduced interest rates (on accounts that were performing) to 14 per cent on the eve of September 13, 2016 and as a result you have enjoyed low interest for two months. I would like to confirm there is nothing wrong with your loan and because of maintaining the same installments your remaining repayment period will be shortened.

In the recent times, banks have been down scaling their operational costs. Recently, your bank rendered redundant 400 employees and opted for the digital platform in most of its transactions. Despite the shift to technology, what are the strategic ways the banking industry is putting in place to rescue the soaring unemployment rate since over the years it has been absorbing young and qualified graduates and professionals?

Martin Muia, Mombasa County

We wish to correct this impression because it is not factual. We have not replaced staff who have left the bank through natural attrition.

Our central focus is to give customers unparalleled convenience in banking because digitisation and use of technology is enabling us do banking anytime from anywhere whether it is payments, money transfers, deposits, loans and other banking services. 

We are learning by observing our customers’ behaviour and from our research we have established that 52 per cent of our customers would prefer mobile and online banking services. They have chosen to convert banking to be what they do on their devices as opposed to visiting a physical location to seek banking services.

However this new digital bank still require to be supported by branches as centres of excellence in customer relationship management, customer advisory services and as a hub to support our agents and merchants partners.

This, therefore, creates more opportunities for staff in the bank but not in the traditional roles and practices. We are glad that the jobs for bankers are now enriched, more challenging and fulfilling, more intellectually stimulating and more people and relationship based, helping the staff to develop new skills and competences on the job.

We don’t see ourselves retrenching but see a huge opportunity to retrain, reorient and develop staff with new skills.

Having followed your steps towards making Equity Bank what it is today and also giving us hope that the sky in the limit in terms of  development in the bank, what specific plans are you making in creating the “James Mwangis” of tomorrow? Francis Njuguna, Kibichoi, Githunguri.

We have a leadership development programme for staff. In addition to training in the form of multi-year programme, management training, academic advancement and on the job training, we also practice mentorship and coaching.

We provide shadow positioning to allow for smooth succession. We also recognise the need to develop leaders for the greater national interest and that is why we have invested in the Equity Leaders Programme (ELP) implemented through the Equity Group Foundation. ELP benefits the top performing boy and girl in every district in Kenya. So far, over 5,600 scholars have gone through or are alumni of this programme out of whom 393 are studying or are alumni of global universities and the majority are pursuing their courses or are alumni of our public universities.

To nurture leadership from an early age, we have extended leadership training to the Wings To Fly Scholars. Every August, the scholars spend two weeks in residential leadership and mentorship programme at Kenyatta University known as the Annual Educational and Leadership Congress. To date 12,477 scholars are beneficiaries of the Wings To Fly programme.

We also coach and mentor young people on a one-on-one basis.

We have created strong effective corporate structures that guarantee fairness and justice and enabling environment that allows the next James Mwangis to thrive.

Why are the services offered by Equity more expensive than other banks?
Michael Wanjora, Embakasi

In the 43 banks ranked objectively on cost basis over the last five years by Think Business Banking Awards, Equity has several times won the award of the bank with the lowest charges.

Some of the things that differentiate Equity and makes us to repeatedly earn this is our business model that has no hidden charges, no ledger fees, no account maintenance fees, no internal standing order charges, no minimum balance, free money transfer within Equity, lowest cost for school fees bankers, free deposits of school fees to school accounts within Equity Bank and free deposit on all channels.

Sir, I am based at NSSF building (in Nairobi) and my many colleagues and I have a hard time accessing Equity’s ATM services especially during working hours. Would you kindly provide an ATM for us to ease our long journey to other ATMs?
Lucy Muring’u, Nairobi

We have 240 branches complemented by 700 ATMs, 25,000 agents, 9,000 merchants and offering cash back services in many leading retail outlets. While there are a number of agents around NSSF, we have ATMS and branches at NHIF Building within the same locality. Nevertheless, we take note of your feedback and we shall explore the possibility.

In addition, we have just launched EazzyPay which will transform the way we pay for goods and services on retail outlets. We already have 15,000 EazzyPay merchants. I invite you to download the Eazzy App and enjoy banking on your phone.

Your staff informed me that renewing my loan was free of charge yet when I applied for instalment payment change, the offer came with 1.25 per cent charge. This has totally made me feel betrayed. How can you help? Eliud Ngeru, Kikuyu Town

Apologies for the miscommunication that might have made you feel betrayed.  This is a restructuring fee given the risk pricing and processing of the restructured loan. It is a one-off cost.

We have of recently witnessed laying off of 400 employees despite reporting an 18 per cent rise in after tax profit for nine months to September. You call this process natural attrition. What is the cause of this employee layoff? Reuben Ludenyo

Natural attrition means employees leave in the normal cause of employment, that is, retirement, voluntary resignation but are not replaced. The 400 was out of 9,000 employees within the group.

I had taken a loan of Sh1 million with Equity bank in 2010. I was to complete paying this November. I realised the loan had gone over by more than Sh300,000. Due to disappointment I took another loan from a different bank to pay the Sh300,000. What is your take on whether your bank is exploitative and unconcerned about customers? Ituuru Julius, Meru

We acknowledge that in November 2011 interest rates increased from 18 to 24 per cent following a drastic increase in Treasury bill rates that determine market interest rates.

They subsequently came down to 18 per cent but experienced another surge in August 2015 when they were pushed back to 24 per cent. As a result, if the monthly repayment as I guess was never adjusted, then the tenure was naturally extended and would represent the residue balance that would be remaining at the original loan repayment completion date.

While we may not have the full view of all the facts, if the loan during the tenure had arrears it attracts penalty and interest which is compounded. I invite you to reach out to your branch manager to analyse the loan to determine the exact reason for this.

Just like Exim Bank of China which is able to finance the Kenya’s standard gauge railway, what is Equity Bank’s strategy on business modelling and resource mobilisation so that it is able to provide low-cost financing of the mega infrastructure projects in Kenya and the region? Osoro N. Desmond, Kisii University

We decided to focus on a high volume low cost business model to attract deposits.  We also strategically expanded in the region to mobilise more deposits, currently in six countries with a footprint of 250 branches.

This strategy has enabled us to grow our balance sheet to nearly half a trillion shillings. We have also built a strong positive reputation that has enabled us to mobilise long-term foreign debt to the tune of $600 million.

As the country has grown to a middle income economy, we see an opportunity to continue nurturing a saving culture for long-term funding so as to support infrastructure development. So far we have participated in financing power generation, road construction, building materials and supported two national airlines to acquire aircrafts among other many projects.

I took a personal loan in 2010 (my account is in Maua, Meru) which was supposed to end in August 2016. However, this year there was accrued interest of around Sh200,000 was added in my payslip. What is more disturbing is that the same accrued interest is attracting accrued interest. Sir, what is happening?  (Joseph Kimathi Mutungi, Meru)

We acknowledge that in November 2011 interest rates increased from 18 to 24 per cent following a drastic increase in Treasury bill rates that determines market interest rates.

They subsequently came down to 18 per cent but experienced another surge in August 2015 when they were pushed back to 24 per cent. As a result if the monthly repayment as I guess was never adjusted, then the tenure was naturally extended and would represent the residue balance that would be remaining at the originally loan repayment completion date.

While we may not have the full view of all the facts, if the loan during the tenure had arrears it attracts penalty and interest which is compounded. I invite you to reach out to your branch manager to analyse the loan to determine the exact reason.

I took a loan of Sh1 million with Equity Bank seven years ago. I have been repaying using check off system at a rate of Sh24,946.00. I am supposed to clear in September according to the plan. Disappointingly, a lump sum figure of over Sh400,000 was put as my outstanding loan. On simple calculation I would have to pay over Sh1.5 million in interest. What is happening and how can you help? Bernard Maranya
(Please refer to response above)

My question is based on the brain drain theory. Equity Bank has been sponsoring some Kenyan students to study in the world’s top universities. What are you doing to encourage the students to participate in the development of our country after they complete their studies? Paul Mwari Maina, Nairobi)

In total we have 5,500 university students we have supported, 393 of whom are alumni or studying  in global leading universities.

Every year we bring the students back during the Summer holiday and they do internship in the bank or other companies and also to mentor and coach the next group of applicants for admission to these global leading universities.

During the Thanks Giving week, we bring them together in the USA for dinner where we engage to know how they are performing and encourage them.

We are encouraged to see those who have served between three to five years after graduating are coming back to serve in government, private companies and in the bank.

Sir, as the chairman of Kenya’s Vision 2030 Board, what do you have to say when many of the flagship projects are being questioned and referred to as corruption conduits and devoid of public participation input? Komen Moris, Eldoret

We have hundreds of vision 2030 projects spread throughout the country and in all sectors of our economy at different stages of execution and completion.

Vision 2030 projects are national and by nature the scope of the projects is huge and complex, they are also capital and land intensive and require a lot of expertise in structuring and implementation, complexity in the project structuring and execution can lead to questions being raised.

Financing and execution of Vision 2030 flagship projects is governed by the public procurement laws rules and regulations and Vision 2030 projects are subjected to public procurement regulations to ensure the law is adhered to and due process is followed. I appreciate the scrutiny that reflects interest by the public exercising their right of oversight and holding management and implementation of such projects to transparency and accountability.

All these projects enjoy the oversight of the public oversight institutions and where impropriety in the usage of public funds is suspected then due process of the law is being followed.

However, it’s good to observe that implementation of these projects is transforming our economy. We have become a middle income economy and the next 14 years will enhance our status as our middle income economy.

Financing and execution of Vision 2030 flagship projects is governed by the public procurement laws rules and regulations and Vision 2030 projects are subjected to public procurement regulations to ensure the law is adhered to and due process followed.

These projects have also assisted to increase efficiency, attractiveness of our country as an investment destination and facilitate the private sector growth by enhancing logistics and reducing costs of doing business. 

The road network is growing, standard railway gauge is on track, energy/power generation doubled, airports expanded airport,  Lamu Port Southern Sudan-Ethiopia Transport, oil and mining is ongoing.

We are experiencing microeconomic stability, inflation is within target and seeing stability of our Kenyan shilling against the dollar, Nairobi becoming a choice HQ for global multinationals doing business in sub-Saharan Africa among many others.

Finally, I believe we should remain focused on developing our country as we at the same time deal with the vices.

The Eazzy Banking app credit is always under maintenance. What is happening? (John Onyango)

Since September 14, 2016, the computation engines and algorithms of Eazzy Banking had to be re-maintained and that is why the interest computation slider was under maintenance. But I am happy to inform you that on  November 11, it was successfully adjusted. The final release for IOS users will be released to the App Store on November 18.

The agriculture loans you offer have one month grace period which is not sustainable in agriculture enterprise, especially for one who wants to start from scratch. Have you considered the detrimental effect of this? Joseph Mwema Gathuo, Kiambu

We have observed un-serviced interest puts the loan above the approved limit. However, we see an opportunity to develop a product that would address this concern of both principal amount and interest

Do you often have a good night’s sleep and what worries you most? Githuku Mungai, Nairobi

I thank God I enjoy a full night’s sleep but I am occasionally awake and the issues that I keep on reflecting include:

- The great favour that I enjoy  from God to be given the opportunity and the responsibility to serve

- The trust that has been bestowed on me by 9,000 staff who have chosen to serve in pursuit of the Equity vision, and 11 million customers who have entrusted us to be the custodian of their financial wealth and who seek our partnership to  realise their dreams

- The weight of responsibility to steer the vision, dream and purpose of Equity Bank of social economic transformation of our people.

- The honour and challenge to spearhead the national aspirations of the Kenyan people by chairing the delivery of Kenya’s vision 2030 and more recently chairing the task force mandate to evolve and develop brand Kenya. 

Congratulations for the unique philanthropic social interventions both as an individual and through the Equity Group Foundation. With the runaway corruption in this country, how have you managed to insulate these activities from misuse by greedy individuals? Komen Moris, Eldoret

- We follow strictly the laid down procedures and policies governing the different programmes. We have also allowed the participation and guidance of external organs and stakeholders in the selection of best boy and girl by the Ministry of Education which is performance and merit based.

- The selection of the Wings to Fly scholars is community driven. The Community Scholars Selection Board which is made up of 13 eminent personalities representing diverse community interests receives applications from deserving candidates. The due process is followed to identify the beneficiaries.

Regular and constant review and audit of all the programmes is conducted to the satisfaction of all stakeholders.