Secured Loans to Microenterprises and SMEs in Kenya by Century Microfinance Bank

Robert Kamanja, CEO of Century Microfinance Bank, discusses current projects. Century Microfinance Bank is a microfinance institution that specializes in providing financial services to micro, small and medium businesses at large.

“Our main product is loans. We give secured loans to microenterprises and SMEs. With the removal of the rate capping, it is now possible for us to go even deeper and offer loans to people without conventional securities like logbooks or motor vehicles or land. We will use chattels and domestic animals to be able to finance them. We are getting into mobile lending. This is a hybrid product we have developed. Mobile lending has reached the whole country. You download the app, apply for a loan, they check your risk profile, they do their analysis, and then start you with $20 and when you pay two or three times, they continue. You will find more loans like that on the consumer side. It is not serving the working capital for businesses. It starts small and there is a limit, sometimes only up to $400. Our product brings in the convenience of fintech where you get a paperless loan and you can pay and borrow again. It also introduces proper KYC. Currently, the space of mobile lending is having challenges because the repayment rate is about 20% bad book. This is because someone might be on the far corner of the country and only needs the app to apply for a loan. When they apply for a loan, they do not pay. Recovering a loan of $20 that is 300 to 400 km away is not risk feasible. Now, we come to your business, we appraise you, we look at your bank statements, get a guarantor, get next of kin, which is very important, and a Google pin location of your business. If I cannot reach you, I will call your wife. If I cannot get your wife, I will call the guarantor. If you fail to pay, even if the officer who appraised is not present, we have the Google location of the business and we can go there and demand payment. We see this product as being a game changer in terms of addressing the challenges and also the working capital needs. We are starting as low as $50 and we can go up to $1,000. We are in a position to finance working capital needs at the convenience of technology. They take the loan monthly, pay, and take again with interest. They can plan to pay slowly. In 2020, this will be a big space for us”, says Robert Kamanja.

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