NAIROBI — For millions of Kenyan borrowers who have watched interest rates climb with anxiety over the last two years, 2026 began with a rare note of optimism. Equity Group CEO James Mwangi has signaled a definitive shift in the lending landscape, projecting a fall in the cost of credit that could finally ease the squeeze on households and small businesses.

Speaking on New Year’s Day, the veteran banker did not just offer relief; he laid out a combative roadmap for the year ahead. His target? The massive, largely untapped banking market of Ethiopia. After years of regulatory waiting games, Mwangi confirmed that Equity is now actively scouting for an acquisition to fast-track its entry into the neighboring economic giant.

The Turn of the Tide on Rates

“We are confident in lower lending rates,” Mwangi noted, marking a sharp departure from the defensive stance banks were forced to take in 2024 and 2025. For the Mama Mboga in Gikomba or the SME owner in Industrial Area, this is the signal they have been waiting for. High borrowing costs have stifled expansion and eaten into profits, but Mwangi’s outlook suggests the banking sector is preparing to pass on the benefits of a stabilizing macroeconomic environment.

This confidence isn't unfounded. It follows a period where the Central Bank of Kenya (CBK) has battled inflation with tight monetary policy. Mwangi’s comments imply that the worst of the tightening cycle is in the rearview mirror. “The data supports a softer stance,” he explained, hinting that the risk premiums loaded onto customer loans could soon be trimmed.

The Ethiopian Prize

While cheaper loans will win hearts at home, Mwangi’s eyes are fixed on a bigger prize across the border. Ethiopia, with its population of over 120 million, represents the final frontier for East African banking. Equity has operated a representative office in Addis Ababa for six years, but the goal now is full-scale banking operations.

Mwangi was candid about the strategy: they are not looking to start from scratch. “In the best efforts, it is a 2026-27 transaction,” he said, revealing that the group is favoring an acquisition over a greenfield entry. By buying an existing player, Equity aims to leapfrog into the top tier of Ethiopian lenders immediately, rather than spending years building branches one by one.

• Target Market: 120 million+ population (approx. 2x Kenya's size).
• Entry Strategy: Acquisition of a local bank to secure immediate market share.
• Timeline: Deal closure targeted for 2026-2027.

A 'Comprehensive' Evolution

Beyond geography, the group is pivoting its business model. Mwangi detailed an evolution from a traditional lender to a “comprehensive financial services group.” This isn't just corporate speak; it reflects a race to capture every shilling of a customer's wallet—from insurance premiums to stock trading and digital payments.

The bank’s “capital war chest” remains robust, with liquidity ratios well above the regulatory minimums. This financial muscle is what allows Equity to hunt for acquisitions in Addis while simultaneously promising rate cuts in Nairobi. It is a balancing act that few other lenders in the region have the scale to attempt.

As 2026 unfolds, the message from the Upper Hill headquarters is clear: The defensive play is over. It is time to attack.