By Kenya Today City Hall correspondent.
Forget the screaming headline of this article, Dr Kidero is not some Eliud Owalo to be unprofessional in language. But, he has done to Equity Bank exactly that! Kidero has gone head-on with James Mwangi. In the coming weeks and months, expect a lot of dirt.
Equity Bank has been dangling its financial monopoly of Kenya’s public sector for a while now. With the rise of GEMA power and politics in the last decade, Equity Bank has been one of the more popular public emblems of that ingenuity, or collaboration, and, with that, it has done what every dictator do: “go too far”.
Because of Equity Bank’s ‘black-market manner’ of conducting businesses, a new Sherrif in Nairobi City government had to put up its ‘stick’ to counter the ‘carrot’. This will end to a loss in a political career.
Nairobi Governor Dr Evans Kidero, himself a former CEO, has ended Â the stranglehold of Equity Bank on Nairobi County services.
The Bank will lose billions on revenue collection deal it signed with the defunct Nairobi City Council, the forunner to the current county government.
Here is the story:
In 2011, Equity Bank advanced a loan to Nairobi City Council for what a corrupt city hall said was to pay outstanding creditors. City Hall, despite its massive revenue base, had debts running into billions. Equity Bank Debt stood at 5 billion shillings.
However, to repay this debt, the bank kept on changing the interest rate terms. Initially, the interest rate was at 10 per cent which the bank upshot to 18. 9 percent. When Dr Kidero took over, the new county government decided to force Equity into ‘clean’ business. These terms, according to city hall, were very unfriendly.
Because Equity Bank became intransigent, which precipitated a fallout, Dr Kidero got a new partner in Kenya Commercial Bank, who took over the outstanding balance (ksh 3.34 billion), repaid it in full (to Equity Bank) with an advance of Ksh 700 million to the county, bringing the loan amount to 4 billion.
In return, Dr Kidero has given KCB a revenue collection deal to collect the County’s Wages. What next brings us to the ongoing Matatu strike.
Because Dr Kidero has insisted the Matatu industry services in Nairobi must be automated. The sector – currently the biggest tax evaders – will also come under KCB collection dragnet. Not only has equity lost business, it has also lost opportunity. Again, this means KCB becomes the County’s primary financial transaction patner. In layman’ terms, the Nairobi County government account at Equity Bamk is getting closed down. Dr Kidero will henceforth keep his money at KCB.
Now, those who love politics see the connection, right? I tell you, the Mt. Kenya Mafia will fight viciosly back. Already, as usual, they have stared by using their holoi poloi but wait until this thing gets to parliament and the judiciary complete with executive meddlingÂ that’s when you know Kenya ina wenyewe.
Just so you know what we are taking about: KCB has for the fourth straight year beaten Equity. In the year ending 2013, posted a net profit increase of 17.5 per cent with Equity Bank trailing 9.9 percent which translated to Ksh 14.34 billion and 13. 28 billion respectively.
Keep it here for more details