South Africa firms in Sh413bn swoop on Kenya blue-chips

The firms have been attracted by the faster pace of economic growth in the East African economy compared to their home market.

As a regional hub, Kenya offers easy access to cross-border business in countries such as Uganda, Tanzania, Rwanda, South Sudan, Ethiopia and the Democratic Republic of Congo. It also provides a primary trade corridor that links Africa with the Middle East, India and Asia.

Absa said on Thursday last week that it is bidding to raise its stake in its Kenyan subsidiary from 68.5 percent to 85 percent in a deal valued at Sh30.9 billion. The lender plans to purchase an additional 895.9 million shares in Absa Bank Kenya for Sh34.50 each, taking its ultimate holding to 4.61 billion shares.

In raising its stake, the South African lender is eyeing a larger slice of Absa Kenya’s growing dividend payouts, in addition to pushing its broad strategy of deepening its presence in high-potential markets in Africa.

Since the split and rebrand of the Kenyan unit from Barclays Plc in 2020, net earnings have grown from Sh7.4 billion (in 2019) to Sh22.9 billion last year, allowing the unit to raise its annual dividend from Sh6 billion to Sh11.1 billion in the period.

“Absa Group regards East Africa as a cornerstone of its Pan-African growth ambitions,” the Johannesburg-based multinational said.
“Growth in East African markets is expected to continue to outperform, driven by infrastructure investment, with Kenya, Tanzania and Uganda’s GDP expected to grow by at least five percent per annum over the coming years.”

This is the playbook that both Vodacom and Nedbank are following in making their new Kenyan investments.

Vodacom is purchasing a 15 percent stake in Safaricom from the Kenyan government for Sh204.3 billion, and a five percent stake from its British parent Vodafone Group Plc for Sh68.1 billion. The deal was first disclosed in December 2025, with its conclusion currently held up by a High Court order.

Upon completion of the Sh272.4 billion transaction, Vodacom will raise its stake in Safaricom to 55 percent from the current 35 percent. This will hand it a larger slice of Safaricom’s annual dividends, which in the year to March 2026 totalled Sh80 billion.

The purchase also comes at a time when Safaricom is deepening its position in the Ethiopian market, where it is targeting to break even in 2027. The Kenyan telco holds a 54.17 percent stake in Safaricom Ethiopia, with Vodacom holding direct ownership of 6.02 percent in the unit.

Nedbank is meanwhile spending Sh110 billion to buy a 66 percent stake in NCBA, Kenya’s fifth largest lender by assets, in a cash-and-stock deal that was announced in January 2026.

NCBA will help Nedbank diversify its business, which currently comprises operations in six southern African markets. The Kenyan bank is a strong player in the East African market, where its digital credit services reach millions of customers.

Nedbank also cited regulatory certainty as a key consideration in choosing to enter the East African market.

Barely two months before announcing the NCBA acquisition, Nedbank had sold its entire 21 percent stake in West Africa-headquartered Ecobank Transnational, citing regulatory uncertainty, the deterioration of the Nigerian economy and potential increases in capital requirements.

When quitting West Africa, the bank said it would set a clear focus on the Southern and Eastern Africa regions.

“Kenya’s role as a regional financial hub, supported by strong institutions, sophisticated markets and a dynamic technology sector, makes it a natural anchor for Nedbank’s East African ambitions,” Nedbank chief executive officer Jason Quinn said in January when announcing the transaction.

Standard Bank of South Africa —which trades locally as Stanbic Bank— is also said to be in the market for an East African acquisition, having explored a bid for NCBA before Nedbank swooped in with its offer.

The lender’s strategy is to be a top-three player in its African markets, but in Kenya it is ranked seventh with an asset base of Sh551.71 billion as at March 2026.

The top six lenders by asset base are KCB Group (Sh2.25 trillion), Equity Group (Sh2.04 trillion), Co-operative Bank of Kenya (Sh884.57 billion), I&M Group (Sh742.5 billion), NCBA (Sh741.1 billion) and Absa Bank Kenya (Sh569.35 billion).

Between 2018 and 2022, Standard Bank progressively raised its stake in Stanbic Holdings –the parent firm of Stanbic Bank— from 60 percent to 74.92 percent through share purchases in the open market, underlining its confidence about the subsidiary’s long-term prospects.

Fellow Johannesburg-listed lender FirstRand Bank has, in the meantime, held a longstanding interest in establishing a full presence in Kenya since 2012, but is yet to identify a suitable acquisition opportunity.

The bank said last August that Kenya’s enhanced minimum capital rule to Sh10 billion for banks has opened a new opportunity for its entry into the market through an acquisition of a smaller bank.

FirstRand has meanwhile maintained a representative office in Kenya since November 2011, operated by its corporate and investment arm Rand Merchant Bank.