Microfinance firm’s clients to repay loans via M-pesa

Clients of Kadet will now service their loans
Clients of Kadet will now service their loans through M-pesa 

Clients of microfinance company, Kenya Agency for the Development of Enterprise and Technology (Kadet), will service their loans through M-pesa, making repayment cheaper and time saving as they will not need to travel to make payments to banks or at the company’s offices.

The use of M-pesa also marks increasing use of technology to make it easier for low income groups to access financial services. Kadet said the service would be rolled out soon, adding that a successful pilot study had been completed. The company is a subsidiary of humanitarian agency World Vision Kenya.

The launch of the service comes days after Family Bank partnered with M-pesa to enable its customers repay their loans through mobile phones.

Last week a micro insurance company, MicroEnsure, which is set to roll out affordable insurance products for low income earners said it was negotiating with mobile phone service providers to enable its customers to buy their policies using mobile phones.

Kadet CEO, David Ruchiu, said M-pesa provided a reliable, efficient and fast way of transacting business. The microfinance operates in remote locations such as Maralal, Moyale, Keiyo, Nyatike, Budalang’i, and Lamu.

In the locations listed above, banks are either far away or not available. Consequently, customers delay in making their loan repayments which affects their eligibility for new loans.

Automation processes
“The presence of M-pesa agents in these locations allows customers to make loan repayments on time and with great ease,” said the company in a statement.

“We are happy with the progress of the pilot scheme and are looking forward to improving the Mpesa product offering to our customers,” said Mr Ruchiu.

Mr Emmanuel Khisa, an information technology manager at Kadet, said the Mpesa service was part of the company’s automation processes which aims at using technology to make financial access convenient, affordable and flexible for the rural populace.

“We are looking at further enhancements to the M-pesa system such as SMS-based account services and others. These enhancements will eventually allow a seamless interaction between our clients and our banking system. This will open up a whole new exciting phase for our customers,” said Mr Khisa.

The move is in line with findings of the World Bank’s Consultative Group to Assist the Poor, which found that use of Mpesa among low income earners was growing exponentially. However, the study said data on the topic was “surprisingly less.”

The study found that the majority of M-pesa users were urban men and rural women recipients. The study said M-pesa is more used in transfer of money by men working in urban areas to pay bills and loans.

“In Kibera, a majority of customers are young men. Customers deposit money into M-pesa and transfer it to their rural relatives. In Bukura, (Western Kenya) a majority of customers are women and retirees. They use M-pesa to withdraw money sent to them by relatives in the city,” said the World Bank study.