Equity’s dubious entry into Rwanda
Kenyan lender alienates employees and labor regulators
On February 17 this year, the new entrant on the local banking scene, Equity Bank Rwanda announced it had managed to attract more than Frw 5.2 billion in customer deposits with another Frw 1 billion already advanced out in loans. Equity also said in that in the short period of five months it already was banking over 30,000 customers. However, behind these numbers is a story of highly dubious practices. A Focus investigation reveals a company that will do anything, in complete disregard of the laws of the land.
Focus agreed to talk to all its sources in Equity Bank on condition of anonymity so they could speak freely. We crosschecked any information we got with several employees. We also have copies of letters and several official documents corroborating all allegations our sources made about Equity Bank practices in Rwanda.
For example at Equity, employee salary deductions are made with no explanation, which is in contravention of the country’s labour laws. Employees are not even informed when such deductions are made. Instead, when the final salary sheet is released, employees only see a diminished sum on their paychecks. (For example a person entitled to Frw 250,000 got 40,000 less). Under standard practice, all deductions on a salary are clearly indicated on the pay sheet.
Employees at Equity Bank are hired and fired depending on who they are. There is one case of a female employee who is a relative to a Rwandan dignitary. As a cashier officer she made several accounting losses. Fellow employees say she did not have the skills for that position. But instead of firing her, the bank sought to raise her salary. Unfortunately for those who have no “connections,” even being found in a different place of work at the “wrong time” is received with a warning letter.
Investigations by The Rwanda Focus indicate that among the foreign banks in the country, Equity salaries are among the worst. And when Equity employees complain, Kenyan executives tell them the bank is new in the market and that “salaries would increase once the bank is fully established.”
On the face of it, this explanation is logical. But a deeper search reveals even more discrepancies in payment policy. At Equity Bank, a conflict has been brewing between the Kenyan executives and employees over the convertibility of their salaries. When the bank was recruiting people for training in late 2010, the original employees were told their salaries would be set in Rwandan francs. Instead salaries are paid in Kenyan shillings, which is confusing as staff continually discover they are getting less than they had been promised. A staffer at a very senior level found himself earning way below the amount he had expected. When he complained, the bank ignored his pleas. He quit and left.
Since there are not many accounting professionals in the country, banks spend heavily on training their own staff. They never fire their employees and will do everything to keep them around. A number of banks operating locally have systems whereby even if a member of the staff commits an offence, they may demote him or her, but they maintain the same salary as previously. This is a policy that cuts across the board in the local banking industry with the aim to attract and retain good staff. Or to minimize loss of staff whose training they incurred a lot of cost to fund. The single exception may be Equity.
Firing at Equity
The Rwanda Focus has spoken to more than seven former and current employees at Equity Bank Rwanda, and many live in terror of its human resource manager Orane Gakuba. Several allegations are levelled against him including that he has orchestrated “the unfair sacking of several employees.” In one particular case, two employees had a conflict away from work. Gakuba saw it fit to write a threatening letter of warning for one, but not the other. Gakuba is also accused of orchestrating the promotion of a relative, Innocent Mumararungu, from receptionist to cashier. He moved up more than five positions.
One of the sacked employees petitioned the Labour Inspector based at Nyarugenge District, Jean Marie Rusezerangabo. He summoned bank officials twice, between 02 and 15 February this year, but they declined to answer the summons. When he threatened them with legal action, they complied. It was Orane Gakuba, the Human Resource Manager, who answered. The problem, according to the labour inspector, is that despite an amicable agreement reached between the affected employee and the bank at the meeting on February 15, no redress took place. According to minutes of the meeting, Equity Bank agreed to make several payments including damages. But to the labour inspector’s surprise, no action was taken. As a response, he signed an affidavit to a court case against Equity Bank filed by one of the disgruntled sacked employees.
In an interview with The Rwanda Focus the labour inspector said the bank did not have any chance of winning the case, and that it could open the door for more court cases of disgruntled employees.“This case has to do with a bank that does not respect the legally stipulated workers’ rights leading to poor working conditions,” said Rusezerangabo.
So what is wrong with Equity Bank? In October 2010, the Kenyan bank sent scouts to Rwanda to recruit people. This original group of 21 Rwandans, who had passed what was dubbed a rigorous selection process, were taken to Kenya for nine-months training. Several other teams, all meant to be the staff to launch Equity Bank operations in Rwanda, followed for the training. In October last year Equity Bank Rwanda was launched with three operational branches. It currently has 7 branches with plans for a further 3 branches before the end of the year. Equity Bank claims to have the largest customer base in Kenya. On its website, it says of itself: “With over 6.3 million accounts, accounting for over 57% of all bank accounts in Kenya, Equity Bank is the largest bank in the region in terms of customer base and operates in Uganda and South Sudan and Rwanda.”
Despite this glowing public image, the behind-the-scenes details are disturbing. An anonymous whistle-blowing letter made headlines in Kenya in July 2007, with among many allegations that Equity Bank had the highest senior staff turnover in the industry. It was reported that no senior employee stays for more than a year, and also that not many people employed at Equity Bank work there for a long time. The whistleblower also cited “serious corporate governance issues”.
In February 2009, another letter appeared in the media purportedly from Equity Bank employees to their CEO. The letter among a very long list of grievances complained that they earn “meager” salaries. They wrote: “[We are] Professional but cannot afford a decent house. We live in slums. We walk to work because we cannot drive and or afford fares. We cannot even afford newspapers; we buy in turns.” The irate employees added: “We need good pay. We want our salaries harmonized. Why do we get paid a half what others are getting elsewhere for the same job? We don’t eat titles. We don’t eat awards. We eat from our sweat and need to be compensated well. That is why we are leaving the bank.”
Strange attitude towards media
Armed with all these allegations after conducting investigations since January this year, The Rwanda Focus team initiated contact with Equity Bank Rwanda Executive Director, Samuel Kirubi on March 08. More than five calls to his mobile phone on that date went unanswered. We thought he was probably out of the country, but staff at the bank confirmed to us that he was indeed around. More calls in the following days still went answered.
A few days later we sent an SMS to his cell phone informing him of our intention to speak to him due to the seriousness of the information in our possession. Kirubi immediately called back, but explained that he was in a meeting and that he would get back to discuss the details and probably arrange an appointment. The promised call did not come. We sent him a brief text message reminding him of the promised call, but there was no response. When we persisted and finally got him on the phone, he made it clear he was not willing to speak to us. “Give me time I will get back to you,” he said. “Well, ‘how much time?” we asked.
“At this point in time I cannot give you a clear indication of when that will be. You wait I will contact you,” said Kirubi. We informed him that the story would be published this week with or without Equity Bank’s comments, to which he said, “No problem, go ahead!”