Equity’s dubious entry into Rwanda
Kenyan lender alienates employees and labor regulators
Equity Bank’s Rwandan headquarters in Kigali. (photo Bruno Birakwate)
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.
Samuel Kirubi Executive Director Equity Bank Rwanda.
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!”
Posted by The Rwanda Focus
on Mar 26 2012. Filed under Cover Story, National.
You can follow any responses to this entry through the RSS 2.0.
Both comments and pings are currently closed.
Dear Sir/ Madam,
I think we need to be careful when making these strong allegations, especially if they involve investors entering a very competitive market place. Time and time again we see these complaints originating from employees and it doesn’t augur well when reading these accusations. I am quite disappointed in the fact that no feedback was got from Equity’s side of the coin. I hope we can expect more balanced reporting in the future. This was / is a very vicious article and does not reflect the kind of investigative journalism we expect from the Focus. Editor please understand that although some investors are scrupulous, when we have a successful company investing in our homeland we at the very least should accord them the respect they deserve and not try and destroy. Lets understand what’s going on before we have such vicious accusations and headings.
Investor does mean they should do as they please. What about if they promote divisionism such as they openly do in Kenya? Our young generation which knows little about how genocide is started had better observe these “investors” who deduct salaries without showing why. I hear there is another big company, ruled by Kenyans also which steals staff salaries without accounting for a reason; it was recently alleged in a court in Nyarugenge.
A bank – perhaps more than many commercial entities in other industries – thrives or fails – largely on reputational factors since its primary business is credit, credibility or credere (take your pick). To start off in a new, and increasingly competitive, market with such a dreadful image can do Equity Bank’s prospects no favours. This is especially true in a business where the much abused cliché of managers that their most valuable asset is the company’s human resource is, for once, true as reflected in the fact that payroll expenses normally represent a bank’s highest operational costs. In these circumstances, antagonizing the bank’s most critical asset is akin to a battlefield commander alienating his/her troops and then expecting them to guard his/her back and follow him in battle against his/her enemies. Its poor human resource management reputation, whether deserved or not, also means greater headwinds in the bank’s efforts to recruit the best skilled workers in a competitive labour market. Talk about shooting themselves in the foot and turning their name – Equity – upside down!
Mwene Kalinda
Dear Focus,
I think your article title is too strong for the article within. On first impression, you might think that there was no compliance to the set laws for the investor in perceptive. Inside the article though are very serious allegations to make about an investor who is trying to open up financial services to the unbanked populations in Africa. HR issues will exist as long as there are Organizations to manage and to destroy a Company’s Reputation on the basis of a few disgruntled employees is a long shot if u ask me. And mind you they are not authorized to speak to the media, the reason why you promise to uphold their anonymity. Kindly Focus on the good until you have the full information to back these serious claims! Suzie, Nairobi Kenya.
But Gihana, somewhere in the story, we are told the Equity people refused to talk to the Focus journalist with the Bank’s boss rudely telling them to ‘write what you want’ surely I think they tried their best to be balanced. And your talk of not scaring investors, for God’s sake we aint going to cover up evil for the benefit of some selfish investor…we need quality investors who respect their employees. Personally, I have an account with that bank but I am not proud if the people who serve me everyday are not happy.
Tito,
I apologize and in fact did see that. However my issue is that they are not your everyday investor. Can you honestly tell me that said Investor is not a quality investor. They are looking to bank the un-banked, which no bank in Rwanda has done. They are a serious and reputable investor and you have to admit that brother.
I think we need to understand the different categories in regards the type of investors we attract. I think it was very commendable to the team that brought Equity rated very highly in the global and regional institutions.
Lastly i think we need to be aware that in order for them to bank said part of our population they will incur larger costs than the other banks and thats why they have to be shrewd in regards their investment and strategic decisions. If you look at the training that the original employees got they wouldn’t complain i might add.
So apologies for not mentioning the fact that they refused to comment, this is a bank with a unique selling proposition and they have to justify their costs to their board. The employees while they might have some grievances, Focus doesn’t help with the sensational headlines and damaging stories about investors. Thanks
In Their country of origin, segregation based on tribe is openly practiced. You only have to read their newspapers for proof. Complaints are rampant. Cartoons depict tribal connotations .Read the Standard online cartoons and you will be shocked. If they should export it here, National Unity will be the first to be undermined. Ombudsman should have a permanent staff and a complaint desk in the premises of these investors. I smell trouble.
Mr Gihana, one might think either you have gotten a loan from Equity, or you are a senior staff member…otherwise you seem more determined to take their side of the bank in this story. But the journalists also seem to have a point. If someone is a “quality” investor, then they should be treating their staff in a quality way.
Personally I think what The Rwanda Focus is doing shows that our media environment is getting better and better. They talked to a labor regulator of and I can see that they mentioned that fact somewhere in their story.
I think most commentators on this story miss the point. Staff satisfaction, motivation and commitment aren’t a luxury in a services industry like banking, in which front-line workers must interact very closely with the clientelle. These traits are an absolute necessity. When customers think of a bank, it is not its building they have in mind; it is the staff with whom they interact, who are the proxy for the institution: their demeanour, the quality of the service, their friendliness are all the critical attributes people expect and demand from their bank. An unmotivated worker with a surly manner is a certain put-off for potential and even existing clientelle not withstanding the average banking customer’s legendary inertia when it comes to changing service providers. The Rwanda Focus is therefore right to point out the failures of Equity Bank in managing their workforce in a manner that gives staff satisfaction, motivates their workers, engenders organisational loyalty and commitment and encourages them to deliver quality service to the client. The bank’s senior management in Nairobi should be grateful that the paper is providing invaluable early warning signals that their local management is failing in their duty to safeguard the firm’s valuable brand by avoiding practices that lead to such controversies with their workforce in this new market. It isn’t the responsibility of The Rwanda Focus or any other local media outlet to go easy on investors if the latter are not complying fully with both local labour laws or acceptable minimum standards of people management in their local operations. It is also important to understand that Equity Bank may perhaps be an exemplary employer in Kenya but still fail to uphold the same standards when it expands outside its home markets. Examples of split-personality behaviour (a sort of corporate Dr. Jekyll and Mr Hyde) in global firms are legion; often because HR managers in peripheral markets fail to integrate the best of both headquarters and local practices and sensitivities in their people management.
Finally, the onus was on Equity Bank to respond to The Focus when the latter approached them for comment on the complaints received by the newspaper^s journalists. This would have enabled the paper to provide the balanced view that some commentators feel was not provided in the article. Conversely, a dismissive stance from Equity was guaranteed to result in only one side’s view of the issue and the kind of negative spublicity the bank will now have to deal with at greater cost than if they had been more cooperative to begin with. You just have to wonder what the PR people were doing sleeping on the job.
Dear all, I personally went to Equity excited at the prospect of opening an account with them, but an employee at the counters sounded like she had not eaten for days and was looking very furious! Some people in the line were saying actually that they had noticed a very bad mood among many of the employees. I think to some extent this story gives us an idea of the conditions in the bank. Equity please, I dont want to be received by angry workers. Solve their troubles so that they can help you grow otherwise they will destroy ur bank.
Claudette, Kigali.
Equity Bank deserves all they that have found themselves in. Operating a business like that one is not about the numbers that are staged in the media purportedly of its glowing performance. You need to have a superb relationship with the media. Equity needs to work on its media relations. You need the media. Remember in Rwanda, people tend to give so much trust to rumours. So if you refuse to speak to the media, the journalists will print all sorts of allegations. But when you speak to them, some allegations can be found to be baseless. However, I commend Focus for making it an effort to seek all responsible sides as possible but when it came to the, bank without success. That is a professional way of doing thing. Equity is going to spend more on recovering the lost image. You know these big organisation have a tendency of undermining media in countries like Rwanda that are just growing. Am sure had it been Nation or Monitor, Equity would have cooperated. Now the damage is worse than had been anticipated.
Gihana
We admit that Equity Bank is doing well and they are proud of the figures and speeches they give. I really feel for the Rwandans at Equity. I have some friends who work in Equity KE and we are treated the same! Low pay and we are high performing! They have to think of whether they eat a good meal, walk to and fro from work, buy second hand clothes to look good because they cannot afford new suits or shoes or save the little they have. As long as Equity keeps this up, turnover will be high! Might this be another Kodak waiting to happen? Who knows.
I think EQuity bank has excelled where most have not, but they have made sacrifices! T is shame about their wages and staff treatment, they moved to Rwanda for the profits and ease of registering business there, you would think they would respect the same laws that enabled them to set up and the people who welcomed them with an open heart and hand!