Some ideas are meticulously planned for and executed in style. Others happen by chance.
Chance is what spurred Daniel Koech into an area he never thought of. His career was about imparting knowledge in his students and making them excel in his subject.
As a new high school teacher in Bomet County in 2010, Koech was going on with his work of preparing for a lesson when a colleague approached him for a little cash to settle some financial problem.
As a newly employed teacher then, his colleagues considered him better-off because his salary was still ‘intact’ for he had not committed his payslip to loans.
Koech gave the teacher in distress a Sh3,000 loan after he promised to repay at the end of the month plus a little interest on top.
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“At the end of the month, the teacher paid me Sh3,300 and two weeks later, he came back for another ‘loan’ that I readily gave him,” Koech says.
The teacher brought along another colleague who also wanted some money. Although Koech was a little apprehensive to give money to this second teacher, he did so after making the new ‘customer’ sign an agreement.
The first customer acted as a witness and a guarantor in the transaction. This was the birth of an idea that might soon materialise into a new Kenyan bank.
Within the term, word of Koech’s ‘banking services’ had spread around the school and more teachers sought loans.
“Many of the teachers who came for soft loans were those employed by the school’s board of management but I soon got requests from the Government employed teachers as well,” he says.
The business idea spurred Koech and his wife Jackline to register TransFedha Ltd in 2012 to formalise the transactions.
Though the company kept its original individual borrowers, the bulk of its clientele currently are women and the youth. Koech, the company’s managing director, says their focus on the two groups is informed by the TransFedha’s objective to fight poverty in the society by encouraging responsible borrowing.
They also wanted to reach out to other people besides teachers.
“More than 80 per cent of our customers are women and youth who are doing small businesses around the county. We give them loans to grow their businesses,” he says.
The highest loan they have given so far is Sh200,000 while the lowest is Sh500.
To qualify for a loan from TransFedha, one should have an existing business though the size does not matter. One should also join a group of four other business people who act as guarantors for the loan disbursed. The group is then trained to keep simple business records. They also advised on the repayment formula and given mobile banking skills.
Jackline says members of a group usually know each other well and this reduces the risk of loan defaulting. Also, their field officers closely monitor borrowers to ensure they pay their loans in full.
Most of the loan transactions are through mobile banking. The loans are disbursed on set dates twice a month. Customers receive loan monies on their phones.
“We don’t deal with hard cash but our disbursement and loan repayments are through mobile money transactions,” Koech says.
The company is non-deposit taking and thus customers do not need cash collateral in order to access loans.
“We also have a flexible repayment schedule coupled with 10 per cent interest calculated on the reducing balance formula and charged monthly,” Koech says.
Their effort has caught the attention of Wings of Hope, a US-based organisation that is planning to work with them soon. So far, they have received some financial support from the organisation and this has helped them set up branches in Chebole and Siongiroi townships in a bid to reach out to more customers.
Technology has helped the enterprising teachers to keep their jobs while at the same time run a thriving business.
They track activity at the office through email and use the same medium to direct their staff on the appropriate action to take. However, they ensure that they go to the office every weekend.
The increasing number of customers is a challenge. And they also need bikes to ease the mobility of field officers.
The duo believe that their company will one day become a bank. They plan to start taking deposits as well as inviting investors to join them, but for now they are happy that their idea is helping transform the society through poverty eradication.
One person at a time.
