Digital lender Branch International will provide loans to gig workers in Kenya following its acquisition of Century MFB, a local microfinance bank.
Gig workers include independent contractors, online platform workers, contract firm workers or temporary employees.
Branch said it would also be offering savings and investment services, money transfers, and repayment of bills as it seeks to expand as a digital bank in the region.
‘’As a fintech, we were only allowed to do one product – microlending. In the space, the amount you can lend is limited because the risks are inherent based on the credit policy you are allowed. After seven years, we felt we can do more and allow customers to borrow more,” said Rose Muturi, the managing director, Branch East Africa.
“From basics of banking and through licence available from Century, we will be able to offer services to our customers including savings, paying bills and investment.’’
Branch, which also has operations in Tanzania, Nigeria and India, plans to replicate products offered in the other markets in Kenya.
The deposit-taking licence offered through Century MFB will see it expand its services beyond short-term loans of Sh500 minimum and Sh150,000 maximum.
It will be the first digital lender to expand into the microfinancing banking market, allowing deposit-taking financial services.
Branch acquired a 84.89 percent majority stake in Century, getting access to its two branches – Moi Avenue and Gikomba area in Nairobi – that focus on SMEs and have 26,000 accounts
Branch said it had engaged other three microfinance banks before settling on Century, based on years of operations, capital adequacy ratios, strategy in the market and governance structures.
The entities are still in the integration process and are yet to come up with a name they will use.
“These are the details we are going through today with different teams, including the technology and co-banking teams, to ensure customers progress without interruption,’’ said Ms Muturi.
The Treasury in January exempted the mobile lender from being subjected to a rule that prohibits the ownership of more than 25 percent stake in microfinance.
In a gazette notice, Branch was exempted from section 19 (1) of Microfinance Act for a period of four years -- January 1, 2022, to December 31, 2025.