CBA aims for 10 million M-Shwari accounts by Christmas

What you need to know:

Commercial Bank of Africa plans to become Kenya’s biggest lender by increasing users on M-Shwari.
CEO says the plan is to grow users by 32 per cent to more than ten million by the end of this year.

Commercial Bank of Africa plans to become Kenya’s biggest lender by clients through its mobile-banking service by targeting more of Safaricom’s M-Pesa clients.

CBA also plans to expand into more than a dozen other nations in the next eight years.

The closely held bank plans to increase the number of customers with M-Shwari accounts by 32 per cent to more than ten million by the end of this year, chief executive Jeremy Ngunze said in a July 8 interview in the capital, Nairobi. Those accounts hold an average of Sh1,000 ($11.40), he said.

M-Shwari allows individuals without assets to build a credit record through regular savings after which they are allowed to borrow small loans that can be increased progressively to as much as Sh20,000. Loans have to be repaid within 30 days at a flat interest rate of 7.5 per cent.

The bank’s M-Shwari unit has a loan-loss ratio below the industry average of five per cent on the $80 million (Sh7 billion) of lending it has made since starting in November 2012, Ngunze said. CBA will eventually target all 15.2 million Safaricom mobile-money service customers.

“We shall then become undoubtedly the largest account holder, including the top lender by number of people in the market,” Ngunze said.

Safaricom and Kenya Commercial Bank, the nation’s biggest lender by market value and outlets, on Wednesday introduced a mobile banking product targeting small and medium sized companies.

CBA also plans to have operations in 16 African nations by 2022, Ngunze said. The lender will build a presence in South Sudan, Rwanda, Burundi, Ethiopia, Mozambique, Angola, Zambia and the Democratic Republic of Congo through acquisitions, joint ventures or direct investments, he said.

The company also has operations in Tanzania and Uganda. In Tanzania, where CBA introduced a mobile-money service branded M-Pawa in May, the bank already has 400,000 customers, Ngunze said.

Ngunze, who is vice chairman of the Kenya Bankers Association, said increasing capital requirements for Kenyan lenders will boost financial stability and spur mergers and acquisitions.

“The minimum capital requirements are still pretty low (at Sh1 billion),” he said. “There is room for us to consider increasing the level of capital which would force a level of consolidation in this market.”