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Microfinance in Kenya consists of microfinance facilities and regulations in Kenya which has been developing since the mid 1990s. Legislation was passed in 2006 with the Micro Finance Act which became active in 2008. By 2010 there were 24 large micro finance institutions in Kenya, which provided US $1.5 billion to approximately 1.5 million active borrowers. With over 100,000 clients, Equity Bank Kenya had the largest share of business loans representing market share of 73.50% followed by Kenya Women Microfinance Bank with 12.06%. Most microfinance firms as in other countries have eligibility criteria which may include gender (as in the case for special women’s loans), age (at least 18 years of age), a valid Kenyan ID, a business, an ability to repay the loan and be a customer of the institution.
Corruption is a major problem in Kenya. In 2010 Kenya ranked 154th (out of 178) on the International Corruption Index. Political riots such as during elections in year 2007, which led to violence and economic disturbance. As a result of this political risk, the Portfolio at Risk rate increased during the riots during the elections in 2007. And infrastructure issues, where despite the economy having risen at a real growth rate of 4% in 2011, banking infrastructure remains weak.
The banking system in Kenya is regulated by the Companies Act, the Banking Act, and the Central Bank of Kenya Act. In addition, there are several existing guidelines. The responsibility for monetary policy and the banking system is held by the Central Bank of Kenya, which also releases information about interest rates, banking guidelines, and the financial institutions.
The Kenyan Micro Finance Act was adopted in 2006 and became active in 2008. With the adoption of this act, institutions could apply for micro finance licenses at the Kenyan Central Bank either as a national or community institution.
In order to do so, these institutions must be registered as:
- deposit-taking institutions
- non deposit-taking institutions
- informal organizations (supervised by an NGO)
The four steps of approval for a micro finance institution are:
- Approval of name
- Application for license
- Letter of intent
- Issuance of license
Existing institutions providing micro finance products
List of Microfinance institutions in Kenya That Give Small Loans
1. Kenya Women Microfinance Bank
Kenya Women Microfinance Bank, formerly Kenya Women Finance Trust or KWFT, is a deposit-taking microfinance bank in Kenya, the largest economy in the East African Community.
KWFT Headquarters, Akira House,
Kiambere Road, Upper Hill
P.O. Box 4179 – 00506 Nairobi
Nyayo Stadium, Nairobi
24 hrs Customer Care Number: 0703 067 700
Hot Line: 0703 067 000
Airtel: 0730 167 000
2. Faulu Kenya
Faulu Kenya Headquarters, Off Ngong Road, City square
P.O Box 60240-00200 Nairobi
Hot Line : +254 711 074 000 or +254 711 074 074
3. Key Microfinance Bank
Key Microfinance Bank Headquarters, Finance House, Loita Street
Hot Line: +254 724 449 288 or +254 733 553 555
4. SMEP Microfinance Bank
SMEP Microfinance Bank Headquarters, SMEP Building, Kirichwa Road, Off Argwins Kodhek Road
P.O Box 64063 – 00620 Nairobi
Hot Line: 020 3572799/26733127
5. Uwezo Microfinance Bank
Uwezo Microfinance Bank Headquarters, Park Plaza Building, Ground Floor, Moktar Daddah Street
P.O Box 1654 – 00100 Nairobi
Hot Line: 2212917 / 9
6. Rafiki Microfinance Bank
Rafiki Microfinance Bank Headquarters, 2nd Floor, El-Roi Plaza, Tom Mboya Street
P.O Box 12755 – 00400 Nairobi
Hot Line: 0202166401 or 0734 000 323/ 0719 804 370
7. U&1 Microfinance Bank
U&1 Microfinance Bank Headquarters, 1st Floor, Asili Complex, Off River Road, Latema Rd, Nairobi
P.O Box 15825 – 00100 Nairobi
Hot Line: 0713 112 791
8. Caritas Microfinance Bank
Caritas Microfinance Bank is licensed and regulated by the Central Bank of Kenya.
Ground floor, Cardinal Otunga Plaza, Kaunda street.
P. O Box 15352 – 00100. Nairobi.
+254 (0)20 515 1500, +254 (0)72 998 6331
Email : email@example.com
Website : https://caritas-mfb.co.ke/
9. Century Microfinance Bank
Century Microfinance Bank is a microfinance institution that specializes in providing financial services to micro, small and medium businesses at large. We were licenced by the Central Bank of Kenya as a deposit taking microfinance institution on 19th September 2012 to provide a full range of financial services such as savings account and credit facilities.
Century has over 26,000 clients.
HEAD OFFICE Bihi Towers, 8th Floor, Moi Avenue
Nairobi, Kenya P.O Box 38319-00623 Nairobi
Line 1: +254 756305132
Line 2: +254 722168721
Website : century.co.ke
10. Choice Microfinance Bank
Choice Microfinance Bank is a community based microfinance bank headquartered in Rongai, Kajiado County, Kenya. We offer a full range of Microfinance banking and financial services with a level of personalized service that we hope will exceed your expectations. Please come visit us and we will tailor our services to meet your specific financial needs.
Siron Place Magadi Road, Ongata Rongai
P. O. Box 18263 – 00100
Tel: +254 20 3882 206
Tel: +254 20 3882 207
Cell: +254 731 226 914
Cell: +254 736 662 218
Website : https://choicemfb.com/
Choice Microfinance Bank MPESA Paybill No: 990 360
11. Daraja Microfinance Bank
P. O. Box 100854 – 00101, Nairobi, Kenya
Physical Location: Karandini Road, Off Naivasha Road.
Telephone : +(254) 707444888 or +(254) 718444888
Website : www.darajabank.co.ke
Email us : firstname.lastname@example.org
Although we have highlighted Microfinance institutions in Kenya that give small loans, it is good to note that there are other companies that also give the same type of loans. There are 24 large micro finance institutions in Kenya, which provide US $1.5 billion to approximately 1.5 million active borrowers in 2010. According to their gross loan portfolio, the five largest institutions are:
- Equity Bank Kenya has a market share of 73.50%, a gross loan portfolio of 924,993,804 Kenyan Shilling and 715,969 active borrowers to whom they offer 10 different products.
- Kenya Women Microfinance Bank (KWFT): has a market share of 12.06%, a gross loan portfolio of 152,136,208 Kenyan Shilling and 334,188 active borrowers to whom they offer 6 different products.
- K-Rep Bank has a market share of 6.39%, a gross loan portfolio of 74,182,292 Kenyan Shilling and 82,000 active borrowers to whom they offer 5 different products.
- Faulu has a market share of 3.56%, a gross loan portfolio of 39,643,494 Kenyan Shilling and 102,371 active borrowers to whom they offer 6 different products.
- Jamii Bora has a market share of 0.86%, a gross loan portfolio of 9,568,460 Kenyan Shilling and 79,194 active borrowers to whom they offer 6 different products.
Those 24 institutions offer business loans on a large scale, specific agriculture loans, education loans, and loans for any other purpose. Additionally there are:
- emergency loans, which are more expensive in respect to interest rates, but are quickly available
- group loans for smaller groups (4-5 members) and larger groups (up to 30 members)
- women loans, which are also available to a group of women
Most of the micro finance institutions offer business loans under different interest rates, duration and amounts. With 101,334 clients, Equity Bank has the largest share of business loans. With 50,000 clients, K-Rep Bank is the second largest institution, followed by Jamii Bora, as the third largest bank for business loans and servicing 37,400 clients. Specializing in loans for women, the KWFT (Kenya Women Finance Trust) holds by far the largest market share, with loans to 334,188 clients.
The educational loans market is narrow, which can be observed by the major player’s client base: KADET services only 220 clients, followed by the Kenya ECLOF (211 clients), SISDO (202 clients), and the Adok Timo (173 clients). The same is true for asset finance loans. The Equity Bank has the largest market share (2,853 clients) and Family Bank the second largest (2,000 clients) in asset financing.
Out of approximately 40 million Kenyans, about 14 million are not able to receive proper financial service through formal loan application services, and 12 million more Kenyans have no access to financial service institutions at all. Further, one million Kenyans are reliant on informal groups for receiving financial aid.
Conditions for micro finance products
- Eligibility criteria: The general criteria might include gender (as in the case for special women’s loans), age (at least 18 years of age), a valid Kenyan ID, a business, an ability to repay the loan and be a customer of the institution.
- Credit scoring: There is no advanced credit scoring system and the majority of lenders have not stated any official borrower requirements. However, some institutions require having an existing business for at least 3 months, a small amount of cash, provide the institution with a business plan or proposal, have at least one guarantor, or to attend group meetings or training. For group loans, almost half of the institutions require group members to be guarantor for each other. For Mobile App Lenders, they make use of machine learning algorithms to calculate credit score.
- Interest rate: They are mostly calculated on a flat basis and some at a declining balance. More than 90% of the institutions require monthly interest payments. The average interest rate is 30-40% for loans up to 500,000 Kenyan Shilling. For loans above 500,000 Kenyan Shilling, interest rates go up to 71%.
- Political issues: Corruption is a major problem in Kenya. In 2010 Kenya ranked 154th (out of 178) on the International Corruption Index.
- Furthermore, the lack of transparency leads to uncertainty of effective regulations and acts. Additionally, political riots, especially during elections in year 2007, have led to violence and, therefore, to economic disturbance. As a result, the Portfolio at Risk rate increased during the riots during the elections in 2007.
- Infrastructure issues: Despite the economy having risen at a real growth rate of 4% in 2011, banking infrastructure remains weak and requires significant investment in staff, facilities, and technology.
- Consumer issue: As a result of standardized products without considering customer requirements, many customers are dissatisfied with the terms and wish for more individual loan conditions. For group loans, for example, many clients dislike guaranteeing for each other, because they might not know the other clients well enough. Other clients have complained about time-consuming, weekly meetings and training with trainers, who are often too young and inexperienced. This is especially a cultural problem for older clients, who feel offended by taking advice from younger people
List Of Kenyan MicroFinance Banks, Their Customer Service Contacts Paybill Numbers And USSD Codes
Below, kindly find the email addresses as well as phone contacts USSD codes, Paybill numbers and apps of the microfinance customer service.
- Caritas >>> email@example.com >>> 020 5151500 / 0729 986 331
- Century>>> firstname.lastname@example.org >>> 0722 168 721 / 0756 305 132
- Choice >>> email@example.com >>> 0736 662 218 / 0724 308 000
- Daraja >>> firstname.lastname@example.org >>> 0733 988 888 / 0707 444 888 / 0718 444 888
- Maisha >>> email@example.com >>> 0792 002 300 / 0736 028 982 / 020 222 0648
- Uwezo >>> firstname.lastname@example.org >>> 2212919, 0703 591 302
- U & I >>> email@example.com >>> 0713 112 791
- Sumac >>> firstname.lastname@example.org >>> 0738 637 245 / 0725 223 499
- SMEP >>> email@example.com >>> 0711 606 900
- Key ( Formerly Remu) >>> firstname.lastname@example.org >>> 0733 554 555
- Rafiki >>> email@example.com >>> 0730 170 000/500
- Kenya Women Finance Trust >>> firstname.lastname@example.org >>> 0729 920 920 / 0732 633 332 / 0703 067 000
- Faulu >>> email@example.com >>> 0711 074 074 / 0708 111 000
List Of All MicroFinance Bank Paybill Numbers And USSD Codes
|Kenya Women Finance Trust
|Key ( Formerly Remu)
|U & I