Gikomba gold rush: Banks scramble for a slice of Nairobi's street hustle

Gikomba, Nairobi’s energetic trade hub known for its vast network of micro, small, and medium enterprises (MSMEs), is witnessing a surge of interest from Kenyan banks. 

In a bid to tap into this flourishing business environment, several banks are setting up branches and expanding their presence in the market. 

The strategy reflects the growing recognition of MSMEs as a vital segment of the Kenyan economy, and the potential they hold for financial institutions, analysts say.

As such several lenders are beating a path to exploit Gikomba’s famed wealth, earning the popular trade zone a new banking status, add economy watchers.

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On Monday, Kingdom Bank became the latest lender to open a new branch in Gikomba market aiming to capture the expanding pool of MSMEs seeking financial services in Nairobi’s bustling trade hub.

Managing Director Anthony Mburu said the lender was pleased to open doors to the vibrant Gikomba business community that is renowned for its formidable enterprise and industry.

Eager to serve

“We are a bank that has built domain expertise and experience in SME banking, and we are most confident that the Gikomba community will find our services very fulfilling,” he said during the opening of the new branch.

Thriving with clothing and footwear retail traders and wholesalers, food vendors, woodwork and metal fabricators and much more, Gikomba is the ultimate hub of entrepreneurship in Kenya.

Kingdom Bank is eager to serve this flourishing business community, with the new branch bringing its total number of outlets to 20.

The lender is a subsidiary of Co-operative Bank following its August 2020 takeover and rebranding of troubled Jamii Bora Bank.

It has since registered a remarkable recovery and reported a Sh36.7 billion asset base and Sh655 million net earnings in 2023.

SMEs constitute 98 per cent of businesses in the country and have an annual job creation of 30 per cent of all new jobs.

Since 2007, banks have been trooping to the area in a bid to get a pie of the earnings, employing both brick-and-mortar as well as digital platforms to woo customers.

They include Equity Bank, SBM Bank, Family Bank, Stanbic Bank, I&M Bank, NCBA, Kenya Commercial Bank, Absa, Cooperative Bank, CFC and Prime Bank.

Apart from the mitumba business, the market, dubbed a city within a city, is also host to several other businesses dealing in M-Pesa, fish, hardware, furniture, fruits, beverages, cereals, vegetables and poultry.

However, before the entry of banks into the area, customers were prone to insecurity with several of them losing their money to conmen and gangsters.

Another advantage of the increased entry of banks is that traders have wider options for getting credit, including newcomers.

According to previous research, most sellers at Gikomba obtained their initial capital from sources that were not attracting little or no interest rates like personal savings or borrowing from relatives and friends.

However, James Mutiso, a jeans seller, says banks need to address hindrances to getting loans that can help them revamp their businesses such as high amounts of collateral and other documentation required before qualifying for lending. 

Kenya imports about 100,000 tonnes of secondhand clothes a year, providing the government revenues from customs duties and creating tens of thousands of jobs, according to official estimates.

Gikomba market, for instance, is home to an estimated 65,000 sellers and generates about Sh144 million per month, exclusive of county government charges and other expenses. 

According to estimates, there are about 10,000 shops and stalls in Gikomba with millions of shillings changing hands daily.

Kingdom Bank said the opening of brick-and-mortar branches is intended to complement its multi-channel strategy that enables customers to access banking through the outlets that are most convenient to them.

It cited its digital banking platforms that include KB Mobile App, digitisation of payments and internet banking.

“Kingdom Bank continues to explore opportunities to open service outlets in carefully selected locations throughout the country,” the bank said.