Analyzing the Challenges Ahead for Equity Bank Uganda’s New Managing Director Gift Shoko

Today, Equity Bank Uganda announced Gift Shoko as its new Managing Director designate. The decision signals a bold step to stabilise the bank after a tumultuous 2024. Shoko, a veteran with over 26 years of banking experience across Southern and Eastern Africa, takes the helm at a time when the bank is grappling with multiple challenges, from digital fraud to a struggling balance sheet. While his appointment has been met with optimism, the road to recovery is fraught with significant hurdles that will test his leadership, innovation, and ability to rebuild trust.

A Year of Turmoil

Equity Bank Uganda has faced a string of damaging incidents, beginning with a massive digital fraud in March 2024 that cost the bank UGX65 billion. Internal and external fraudsters exploited weaknesses in the bank’s digital lending system, Eazzy Stock. Despite red flags raised internally, the loopholes were not adequately addressed, exposing systemic vulnerabilities.

Adding to the woes, another UGX4 billion was lost due to negligence in reconciling online Visa card transactions. These losses tarnished the bank’s reputation and highlighted glaring operational inefficiencies.

Non-performing loans (NPLs) also ballooned during this period, reaching mid-teen ratios against a regulatory benchmark of 5%. One high-profile case involved UGX82.2 billion lent to Dei Industries International Ltd and Dei Biopharma Ltd. The borrower’s decision to sue Equity Bank, despite receiving a government bailout, further complicated recovery efforts. Combined with delayed payments from government contractors and mounting provisioning for bad debts, these challenges led to a historic UGX18.8 billion loss in 2023, ending the bank’s 13-year profitability streak. 

Rebuilding Trust and Strengthening Governance

Restoring customer and investor confidence will be paramount. The digital fraud and negligence scandals have severely dented the bank’s reputation. Shoko’s first task will be to reinforce internal controls, particularly in the digital banking sector, which was once a key growth driver but now represents a significant risk.

Corporate governance must also be tightened. Ensuring accountability, especially in areas flagged for negligence or fraud, will be crucial. This includes clear communication with stakeholders about remedial measures being undertaken to prevent similar occurrences.

Reviving Financial Performance

From 2016 to 2022, Equity Bank Uganda enjoyed rapid growth. Under Kituuka’s predecessor, the bank’s deposits grew by 5.7 times, loans by 5 times, and assets by 5.2 times. However, these figures plateaued under Kituuka’s leadership, and 2023 marked a significant downturn.

Shoko will need to reignite growth in deposits, loans, and assets while managing risk prudently. Diversifying income streams beyond traditional lending and focusing on high-margin services like trade finance and wealth management could be key strategies. Addressing the UGX191.2 billion in bad debts provisioned in 2023 must also be prioritized to restore profitability.

Leveraging Digital Transformation

Shoko’s background in digital banking positions him well to tackle challenges in this area. The bank’s digital channels, which were once heralded as industry-leading, now require a comprehensive overhaul. A robust cybersecurity framework, coupled with customer-centric digital products, could help rebuild trust and drive growth.

Additionally, Shoko must ensure the Eazzy Stock platform’s vulnerabilities are fully addressed. Digital lending remains a promising growth area if managed effectively. Providing targeted training for staff and investing in advanced fraud detection systems will be critical steps.

Expanding Market Share

Despite its recent setbacks, Equity Bank Uganda remains a significant player, ranking among the top five banks in deposits, lending, and assets. Shoko’s experience in regional banking provides him with unique insights into competitive strategies. Expanding the bank’s footprint through agency banking and tailored products for SMEs and underserved communities could help reclaim lost momentum.

Navigating Regulatory and Legal Hurdles

The ongoing legal battle with Dei Industries and scrutiny from the Bank of Uganda over NPL ratios add another layer of complexity. Shoko must work closely with regulators to demonstrate compliance and operational integrity. Proactively engaging with legal experts to resolve disputes and recover funds will also be critical.

Building a Stronger Team

Leadership will be a defining factor in the bank’s recovery. Shoko must foster a high-performance culture by addressing morale issues and retaining top talent. Clear communication, a shared vision, and an inclusive approach to decision-making will be essential to unify the team.

The Road Ahead

Gift Shoko’s appointment marks a pivotal moment for Equity Bank Uganda. While the challenges ahead are significant, they also present opportunities to rebuild a stronger and more resilient institution. With a focus on governance, digital transformation, and customer-centric strategies, Shoko has the potential to steer the bank back to its prior growth path.

As Equity Bank Uganda turns the page on a turbulent chapter, the coming years will test Shoko’s leadership mettle and his ability to drive sustainable growth in one of East Africa’s most dynamic banking markets.