Kenya’s Equity Bank chief executive James Mwangi has criticised entrepreneurs for taking an individualistic approach to business, describing it as “a major bottleneck in Africa”.
He said the lack of capacity has become a huge constraint, blaming it on the entrepreneur’s decision to go it alone and failing to prepare for funding.
Mwangi contrasted entrepreneurs in Africa with those in Silicon Valley, arguing that whereas many ideas in Africa are good, most of them are not well packaged due to a lack of support systems.
“In Silicon Valley entrepreneurs come together and they are supported so that they become bankable. Entrepreneurs here should form partnerships and be given support. There is no capital that substitutes preparedness,” said Mwangi during a recent conference in Nairobi.
Mwangi told the audience that a good idea on its own is not a basis for financing. “Entrepreneurs need to know that a great idea on its own is not sufficient. They should show a road map that demonstrates that the combination of their idea and the investors’ money will lead to wealth creation.”
The Equity Bank boss said the bank expects to be the most profitable company in the region this year.
He attributed the success of the bank to convenient products like mobile banking, affordability and easy access to financial services.
Mwangi has been credited with driving Equity Bank from near collapse to becoming one of the leading financial institutions in East Africa. “For every ten bank accounts opened in Kenya today, seven will be opened in Equity. Just 15 years ago we had 2,892 customers and we were insolvent. Today we have 7.5 million customers. We have made interventions in society commercially, making us sustainable and scalable,” he explained.
Equity Bank has built a hugely successful business by lending to the country’s low-income population.
“The bank struck a sweet spot, finding equilibrium in balancing the often conflicting objectives of social good and profit maximisation as can be testified by a multitude of accolades awarded for its social economic transformation prowess, as well as its impeccable history of solid growth in shareholder value,” said Imara Africa Securities in a recent report.
“I kept asking myself, ‘Why is banking exclusive?’ We developed a model that would address the market failure and reach the 94% who had been left out. We have removed all barriers of access. We give loans of even US$5,” Mwangi said.