Many Kenyans do not have bank accounts. Those who have bank accounts either have little or no savings. This makes it hard for them to access loans from the banks. For this reason, Microfinance Institutions in Kenya play a crucial role.
Microfinance Institutions offer small (micro) loans to customers who can not access conventional financial aid from banks. The nature and functioning of these institutions vary depending on the purpose and targeted groups. Some institutions are based on gender and strictly offer microfinancing services.
Although they are an alternative to banks, some operate as extensions of large investment banks. By doing this, people living in under-developed regions can access the banks’ funding through these Institutions run by the banks.
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Top 8 Microfinance Institutions in Kenya
Here is a list of Microfinance Institutions operating within Kenya,
1. Kenya Women Finance Trust (KWFT)
KWFT is one of the oldest and most popular in Kenya. The institution was licensed to operate by the Central Bank of Kenya in 2010. Currently, it is the largest Deposit-taking microfinance institution in Kenya.
With over 600,000 customers and 231 branches throughout the country, KWFT offers savings and loan services to all women and girls. It stands to be one institution that has embraced Mobile Money in Kenya as customers can make deposits through Mpesa.
You can reach KWFT through their line 0703067700 or write them an email at info@kwftdtm.com. You can also write a letter through their postal address, 4179-00506, Nairobi, or physically visit their office headquarters at Akira House in UpperHill Nairobi or any of their branches nearest to you.
2. Faulu Microfinance
Faulu is another big deposit-taking microfinance institution. Currently, it is the leading institution when it comes to giving microloans. Faulu has branches scattered all over the country to access customers. Also, with Faulu, customers can make deposits to their accounts through Mpesa.
Loans from Faulu are easily accessed. The loans are processed within 24hours, and the interest rates are amicable. One can perform transactions on Faulu at any Faulu branch, Faulu agent, or ATM within the country.
Faulu headquarters is located along Ngong Lane, off Ngong Road in Nairobi.
3. Choice Microfinance Bank Limited
This is one of the biggest Community-based Microfinance Institutions. The Choice headquarters is located in Rogai Kajiado county. The institution offers services such as loans and savings.
An example of Choice Microfinance’s savings is the Faidikeni Fixed deposit account and the Asset Mali account. Just like Faulu, you can make deposits on Choice through Mpesa.
Choice Microfinance was started to link people in the diaspora with local investment opportunities. This was through providing small business loans that locals could use to create small business enterprises.
4. Uwezo Microfinance Bank
Uwezo Microfinance provides both loans and savings services. The institution offers short-term loans at flexible interest rates. The goal of Uwezo is to facilitate wealth creation and better living standards for individuals, small groups, or SMEs.
For those who want to venture into agriculture, the Farmer loans from Uwezo are the best option in the market.
5. Musoni Microfinance Institution
This is one of the youngest Institutions on the market. The letter “M” in the name Musoni stands for Mobile since it is centered around Mobile banking. Currently, it stands as the most paper-less Microfinance institution on the market.
With Musoni, there are no hidden charges when registering. The loans are processed within 72 hours and deposited into your account on loan applications.
6. Rafiki Microfinance Bank
Rafiki Microfinance is one f the few MFIs that offer diaspora banking, savings, and loan services. This institution provides affordable asset finance, loans for chamas and SACCOs.
Rafiki MFI offers the best loans through the Kilimo Biashara account for agriculture. Below are Rafiki MFI contacts.
7. Momentum Credit
This is a new MFI on the market. The institution was founded in March 2017 but had a vast customer base steadily increasing. Momentum Credit aims to provide the overwhelming demand for capital to SMEs and individuals.
8. Century Microfinance Bank
Just like other MFIs, Century offers saving and loan services to customers. However, this MFI specializes in agribusiness loans.
Deposits to Century are made through Mpesa, and customers get the loans directly to their accounts within a brief period.
These institutions provide the youth with opportunities to achieve financial freedom. However, I advise that you should strictly use the money borrowed from MFIs for the intended purpose, income generation. This is because the borrowed money has to be repaid at an interest.
Conditions For Microfinance Institutions In Kenya.
Eligibility
Different Institutions use different criteria to determine those eligible for funding. In most cases, eligibility is based on gender and age. This means some microfinance Institutions offer loans to special groups such as underprivileged women.
To access such services, they require one to be a Kenyan citizen of 18 years and above. They will also assess your ability to repay the loan and remain an institution customer.
Interest rates
In most cases, interest rates on Microfinance loans are based on a flat rate. However, some loan interests are calculated on a decreasing balance. A majority of the Institutions insist on a monthly repayment system.
The Interest on the loan varies between 30% and 40% for loans not exceeding Ksh.500,000. For loans above Ksh. 500,000, the interest rates extend up to 70%.
Credit scoring
Most of them do not have a system for analyzing credit scores. However, some insist that you must have an operational business for about three months and some cash in your account to get the credit. You also need to provide a good business plan and have at least one guarantor.
Many Microfinancing Institutions are currently using mobile money services such as Mpesa to ease customers’ access to credit. Also, the use of mobile transactions helps minimize cases of fraud within the institutions.
