Lessons from Equity Bank on high-impact entrepreneurship

Monday January 15 2018

Last week, I had the privilege of attending a book launch featuring revolutionary financial enterprises in Africa.

The book, Developing Africa’s Financial Services: The Importance of High Impact Entrepreneurship, edited by Dana Redford, features Equity Bank as one of the lenders that have revolutionised the financial sector in Africa within a fairly short time.

Other banks in Africa in the same category include Fidelity Bank of Ghana, Banco Unico of Mozambique and Atlantico Bank of Angola. These financial institutions gave credence to the Africa-rising narrative.

Their success story has been told a million times but more often the story that is not told is that foreigners had greater faith in their story as locals dilly-dallied on whether to take the risk and invest.

In the case of Equity, a few locals indeed took the risk and some were literally pushed by CEO James Mwangi to invest. They have never regretted the decision. But many of the laggards watched not because there was no opportunity to invest but because they lacked faith in locally driven, high-impact entrepreneurship.

Mwangi, the host of the book launch, used the occasion to emphasize the importance of government, academia and the private sector working to solve the problems of unemployment and poverty.


In his speech, he narrated how “Africap, who invested $1.6 million in Equity shares in 2002, exited five years later at a multiple of 50 while Helios, who invested in 2007, exited seven years later at a multiple of five. Original shareholders who have held their shares since 2000 have had their numbers of shares increase 600 times through share bonuses and splits and their value growing more than 1,000 times.”
Mwangi did not stop there. On the corporate social responsibility side, he noted:

Equity Group together with the MasterCard Foundation and the generous support of other donors has seen 15,168 academically gifted orphans and vulnerable children from humble backgrounds access comprehensive four years secondary school scholarships that provide for school fees, uniform, shopping, pocket money, transport, mentoring and coaching and limited health cover. Out of this, the group has provided internships to over 5,000 university students from the best girl and boy in each sub-county, while 443 students have benefitted to study in the world’s best universities through Equity Banks’ leadership development airlift programme.

He further said that the bank has been able to organise a 13-week training programme for more than 1.6 million micro, small, and medium enterprises as well as small-scale farmers, youth and women.


Through the bank’s corporate foundation, its corporate social responsibility initiatives have “seen more than 600,000 subsistence farmers transform into agribusiness or small-scale commercial farmers”.

These are mind-boggling figures but people who had faith in the Equity narrative in spite of its earlier stumble have truly created wealth and helped thousands secure employment. It is estimated that the bank has created close to 500,000 direct and indirect jobs.

To academia, the story of Equity Bank provides a classic case of entrepreneurship where failure was tolerated if not celebrated. The question we must ask now is whether we have learnt enough from this transformative change to embrace high-impact entrepreneurship.

In the next few paragraphs I will try to highlight some of the characteristics of building a high-impact enterprise, starting with an entrepreneurial mind-set.

How did Mwangi do this? He is often asked, as happened during last week’s launch, to share his secrets of success.

He often gives a textbook response. He talks about values, hard work, honesty, integrity, resilience, acting responsibly, treating others with dignity and respect, keeping your work and your commitment, and being accountable and courageous (love of risk taking).


While these are some of the secrets of his success, those who have worked with Mwangi closely will tell you that there is more. My own interaction with him while he chaired Vision 2030 led me to conclude that his success is driven more by his tenacity.

I have never seen him tolerate any nonsense; he is never indecisive and has great passion for his work, such that even with so much wealth he is always on time for his meetings and in most cases coming to work before 6am.

In a country where virtually every successful businessman seeks to self-actualize in politics, both Mwangi and Equity Chairman Peter Munga have been consistent in separating politics from entrepreneurship. Many of the failed enterprises in Kenya that were at some point successful failed as a result of political involvement by those who championed them.

Unlike many other successful enterprises in Kenya, Equity never relied on government tenders to succeed. They largely exploited opportunities created in especially the cooperative sector in Murang'a, where farmers needed money before the Kenya Tea Development Authority could pay them.


As they say, charity begins at home. Equity built its trust with customers from its humble beginning and began to scale to other parts of the country. The rest as they say is history.

In my view, there are three other key entrepreneurial concepts that, besides leadership, Equity pursued with zeal to become exceedingly successful. These include embracing the concept of professionalising the enterprise at the early stages of growth; like many other high-impact enterprises, it embraced innovation and constantly developed new products; and built entrepreneurial teams early in its turnaround strategy.
As for what lessons we can learn from the Equity success story, there are many. First and foremost, we must learn to change our mind-set as to what private enterprise is and its potential to create both wealth and employment.

Many economics textbooks list factors of production as land, labour and capital but fail to recognise a fourth factor — entrepreneurship as espoused by John Stewart Mills. To create millions of jobs, therefore, we must create hundreds of thousands of entrepreneurs.

The problem, however, is how to develop entrepreneurs. Policymakers have tried in the past to come up with ways of developing entrepreneurs but failed because academia has to a larger extent been sleeping on the job.


Where there are successful high-impact entrepreneurial developments, as in Silicon Valley in California, the support ecosystem (government, research institutions and the private sector) is in place.

This support system ensures that entrepreneurs succeed especially at the very early stage when revenue sources are erratic.

Without delving too much into the benefits of an entrepreneurial ecosystem, we simply must create industrial parks to enable start-ups to leverage the benefits of building an ecosystem.

President Kenyatta has rightfully identified industrialisation as one of the four areas that will determine his legacy. My humble advice is for him to appoint an industrialisation czar not linked to ministerial duties (policy matters). The role of the czar is to fast-track industrial development as Ethiopia (must watch) has done, such that by December 12, 2018, we shall be celebrating one million new jobs in manufacturing.

This concept is not foreign to Kenya, since we had it under Vision 2030 and made some progress towards realising such parks.


However, ecosystems will not work if many of us continue to see too much of the negative and fail to see the potential. We trust least our very own. Our sustained success will come when we embrace our local products.

If we cannot consume our own, it will be difficult for others to consume the same. In turn, failure to consume Kenyan means that our organisations will fail to scale and become multinational enterprises.

Winston Churchill, the wartime British prime minister, once said, “Some people regard private enterprise as a predatory tiger to be shot. Others look on it as a cow they can milk. Not enough people see it as a healthy horse, pulling a sturdy wagon.”

Let us not see private enterprise as a tiger to be shot. Neither should we think about milking private enterprise to death. Rather we must see it as an opportunity or that horse that will pull us out of poverty and hopelessness.

The writer is an associate professor at the University of Nairobi’s School of Business.