GOOD RIDDANCE? Tough Times as DTB, Ecobank Eye Exit from Ugandan Market

Kampala – Diamond Trust Bank (DTB) is embarking on a major shake-up of its regional operations, announcing the sale of its 83.67% stake in DTB Burundi to a consortium of local investors led by the bank’s existing minority shareholder.

The deal, signed under a conditional sale and purchase agreement, is pending approvals from the Central Bank of Kenya (CBK), the Bank of the Republic of Burundi, the Capital Markets Authority, and other regulators.

In a statement, the Nairobi Securities Exchange (NSE)-listed lender said the transaction would empower Burundian investors committed to financial inclusion, while enabling DTB Group to refocus on its core East African markets — Kenya, Uganda, and Tanzania.

Yet, sources suggest a bigger story is brewing: DTB may also be quietly preparing to quit the Ugandan market. Insiders familiar with board-level discussions told this publication the group is “reviewing options for its Ugandan subsidiary” amid mounting concerns which we will report in our subsequent publication.

Hopes that the appointment of Godfrey Ssebaana as DTB Uganda’s Managing Director in 2024 would steady the ship have not materialized. Instead, insiders whisper that “things have only grown worse.”

The same turbulence hovers over Ecobank Uganda, led by MD Grace Muliisa, which is reportedly under pressure to prove its viability in a highly competitive market as we shall also be revealing subsequently.

Burundi Exit

DTB Burundi launched operations in 2009 with just one branch in Bujumbura. Today, it runs four branches and ranks among the top 10 banks in the country, serving both retail and corporate clients.

For the year ending December 31, 2024, DTB Group reported a net profit after tax of KSh 7.64 billion (approx. UGX 207 billion), up from KSh 6.88 billion in 2023. Its Kenyan unit contributed the lion’s share, KSh 5.31 billion, with operating income at KSh 41.43 billion and expenses at KSh 30.16 billion.

Despite the strong performance, the group insists the Burundi divestiture is consistent with its strategic repositioning: handing control to local players while consolidating focus on “core” markets.

Ecobank Moves Out of Mozambique

DTB’s restructuring echoes similar moves across the continent. Ecobank Transnational Incorporated (ETI), one of Africa’s largest banking groups, recently exited Mozambique after selling its subsidiary Ecobank Mozambique (EMZ) to FDH Bank Plc of Malawi.

The acquisition, fully financed through equity, hands FDH control of EMZ’s four branches in Mozambique’s key cities and boosts its regional expansion.

For Ecobank, the move fits within its “Growth, Transformation, and Returns” strategy, signaling a pivot toward more profitable markets. The shake-up comes on the heels of South Africa’s Nedbank offloading its 21.22% stake in ETI to Bosquet Investments, owned by Alain Nkontchou.

The Uganda Question

While both DTB and Ecobank publicly insist their commitment to Uganda remains intact, industry watchers see mounting pressures in Kampala’s banking environment which include regulatory hurdles and rising compliance costs, cut-throat competition from new digital-first lenders, surging non-performing loans (NPLs) in a sluggish post-COVID economy and political uncertainty tied to high-profile banking litigations, including cases where DTB Uganda has been previously cited.

“If DTB and Ecobank pulls out of Uganda, it would be a serious signal that foreign banks are no longer comfortable with the operating environment,” warned a Kampala-based financial analyst.

The speculation has revived broader questions about the future of foreign-owned banks in Uganda, where the past decade has seen a series of exits, mergers, and aggressive portfolio cuts.

What Next?

For now, investors are urged to exercise caution when trading DTB shares on the NSE until the Burundi transaction closes.

But as whispers grow louder of a potential Ugandan exit, industry players agree the next 12 months will be decisive for both DTB’s regional footprint and the stability of Uganda’s financial sector.

Why Foreign Banks Are Fleeing Uganda

Uganda’s banking sector has witnessed a slow but steady retreat of foreign lenders over the past decade. Experts cite several reasons:

Legal Battles

DTB Uganda has been dragged into high-profile court disputes, notably the protracted Ham Enterprises loan saga, which dented investor confidence.

Regulatory Burden

Stricter capital adequacy rules, consumer protection regulations, and compliance costs have squeezed margins, especially for mid-tier banks.

Competition from Digital Banks

New players like Equity, dfcu, and fintech-backed institutions are eroding the market share of traditional foreign-owned lenders.

Political Risk

Frequent allegations of “orders from above” in banking disputes make foreign institutions wary of reputational damage and unpredictable policy shifts.

Shrinking Profitability

With rising NPLs, a slowing economy, and interest rate caps in some markets, Uganda is seen as less attractive compared to Kenya and Tanzania.

Recent Exits & Mergers

Barclays Bank (rebranded to Absa, later downsized operations).

Orient Bank (sold to I&M Bank of Kenya in 2021).

Top Finance Bank (taken over by Tanzanian investors).

“Unless reforms are made to guarantee investor confidence and predictable rules, Uganda risks becoming a graveyard for foreign-owned banks,” warns a senior banker.

Some observers see this as good riddance insisting that Uganda’s economy can only be improved by indigenous financial institutions and not foreign owned who at the end of the day repatriate all profits back.

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