NAIROBI (Reuters) - Kenya's Equity Bank plans to enter 10 more African countries in the next decade, in addition to the five it already serves, by building operations from scratch or acquiring existing lenders, its chief executive said on Wednesday.

James Mwangi told Reuters the bank, Kenya's largest by number of customers, had extended his contract by 10 years in April, to steer the expansion.

During his first 10-year term as CEO, Mwangi turned a specialist in small loans with 600,000 customers in Kenya into a full-scale commercial bank with 10 million customers, now also operating in Uganda, Tanzania, Rwanda and South Sudan.

He said the bank's expansion strategy aimed at moving into Democratic Republic of Congo, Burundi, Zambia, Zimbabwe, Malawi, Mozambique, Botswana, Ghana and Nigeria. He also wants to enter Ethiopia, currently off limits to any foreign bank.

"It involves seeking to raise the number of customers from 10 million to 100 million over the same period," Mwangi said.

Equity will consider acquisitions in Nigeria, Democratic Republic of Congo and Ethiopia, once it opens up, he said, adding it planned new operations in other markets.

"Our best experiences have been on greenfields, so for the small countries we know greenfield it will be," Mwangi said, referring to Equity's experience of expanding in east Africa.

For bigger markets, he said "sometimes you need an engine to scale as opposed to a greenfield."

With the exception of the move into Nigeria that may require a cash injection, the 10-nation expansion would be funded from operations, Mwangi said, citing Equity's return on assets of 5.5 percent and return on equity of 31 percent last year.

Equity has also committed to preserving its dividend policy of paying out 40 percent of available profit after tax even during the expansion, he said.

The bank is testing a mobile phone-based banking service, Equitel, which it aims to formally launch in July and break even by September, he said.

Equity has 768,000 active SIM card users after launching its network in partnership with telecoms operator Airtel Kenya, aiming to take on market heavyweight Safaricom's M-Pesa service.

Equitel users can transfer money, access credit and make payments by phone. It also offers typical mobile services of calls, text messages and Internet browsing.

Equity leases Airtel's telecoms infrastructure network, so it keeps all the revenue. "We have really focused on what we believe is the future infrastructure of banking," Mwangi said.