How 25 years as bank manager birthed digital lending business

Peter Macharia, Managing Director Jijenge Credit Ltd. He started the business in 2014 after taking a voluntary retirement package. [Graham Kajilwa, Standard]

Jijenge Credit Ltd is one of the digital lenders licensed by the Central Bank of Kenya. It was founded almost a decade ago by Peter Macharia who has decades of experience in banking.

Enterprise caught up with Mr Macharia who shared the business' triumphs and setbacks, his view of the lending market environment, particularly to small enterprises, and how his experience as a senior manager at a leading bank helped the business and the dream of growing Jijenge Credit Ltd to a bank.

How was Jijenge Credit Ltd founded?

I founded Jijenge Credit Ltd in 2014 with part of my voluntary early retirement package from the bank where I was working in a managerial position. It was a handsome package because I was paid by the number of years worked. I had worked for over 25 years.

What gaps did you seek to fill in the market when you started the business?

The motivation was the gaps I had seen in the industry where I was working. I realised that when a client applies for a loan it takes weeks or months to be approved. Therefore, if you look at Jijenge Credit Ltd, the turnaround time is one hour on logbook loans.

How has the business environment been since you started operations?

The business environment has been full of ups and downs but we have been on a growth trajectory and so, I cannot regret having left the bank in a senior position. Tough times do not last but tough people do. That is what we are.

What period was toughest for your business?

The toughest time would be the first three years, ordinarily, most startups fail before or in the third year. We are now in our ninth year. The beauty is that I was supported by the customers I used to handle at the bank.

How did your experience in the banking industry help in the business?

The advantage I had is that I was at one point head of marketing. I was also head of sales and head of operations on separate occasions, so the network I had is what catapulted the organisation with very fast growth. I used to be head of sales countrywide, and I used to travel a lot, so I had a very good network.

I was also the person who used to set up new branches. It was under my department then called Business Development and Operations. For any new branch, I would do the research, and feasibility study, set it up, identify the premise, renovate it, open the branch, bring the staff and move on to another one.

That is a very good base (to start the business). The same customers are the ones who used to call to inquire whether I am still with the bank and ask how can I assist them. Then I would tell them, 'If you apply for a loan at the bank, it would take two months. I am giving you in an hour.

Some of your clients are micro and small enterprises that are classified as high-risk by larger lending institutions. How do you handle this clientele?

Micro and small enterprises are risky but what I have done is that we invested heavily in technology. We have a very good credit appraisal system, an intelligent system, therefore it is able to know in seconds whether you are able to pay, by counterchecking a lot of traits.

We are then able to classify you as low, high or medium risk.

So the money they receive is dependent on the level of risk?

Yes. Even the interest rate.

The industry is moving towards credit rating compared to traditional lending methods used to avail credit to clients. How are you preparing your business for this new space that will also heavily depend on technology?

We have just upped our game in technology. Digital lending implies that you should be able to lend to somebody who does not physically visit your branch. We are moving slowly into that segment so that we can move from the traditional method of lending to the credit rating.

Digital space has a lot of fraud and hackers. And anything new has so many challenges to setting up. Until it stabilises, there will be a few casualties here and there.

The market is awash with digital lenders, some licensed by the CBK others not yet. Does this competition give you sleepless nights?

The beauty is that most of those other digital lenders have been closed. CBK has cracked down on them. Currently, we are only 22 licensed digital providers in this country. Any other digital lender out there risks closing or being taken to court. You are not supposed to operate a lending business without a licence. I am happy we are few. I know there are over 400 who have applied.

Where do you see your business in the future?

We are now serving 20,000 customers. By the same time next year, I am looking forward to increasing the number to 30,000. I am also looking forward to Jijenge Credit Ltd growing into a bank.