Changing face of micro finance in Kenya

NAIROBI, KENYA: Micro-financiers are gradually finding a place in the Kenyan market. Three years ago, getting a loan was a headache for the unbanked population.

But, micro financiers are helping to further financial inclusion in Kenya. “Micro-financiers have reduced approval time from days to minutes,” says Mr Stefan Coetsee, country manager at Get Bucks Ltd, a firm that provides short term loans to civil servants and those in formal employment.

Coetsee explains that it is now easy to apply online or through a mobile platform and get a loan processed through the same platform reducing the amount of time one has to wait for the loan to be approved.

He says customers are offered easy and immediate access to financial services online without the cost and time of having to physically consult a loan officer.

“It is the vision of many micro financiers to respond to market challenges by embracing virtual technologies to bring about financial inclusion,” Coetsee said.

Mr. Kibatha Njoroge, the Chairman of Sumac microfinance bank says micro financing is set to grow further following the improved economy.

“The re basing of Kenya’s economy for instance shows that the number of middle class has grown, entrepreneurs are taking advantage of the growth to set  up businesses targeting the surplus money spent by this segment” he says. “We as financial institutions are moving in to offer micro loans to enable such enterprises grow their supply to the middle class,” he adds.

Sumac micro finance for instance offers between Sh50, 000 to Sh100, 000 and a maximum of up to Sh 4million.

Kenya Commercial Bank has the Boresha Biashara, Tuungane Chama, and Tuungane Investment as its micro loan products. Through Boresha Biashara product, one has access to loans from Sh5,000 to 1 million with a flexible security requirements and repayment terms of up to 24 months. To qualify one needs a minimum of one year experience in the business to be financed and should open a KCB Boresha Biashara account or Bankika Business Account. 

The bank’s Tuungane Investment Loan serves groups that share a common interest and run a business together. Giving them access to loans ranging from Sh500,000 to Sh 5,000,000 and a flexible repayment terms up to 5 years. Members of these groups are also able to access individual loans through the bank’s Tuungane Chama Loan product with loans ranging from Sh 5,000 to Sh 50,000 over a 18month repayment period; using their members as safety to cover them over the loan duration.