Effects of Kenyan Banking on International Trade

The impact of Kenyan banking on international trade is evident because most banks in Kenya operate internationally. International trade involves business transactions carried out across national borders with the aim of satisfying businesses’ and individuals’ interests. This article highlights the effects of Kenyan banking on international trade.

It involves a process where people exchange goods and services along international borders. International trade allows for more competitive pricing in the market. Because of this, goods and services are available to consumers at affordable prices.

The banking industry in Kenya is expanding and recent studies suggest that the banking sector in Kenya has the potential for further growth. Currently, there are a total of 43 commercial banks in the country.

Trade financing

Equity bank in Kenya offers trade financing through letters of credit as well as guarantees. Because of this, the movement of goods from place to place both locally and internationally is easy. Trade financing involves local and international trade transactions. Kenyan banks act as intermediaries that facilitate these kinds of transactions by financing the trade.

Foreign exchange

Commercial banks in Kenya promote international trade by facilitating the exchange of currencies. This makes it easy for companies to conduct their business in another country because they are mostly paid in the host country’s currency.

Corporate finance

Kenyan companies operating internationally sometimes need to borrow cash to cover for certain costs. Because of this, they are mostly in need of a bank they are used to process their applications. Kenyan banks such as equity bank which have branches in other countries are of great help in corporate financing.

This is because they simplify the process of corporate finance by consolidating transaction procedures and record keeping. This is a much easier process for businesses than having to develop banking relationships in every country they conduct business in.

The use of America Express branded charge and credit cards

Equity Bank signed a partnership agreement with American Express in 2018. Because of this, they were made the exclusive issuer of American Express cards in East African countries. This facilitates international trade because it enables easy conduction of international business transactions between East Africa and other countries.

This partnership has given equity bank leverage over its competitors. This is because American Express offers gold as well as green cards to its users to enable them to participate in international trade.

Establishment of Return Merchandise Authorization (RMA)

Equity bank in Kenya is showing its support for international trade with The establishment of RMA with other banks internationally, especially in China. RMA fund allows local and international investors to benefit from profits generated from it.

Credit access

Banks such as equity bank in Kenya operate and provide credit facilities internationally. Because of this, Kenyan and outside investors can easily access credits to expand their businesses. As a result, more investments increase which gives rise to more revenues coming from international trade. This, in turn, boosts the Kenyan economy.

The innovation of equitel Simcard

In partnership with Airtel, the equity bank launched the thin Equitel Simcard. This business model is designed to reach out to the low-income market across Kenya, Uganda, and Tanzania.

Because of this, equity bank can provide stable funding to its customers while maintaining affordability, accessibility, and efficiency in its products and banking services. Equity bank is also able to have access to untapped markets through information technology and the distribution of its agents to all places.

The agency and mobile banking model enables most Kenyan banks to reach out to remote populations for financial support. Each commercial bank in Kenya has a network of agents distributed in different locations. This expansion improves access to formal financial services to low-income markets across the country.