Microfinancier gets Sh425m loan from Swiss fund

• Rafiki DTM said it would lend part of the money to borrowers, as it also seeks to expand its presence in all the 47 counties.

Rafiki Deposit Taking Microfinance, a Chase Bank owned micro-lender, has received Sh425 million ($5 million) loan from a Switzerland-based fund that invests in social projects which have mass impact.

The amount is part of a Sh1.7 billion ($20 million) long-term loan lent to Chase Bank by ResponsAbility Africa.

Rafiki DTM said it would lend part of the money to borrowers, as it also seeks to expand its presence in all the 47 counties.

Rafiki Chief Executive Officer Daniel Mavindu said that the firm plans to spend more than Sh1 billion on expansion over the next five years.

The microfinancier lends money to low-income earners at an average of about 18 per cent, depending on the amount and repayment period.

Mr Mavindu said Rafiki plans to open at least 50 new outlets, which include branches and marketing outlets, by the end of this year from the current two branches. It expects to set up at least 40 branches and 100 marketing outlets in the next five years.

“Our strategy for the next five years is to grow a customer base of two million customers spread across the country and have a significant regional presence within the East African Community,” he said, adding that funds for expansion will be through a mix of debt and equity.

The microfinance institution, which was licensed in June last year, had an asset base of Sh445 million as at the end of last year according to the Central Bank of Kenya, total deposits of Sh102 million and 7,498 deposit and 623 loan accounts.

Mr Mavindu said that the funds received from ResponsAbility Africa have pushed the micro-lender’s asset base to Sh1.1 billion and that the firm is expecting to grow its balance sheet to Sh10 billion over the five-year period.

As at the end of June, according to the banking regulator, there were six DTMs operating in the country, with 0.5 million loan accounts worth Sh17.9 billion and 1.6 million deposit accounts worth Sh12.3 billion.

The Central Bank is currently working on a new set of regulations that could result in the reduction of entry costs for the micro-lenders.

Deposit taking microfinanciers do not operate current accounts, which make them unable to participate directly in the national payment system and have to be represented by a commercial bank.

Mr Mavindu said that conservative costs of putting up a branch are about Sh15 million while a marketing outlet will cost Sh5 million meaning that 40 branches and 100 marketing outlets will cost at least Sh1 billion.