Absa Bank Kenya has signalled its intention to shake up the banking market through its revamped SME proposition which offers up to Sh10 million unsecured loans to entrepreneurs.
Under the new proposition, known as Wezesha Biashara, entrepreneurs can also access LPO financing of up to Sh12 million, unsecured invoice discounting of up to Sh50 million and unsecured bid bonds of up to Sh10 million.
The lender is targeting to play a bigger role in the development of the SME sector which is the main driver of the Kenya’s economic growth.
“Kenyans thrive on innovation and that spirit is very present within the SME sector. As a brand we are inspired by this spirit and have taken it as our responsibility to connect these dreams and aspirations to the financial resources needed to accomplish them,” Absa Managing Director Jeremy Awori said. “That is why we have tailored our products to suit the needs of SMEs, where they can access unsecured loans payable for a longer period of time.”
The lender has also cut the time it takes to secure smaller ticket loans for SMEs to 48 hours. Under this proposition, businesses will secure loans of up to Sh3 million within two days of application.
During the launch at Absa Nkrumah branch in Mombasa, the director of business banking at Absa Bank Kenya, Elizabeth Wasunna, said the bank had relaxed the process of application to its customers and through the Timiza mobile App, SMEs can access loans through mobile phones.
“I have been banking with Barclays before it rebranded to Absa Bank Kenya and I have contacted one of the sales executives after they launched the product last week who assured me I qualify for the loan. I am in the process of making my business plan before getting the money to expand my business by opening an outlet in North Coast,” said Mrs Halima Njore, a cosmetic supplier in Mombasa.
Women entrepreneurs stand an even bigger chance to benefit after Absa announced a Sh10 billion fund for women-owned businesses. The money will be availed to the women through existing banking products including unsecured and secured loans, trade finance, asset finance, property finance and working capital facilities.
The bank said it startups and upcoming businesses can access financing through Timiza, its virtual banking platform which has nearly five million customers.
The app, which offers a variety of services from savings, deposits, withdrawals and loans, is part of the bank’s strategy to connect with its customers following its change of brand to Absa. Timiza, which won a Marketing Society of Kenya Award for its innovative marketing campaign, also offers the bank’s customers a goal-based mobile savings option with a return of five percent per annum. Savers can start with as little as Sh100.
The platform, with a capability of transferring upto Sh250,000 from one individual to another at no cost, is available to smart phone users as well as feature phones through the USSD code *848#.
Other add-ons to the app include the ability of users to order for taxi services, buy airtime and pay utility bills at the click of a button. Timiza was also the first such product in the market to offer a personal accident cover of upto Sh100,000 and last expense cover of upto Sh50,000 for customers who pay sign up to pay the Sh42 monthly premium.
Besides the mobile innovation, Absa is also seeking to shake up the mortgage market ahead of the roll-out of the State backed subsidies for the sector. The lender has announced a rate of 11.75 per cent, lower than market rate of 12.9 percent and will waive legal fees for mortgage customers who wish to change loyalty.
A gain in market share will position the bank to reap big from the planned State intervention through Kenya Mortgage Refinance Company (KMRC), which will lend money to financial institutions at an annual interest of five percent.
“We have redefined our mortgage offering to include 100 per cent financing, offering the lowest interest rate in the market at 11.75 per cent, and a waiver on all legal fees for customers transferring their mortgages to Absa,” Mr Awori said.
According to CBK data, Absa had mortgage portfolio of Sh9.6 billion in 2018 which put the lender at 7th position among the 34 banks that offer home ownership loans.
The bank also announced it will be investing more on mobile technology to take the competition to other mobile money loan lenders. He said with mobile services already in place, Kenyans can easily open account on their phones and access almost all services offered in the branches.
In February, Barclays Bank Kenya officially rebranded to Absa Bank Kenya following regulatory and shareholder approval. Absa Group operates in 12 countries in Africa where it plans further expansion, including to Nigeria where it has a representative office.
Since its change from Barclays, the bank has been trading under the name Absa at the Nairobi Securities Exchange (NSE).