Microfinance bank cedes stake to US firm

Central Bank of Kenya. [Jenipher Wachie, Standard]

US-based fintech company UMBA has acquired a majority stake in Daraja Microfinance Bank (Daraja MFB).

This follows approvals by the Central Bank on May 23 and by the National Treasury on June 10 this year.

"Central Bank of Kenya (CBK) announces the acquisition of 66.06 per cent shareholding of Daraja Microfinance Bank Ltd (Daraja MFB) by UMBA Inc (UMBA) effective July 1, 2022," said the regulator in a statement on Friday.

The regulator said UMBA, which has operations in Kenya and Nigeria, is incorporated in the US State of Delaware and has its headquarters in San Francisco, California.

"In Kenya, UMBA operates a non-deposit-taking credit business through its subsidiary UMBA Technology Ltd. In Nigeria, it operates in partnership with a licensed bank to offer digital banking services," said CBK.

Daraja MFB was granted a licence by CBK on January 12, 2015, to carry out community microfinance bank business within the Dagoretti area in Nairobi.

Market share

The microlender targets micro and small enterprises and is categorised as a small microfinance bank with a market share of below one per cent of the microfinance banking sector as of March 31, 2022, according to the regulator.

CBK believes the deal with UMBA will strengthen Daraja's business model given it involves supporting the digitalisation of its operations as it moves to provide "anytime anywhere" services to its customers.

"This is aligned to CBK's vision of the microfinance banking sector that works for and with Kenyans. CBK welcomes this transaction, which is a critical component of Daraja MFB's transformation plan. It will strengthen Daraja MFB and support the stability of Kenya's microfinance banking sector," said the regulator.