The Central Bank of Kenya (CBK), Kenya’s central banking authority, recently announced plans to connect deposit-taking microfinance institutions (MFIs) and savings and credit cooperatives (SACCOS) with existing credit reporting systems that commercial banks have been required to use since 2008 [1]. Mr Njuguna Ndung’u, governor of CBK, propones that “the merging of credit information from these various players will provide for a stronger credit market that will improve the pool of credit borrowers, decrease defaults, reduce credit costs and ultimately result in a stable financial sector.” In total, MFIs in Kenya have extended an equivalent of KES 16.8 billion (USD 200 million) in loans.
Meanwhile, the Small and Micro Enterprise Programme (SMEP) has announced plans to convert into a commercial bank after the completion of its divestiture exercise whereupon the National Council of Churches of Kenya, SMEP’s owner, will have ceded 75 percent of its stake to other churches and investors. In 2009, SMEP reported to the Microfinance Information Exchange (MIX), the US-based, nonprofit data provider, total assets of USD 17.5 million, a gross loan portfolio (GLP) of USD 12.4 million, return on assets (ROA) of 1.01 percent and return on equity (ROE) of 4.72 percent.
By Jacqueline Foelster, Research Associate
About Central Bank of Kenya (CBK): Established in 1966, the Central Bank of Kenya is the country’s central banking authority. CBK enacted the Microfinance Act in 2008 to pave the way for the licensing of deposit-taking microfinance institutions (DTMs). Professor Njuguna Ndung’u was appointed governor of the central bank in March 2007.
About Small and Micro Enterprise Programme (SMEP): Small and Micro Enterprise Programme (SMEP) began as a relief program in Nairobi, Kenya, in 1975. In 1999 it registered as a microfinance institution (MFI). SMEP has 20 full branches and 13 satellite branches throughout Kenya as of April 2011. As of 2009, it reported serving 85,700 active borrowers with an average loan balance of USD 145. SMEP’s gross loan portfolio was USD 12.6 million and total assets were USD 17.5 million. Return on assets (ROA) was 1.01 percent and return on equity (ROE) was 4.72 percent also as of 2009.
Source and Additional Resources:
[1] The Nairobi Star, April 6, 2011, “CBK set to widen net for loan defaulters”, http://www.nairobistar.com/business/local/19961-cbk-now-targets-sacco-loan-defaulters
[2] MicroCapital.org Brief, February 4, 2011, “Kenyan Microfinance Institutions (MFIs) Want Access to Credit Reference Bureaus”, https://www.microcapital.org/microcapital-brief-kenyan-microfinance-institutions-mfis-want-access-to-credit-reference-bureaus/
MicroCapital.org Brief, December 29, 2010, “Small and Micro Enterprise Programme (SMEP) of Kenya Licensed to Take Deposits”, https://www.microcapital.org/microcapital-brief-small-and-micro-enterprise-programme-smep-of-kenya-licensed-to-take-deposits/
MicroCapital Universe Profile: Central Bank of Kenya (CBK), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Central+Bank+of+Kenya+%28CBK%29
MicroCapital Universe Profile: Small and Micro Enterprise Programme (SMEP), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=SMEP
Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/
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