You don’t make money by starting a business, you make money by solving a problem, says the CEO of Kenya’s Equity Bank, James Mwangi


“The bigger the problem, the bigger the opportunity; the bigger the opportunity, the bigger the possible scale”


Legendary Kenyan businessman James Mwangi built an empire by taking banking to the rural poor, a move that saw Equity Bank rise from the very bottom to the top of Kenya’s banking sector in only a few years. His initiative has transformed the lives of millions of Kenyans, empowering them to engage with the local economy.


Do you think Kenya has what it takes to support budding entrepreneurs in terms of markets, capital, and regulations?

Kenya has a lot of challenges. That in itself is a huge opportunity for Kenyans, to innovatively create solutions for those challenges. Society is always willing to pay for solutions to problems. You enhance the quality of the people and the standard of a society by solving its problems. We are 50-million people in Kenya; you can imagine the size of that market! Our GDP per capita has grown significantly from $1 000 to about $2 000, so it’s not just 50-million people, but 50-million people whose purchasing power has doubled within seven years.


Statistics show at least 90% of start-ups fail before their sixth month of operation. What tips would you give such enterprises?

The biggest challenge is people jumping on the bandwagon when they don’t understand the market. They do it because someone has done it, so they keep on copying what others have done without doing research to understand what the market needs.


Businesses that thrive and grow to scale are the ones that attempt to solve society’s problems. If you look at Equity Bank, it went out to solve the problem of exclusion. For example, the ‘mama mbogas’ (roadside vendors), the kiosks, the farmers were excluded. Ninety-six per cent of the population had no bank accounts, and Equity decided to solve this problem with an inclusive business model. So we removed the barriers that excluded people and became a movement. Now we have 60% of all bank accounts in the country, with 14-million customers, simply because we solved the problem.


So the answer is ‘have a programme’. Most businesses are not started with an objective of solving a problem, they are driven by an objective of making money. You don’t make money by starting a business, you make money by solving a problem. Profit is a reward for solving a problem – the bigger the problem, the bigger the opportunity, the bigger the opportunity, the bigger the possible scale.


What advice would you give small traders to succeed and grow their businesses? 

You must have best practices in business, and best practices start with governance. You must have processes and procedures that help you manage risks.


What is your purpose for starting a business? If you look at Equity, we’ve always pursued a broad purpose of ensuring we change lives and livelihoods. And that is why, due to COVID, we gave businesses a break so that they could mitigate the negative impact of the freeze on economic opportunity and the closure of businesses. We did not ask for repayment from businesses that closed, instead, we helped them survive and recover. So you see, when you have a purpose, it will point you in the right direction.


Have patience. I have been in this business for the last 30 years. I joined banking in 1991; that’s when I became finance and strategy director. Fifteen years ago I won the Global Vision Award at the G8 Summit in Germany for the Equity business model, which was cited as (“a concept of the future that will transform the world economy”). Little did I know then what that meant to be honest because it was too broad, but today, when I reflect, I see what the professors who made the judgement saw in an inclusive model. Today, I’m an advocate and global champion of inclusive businesses.


Young people are advised not to look for white-collar jobs, but instead to focus on entrepreneurship. Do you think this is suitable advice?

Young people can improve on technology and provide intellectual technology just by starting with knowledge. The old factors of labour and capital are no longer the factors of production. The population is much younger with a very different taste. It means that the products of the past are not going to be sustained into the future. Young people can study the tastes and preferences of the population and re-invent and disrupt the market all over again. No great idea has ever missed capital because capital is always looking for great ideas. Great ideas promise great returns.


Let’s talk about your drive for education. How many children have benefited from your Wings to Fly scholarships?

Looking back, this has been the most successful of all the equity programmes and I am very passionate about it. We have 2 600 young people who have enrolled. Eighty-two percent of all the kids have managed to transit to university – that compares to a 12% transition rate for the country. So far, we have 663 kids who have made it to global universities. This year, we had the highest number, with 92 going to global universities, four to Harvard.


What is the secret of your success? 

Equity’s biggest contribution to the world is financial inclusion. We are ranked as the most inclusive bank in the world. We start with refugees; we have a branch in Kakuma and Guru-Uganda refugee camps. We ensure that the host communities and the refugees themselves prosper together. We use the cash flows from social payments to start lending to the recipients, and we can see them starting to acquire assets.


Eighty percent of our workforce is in the informal sector and 68% of all our loans are to SMMEs. That explains why Equity continues to grow and has sustained tenfold growth every five years; simply because the informal sector, the ‘mama mbogas’, the micros, the small businesses are the ones that expand. It’s not really the government. It’s the informal and private sector that is the engine of transformation. We are at the centre.


Seventy-five per cent of Kenya’s population makes a living out of agriculture. I’m glad to report that we have seen 682 000 farmers convert into agribusinesses due to our financial literacy programme. Over the last four years, we have trained 2.2-million young people and women who are in micro-businesses to enhance their capacity. During the same time, we trained 97 big entrepreneurs in a three-year entrepreneurship programme to strengthen their capability to grow.


The biggest driver is the fulfillment that these interventions bring. When I see those orphans become like any other child in the society, see them go to Harvard University, where my children never made it to, I realise that this is selflessness. The other driving force is inspiration.

Peter Burdin