DRC’s Rawbank continues to grow despite weak markets
Operating in a difficult business environment, Rawbank has gone from a newcomer about a decade ago to the market leader today, controlling more than 20% of the market.
The challenges for banking in the Democratic Republic of Congo (DRC) are immense.
The World Bank estimates that there are fewer than a million formal bank accounts for a population of around 70 million, which means banking penetration is lower than 2%.
The sub-Saharan Africa average is 25%. Rawbank appeared in The Africa Report’s list of Africa’s top 200 banks in 2012, just a decade after the bank’s launch.
A subsidiary of the Indian group Rawji, the bank started with a few dozen employees and now boasts more than 500.
The youngest of the DRC’s financial institutions, Rawbank now has 36 branches across the country.
Part of its success has been achieved through deploying the latest technology to keep costs down.
The huge distances and dispersed population have meant that traditional banking has high ad- ministrative costs.
The country’s older banks do little outside the country’s urban centres.
In 2012, Rawbank partnered with computing company IBM to allow customers to access their accounts on their mobile phones via text messages.
Rawbank is seeking out Congolese people who do not have access to banking services, with accounts aimed at young people, loans for small companies and preferential credit for women business owners.
Its Lady’s First programme has loaned more than $3m to Congolese women and their businesses.
To boost its reach among small companies, Rawbank received a $15m loan from the International Finance Corporation on 8 May.
“This will strengthen our leading position in DRC’s financial system and enable us to reach more small and medium-sized enterprises, which are the backbone of the emerging economy in DRC,” Rawbank chief executive Thierry Taeymans told reporters.
To keep its place as market leader, Rawbank has tried to keep close to its customers and to innovate with new products.
The bank was a pioneer in retail banking, which represents 60% of its clientele.
Among its strategies to target young people, the bank has created the Academia account, which makes up around 10% of deposits.
It was among the first Congolese banks to issue credit cards, as well as to allow customers access to accounts on an online platform.
But while retail accounts and small consumer loans are growing, the corporate market is still small.
Larger companies often prefer to rely on foreign banks or to receive finance from parent companies, especially for large loans that Congolese banks are unable to extend.
New economic activity – agribusiness in Equateur and Bandundu, and mining in Katanga and Orientale provinces – is helping to create new business.
The decision to join the Organisation pour l’Harmonisation en Afrique du Droit des Affaires, a regionally harmonised business law framework, has brought greater security to investors and helped to solidify the arbitration processes.
To find new customers, Rawbank has to look elsewhere for growth.
The decision of the Congolese authorities in April 2013 to pay government salaries into bank accounts may be one possible avenue.
But there is a finite number of retail customers left, argues Michel Notebaert, deputy chairman of Rawbank: “The banks that have recently arrived in the DRC thought that – because of the low level of bank penetration – the Congolese market could be rapidly developed. Their model does not correspond to reality. The growth in accounts is not exponential.”
The public, most of whom remain poor, are still wary of banks. The various bank collapses of the 1990s led many families to lose their savings. ●