The career profile of Equity Bank CEO James Mwangi

1st January 2021

Dr. James Mwangi in Monaco - Picture Courtesy

James Mwangi Biography: Dr. James Mwangi or King James as he is commonly referred to as is one of the wealthiest Kenyans with an estimated wealth of over 20 billion shillings. He is the Group Managing Director and Group Chief Executive Officer of the Equity Group Holdings Limited, the banking conglomerate with the largest customer base on the African continent, in excess of 8 million as of 2014. Dr. Mwangi is also an entrepreneur, visionary and philanthropist.

James Mwangi Biography: Background

Date of Birth: 1962

Place of Birth: Kangema, Murang’a County

Schools: Nyagatugu Primary School

Ichagaki Secondary School (O-Level)

SEE: The salary and allowances James Mwangi earns as Equity CEO

Kangumo High School (A-Level – Economics, English Literature and Geography)

University: University of Nairobi (Bachelor of Commerce)

Professional Courses: Certified Public Accountants of Kenya (CPA- K)

Family: Married with four sons

James Mwangi Biography: Career

Accountant, Ernst and Young
Banker, Trade Bank
Equity

Milestones

1993 James Mwangi joined technically insolvent Equity Building Society

2004 Equity acquired a banking licence

2006 Equity Bank listed on the Nairobi Securities Exchange

2014 Equity Group shares were cross-listed in Kenya, Uganda and Tanzania

Key Positions

Group Managing Director, Equity Group Holdings Limited
Group Chief Executive Officer, Equity Group Holdings Limited
Chairman, Equity Group Foundation
Chairman, Vision 2030 Delivery Board
Patron, Equity Bank Wings to Fly Scholarship Program
Board member, Africa Leadership Academy
Chancellor, Meru University of Science and Technology

James Mwangi Biography: Awards

2019 – Named among top 50 CEOs in the world
2015 – CEO of the Year – Africa Investor
2013 – African Business Leader of the Year – Africa Investor
2012 – Forbes Africa Person of the Year 2012
2012 – East African Business Leader – CNBC Africa
2012 – World Entrepreneur of the Year – Ernst & Young Entrepreneur
2011 – African Banker of the year – Africa Investor
2011 – Kenya National Heroes and Legends
2011 – Chief of the Order of the Burning Spear (CBS), Republic of Kenya
2010 – African Banker of the year – Africa Investor
2010 – One of the top 50 emerging market business leaders in BRIC (Brazil, Russia, India and China) countries – The Financial Times
2009 – Africa Investor Series Awards – Africa’s CEO of the year
2007 – Global Vision Award
2006 – Moran of the Burning Spear (MBS), Republic of Kenya
2004 – Head of State Commendation (HSC) – Civilian Division, Republic of Kenya

Honorary doctorate degrees

2014 – Doctor of Business Management (Honoris Causa) Meru University of Science and Technology
2010 – Doctorate of Letters, Africa Nazarene UniversityEntrepreneurship, Jomo Kenyatta University Agriculture and Technology
2008 – Entrepreneurship, Jomo Kenyatta University Agriculture and Technology
2007 – Humane Letters, Kenyatta UniversityBusiness Administration, Kenya Methodist University (KeMU)
2007 – Business Administration, Kenya Methodist University (KeMU)

Early Life

James Mwangi attended Nyagatugu Primary School in Kangema village. But money was short and the family teamed up to supplement their income by engaging in ‘small business’. While this may have been humbling for the boy, he was nevertheless absorbing invaluable business lessons that would stand him in good stead for his future.

He was learning, without consciously doing so, the basics of business – what people needed, what they were prepared to pay, how to add value to mundane articles, how to negotiate, how to make a sale and turn a profit. With no role models to emulate, he and his family were, in effect, discovering the basics of business all by themselves, based on observation of what worked and what didn’t.

He obtained outstanding results at the end of his primary schooling and this led to a government scholarship at Ichagaki Secondary School. Here he was introduced, for the first time, to accountancy and commerce. “This was an important discovery,” he recollected. “I could see how the systems related to the small businesses we had been doing. We had been going about business in a haphazard way, but here was a systematic method of doing the same things with far better results. It was an eye-opener.”

Mwangi obtained outstanding O-Level results and went to Kagumo High School to study for A-Levels in economics, literature and geography. Whatever he was picking up in theory, he was mentally applying to real-life situations and his earlier, unformed brushes with commerce. He obtained a bachelor’s degree in commerce from the University of Nairobi, passed a Certified Public Accountancy course and was ready to face the daunting and mysterious world of work.

Equity: From society to a respected bank

At the age of 28, although he didn’t know it himself, Mwangi was primed, in terms of character, values and down-to-earth business savvy for the major role he was about to play in the nation’s commercial life.

In 1993, the chairman, Peter Munga, and the CEO, John Mwangi, turned to James Mwangi, who had established a reputation for honesty during a period when that commodity was in very short supply, to help wind up the business. It had already been declared technically insolvent.

“That was an understatement,” Mwangi told me. “To cut a long story short, the building society had been making losses of Ksh 5 million every year and was now facing a cumulative loss of Ksh 33 million, the staff had not been paid salaries, morale was at rock bottom and membership was dwindling by the hour.”

But rather than throw in the towel, Mwangi wondered if he could intervene and “reinvent the organisation, transform it completely.”

He became the strategy and finance director. At the time, Equity had 27 employees, 27,000 customers, five branches and stood at number 66 out of 66 in the financial sector rankings.

“I accepted the challenge because I could see clearly how important a properly functioning society was to the mass of the people. It was their only avenue out of poverty. I felt I had to do something – somehow square the circle.”

But he had no resources, no money, no way of raising capital. A banking licence, which might have provided some leeway, was not forthcoming. Public confidence in indigenous organisations was at rock bottom.

“How could I entice people to come to Equity? What could I provide that was needed but not available? I decided to look inside the organisation. If I could change the culture internally, I would have, in effect, succeeded in reinventing Equity.”

Mwangi set about retraining the staff. He introduced a concept which at the time was practically unknown – customer care. “Put the customer and his or her needs first – he is the most important person in the world. Treat people with dignity and respect. Serve to the best of your ability.”

He encouraged his staff to use their own networks – as he did his – to persuade people to join the society. “I told them, ‘trust me’. They believed me because I believed it myself. If you expect anyone else to follow you, you must have absolute confidence in yourself.”

What he felt most at this time was a heavy sense of responsibility. “I knew I could not let down the chairman and CEO and, above all, I could not let down the customers. When I said ‘trust me’, I meant to keep my word.”

The first sign of success, he said, was a complete change in the attitude of the staff. They were now motivated, they had a direction to follow and what they were doing was bearing fruit. “We were able to give them their first raise in eight years. I also persuaded them to use 25% of their salaries to buy shares in the company. Now they were involved. It was as much their company as anybody else’s. They knew that if they succeeded, they had a lot to gain.”

Slowly but surely, like a ship that was almost sunk, the company began to right itself. Customers, many of them peasant farmers, were given red carpet treatment. Accounts were kept meticulously. Confidence blossomed.

“By 1997, we were ready to expand. We invited customers to buy shares in the company and we started to pay them dividends. The word began to spread – Equity was different; Equity could be trusted.”

In 2006, Equity Bank listed on the established Nairobi Stock Exchange (NSE). More capital – this time from the giant Helios fund, supported by IFC, CDC, George Soros and Opic, who bought 25% at $185 million – allowed the bank to become the most highly capitalised in East and Central Africa.

The figures are mind-boggling. From a loss of Ksh 5 million in 1993, the bank registered a profit of Ksh 17 billion in 2014. Equity now has the largest banking customer base in Africa. It is the biggest majority-African owned bank and the most profitable in East and Central Africa. Since listing on the NSE in 2006, shareholder value has grown 900%, turning a large slice of shareholders into millionaires.

Innovations such as mobile banking – taking the bank to the people in remote areas – and agency banking, where customers can carry out transactions in shops, has made this once given-up-for-dead institution one of the most progressive on the continent.

Investment

Dr. James Mwangi’s paper wealth has surged to a new high, helped by a steady climb in the bank’s stock at the Nairobi Securities Exchange.

Dr. Mwangi’s 6.5 per cent stake (co-owned with his wife Jane) in the bank is now worth Sh12.15 billion, making it one of the largest family fortunes held in a single stock.

Few stocks have generated wealth for long-term shareholders like Equity Bank, which has minted at least six individual billionaires since going public in August 2006.

The performance of the portfolios of Dr. Mwangi and his wife, Jane Wangui Njuguna, attests to the long-term benefits that investors have continued to draw from the bank’s steady growth in the past 10 years to become the second largest lender in Kenya by profitability and asset size.

At Sh12.15 billion in 2014, the Mwangis’ stake represents an annual compounded growth rate of 50.4 per cent over the past eight years, a massive expansion from the 7.32 per cent stake valued at Sh464.2 million they held in 2006.

Equity’s wealth creation capability is even more significant considering the fact that the Mwangi’s have since sold Equity shares worth an estimated Sh1.7 billion, partly to comply with regulatory ownership limits imposed on executives of publicly traded firms.

Equity’s market valuation has risen from Sh6.3 billion in 2006 to Sh186.9 billion at the close of trading last week, representing a 52.7 per cent compounded annual growth.

Dr. Mwangi currently holds 127.8 million Equity shares equivalent to a 3.45 per cent stake in the lender.

The Equity chief executive is also the beneficial owner of another 1.43 per cent stake through his entitlements in the bank’s employee share ownership plan.

This brings his total shareholding to 4.88 per cent, making him the single largest individual investor in the bank with a stake worth Sh9 billion.

As the CEO, Mr Mwangi’s ownership is capped at five per cent, meaning that at 4.88 per cent he is barely below the cap.

His wife, Jane, owns 60 million shares or a 1.62 per cent stake in Equity valued at Sh3 billion based on the current share price of Sh50.50, taking the family fortune to a total of Sh12 billion.

As far as wealth concentration goes in Kenya, the couple’s Sh12.15 billion stake in Equity is only comparable to businessman Chris Kirubi’s Sh12 billion fortune in investment firm Centum.

The Mwangi family also own shares worth over Sh3 billion in Britam, pushing the value of their known NSE portfolio above Sh15 billion. James Mwangi Biography.