KCB To Close South Sudan Branches
Kenya’s biggest bank KCB is in the final stages of closing down most of its branches in war ravaged South Sudan.
KCB, which has branches in Uganda blames civil strife in South Sudan, devaluation of the country’s currency, and hyperinflation which negatively impacted the lender’s earnings last year, according to a report in Business Daily.
KCB, which has 19 branches in South Sudan, now wants to cut its exposure in Africa’s newest nation where the bank took a Sh3.4 billion hit due to hyperinflation in 2016.
“KCB Group board of directors has approved the temporary closure of some branches in South Sudan, driven by logistical and operational challenges that have made operating some of these branches unsustainable.”
“A change in the economic situation will lead to a re-assessment of the viability of branches.”
South Sudan’s inflation rate hit 830 per cent in late 2016, and the South Sudanese pound has been on a free fall — currently trading at 108 units to the US dollar compared to 2.95 units at which it was fixed until December 2015 when Juba adopted a free floating foreign exchange regime.
The impending closure of branches in South Sudan is likely to lead to job losses, KCB warned, saying the actual number of workers to be affected will be known in due course.
“Naturally, any branch closures will lead to staff re-assessment but, as mentioned earlier, this is work in progress and we cannot therefore, at this time, quantify the number of staff who will be affected,” the bank said.
KCB ventured into South Sudan in 2006 and the wholly-owned subsidiary quickly rose to become the most profitable unit.
The macroeconomic troubles saw the Juba-based unit plunge into the red, with a loss of Sh759 million last year from a net profit of Sh17.8 billion in 2015.
KCB in January 2014 shut three branches in the towns of Bor, Bentiu and Malakal, due to the conflict in the fledgling economy.