Kenya’s microfinance sector is emerging as a soft landing for investors eyeing the banking industry in a move that opens foreign participation in entrepreneurship-focused lending.
In the last six months, three microfinance banks have been acquired by foreign investors including one by a Chinese national, marking the first major entry of the Chinese private sector into Kenya’s banking sector.
To start a commercial bank, Kenya requires an investor to have a minimum capital of Ksh1 billion, according to the Central Bank of Kenya (CBK).
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To start deposit-taking microfinance, CBK requires a minimum paid-up capital of at least Ksh20 million and Ksh60 million for a ‘community’ and ‘nationwide’ deposit-taking microfinance institution, respectively.
Century Microfinance Bank Limited has been acquired by Branch International Limited. In the acquisition approved by the CBK, Branch acquired a controlling stake of 84.89%.
Branch was incorporated in Kenya on April 2, 2015, and is wholly owned by Branch International Holding Ltd, a company incorporated in Mauritius and owned by Branch International Holding Ltd incorporated in the State of Delaware in the US.
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Branch is one of the largest mobile application-based lenders in the country. Branch’s total assets stood at Ksh1.1 billion as of December 31, 2020, according to a statement released by the CBK.
Century MFB was licensed by CBK in September 2012 to carry out a nationwide microfinance banking business. The MFB has two branches, one at the Head Office located along Moi Avenue, Nairobi and the other in Gikomba. It is categorised as a small microfinance bank with a market share of below 1% of the microfinance banking sector as of December 31, 2021, says CBK. The institution’s primary focus is the provision of financial services to smallholder farmers and small and medium enterprises (SMEs).
In another landmark acquisition, LOLC Mauritius Holdings Limited (LOLC Mauritius) has acquired a 73% stake in Key Microfinance Bank PLC (Key MFB).
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LOLC Mauritius is a private company incorporated in Mauritius that is wholly owned by LOLC Holdings PLC. LOLC Holdings PLC is a Sri Lankan conglomerate holding investments in financial and non-financial entities and is listed on the Colombo Stock Exchange, Sri Lanka.
The group had total assets of Ksh484 billion as of March 31, 2021, CBK said. LOLC Holdings PLC operates several microfinance businesses in Asia and is currently expanding in Africa. It acquired a majority stake in a microfinance bank in Nigeria in 2019 and was granted a licence to establish a microfinance bank in Zambia in 2020.
Key MFB was granted a licence by CBK on December 31, 2010, to carry out a nationwide deposit-taking microfinance business. The MFB has three branches and one deposit-taking marketing unit located in Nairobi and Meru counties.
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The institution’s primary market is the provision of financial services to Small and Medium Enterprises. It is categorised as a small microfinance bank with a market share of below 1% of the microfinance banking sector as of December 31, 2021.
In September 2021, CBK approved the acquisition of 85% shareholding of Choice Microfinance Bank Limited (Choice MFB) by Wakanda Network Limited (Wakanda) effective October 22, 2021.
Wakanda was incorporated in the United Kingdom on February 26, 2020, and is wholly owned by Robin Duan Wei.
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Mr Wei is a successful Chinese entrepreneur, having founded Mobvista Inc., a digital advertising company listed at the Hong Kong Exchange and Clearing Limited with a market capitalization of USD 11.7 billion (Ksh1.3 trillion) as of August 31, 2021.
Choice MFB was granted a licence by CBK on May 13, 2015, to carry out community microfinance banking business within Kajiado County. The MFB has its Head Office and one branch both located in Ongata Rongai Town, Kajiado County.
Data by CBK shows that as of June 2021, Kenya had 14 registered Microfinance Institutions which provide financial and non-financial support to nearly 8.5 million Micro, Small, and Medium-sized Enterprises throughout the country.
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