Category Archives: SACCO

M-Shwari, Equitel, and Mobile Lending Apps in Kenya

Just 24 hours apart, Equity Bank and Safaricom, which arguably have the most financial connections with Kenyan citizens, through m-banking, both made financial results announcements. Equity released their Q3 2016 results while Safaricom, whose year ends in March, was announcing their 2017 half-year results.

Safaricom has M-Pesa and also powers M-shwari at CBA and KCB M-pesa while Equity has Equitel a bank in a SIM card that gets around the barrier of the M-pesa. At the beginning of the year Equity had 8.8 million customers and the country’s largest bank – KCB had 3.8 million . They are surprisingly topped by CBA with 12.9 million customers, largely due to their partnership with Safaricom called M-shwari which allows savings and lending directly from a phone SIM card.

In the results this week, Safaricom reported pre-tax half-year profit of Kshs 34 billion derived from their 26 million customers solar-2Bphone-2Bchargerand their CEO said that they process about 21,000 M-pesa transactions per minute and that 2 loans are processed every second. M-pesa revenue increased by 33.7% to Kshs 26 billion, and message revenue grew by 8.1% to Kshs 8.6 billion (with the increase in premium rate SMS revenue probably attributable to sports betting /mobile gaming)

They now have 50,000 merchants using their cashless platform called Lipa na M-Pesa, and announced a waiver on person-to-person and Lipa Na M-Pesa transactions under Kshs 100 (~$1)  “We have done this to empower the people who support this company the most – the mama mbogas, the small businessmen, and the micro-agents who form our network.”

As at September 2016, Equity had a Kshs 15.1 billion pre-tax profit, an 18% increase over last year.  The Q3 results also showed a second straight quarter of reduction in loans at the bank from Kshs 222 to 221 billion. Whether this is due to the recent interest rate-capping bill or an absence of lending opportunities, or an economic pullback is not clear, but the deposits raised by the bank went to government treasuries which grew by Kshs 21 billion in the quarter.

Equity reaffirmed an ongoing commitment to shift in customer service channels from physical branches to phone and agents. In the first year of Equitel (their telco), it did 151 million transactions in the quarter 142% more than the year before. Equitel is now the second largest move of mobile money in Kenya – at 14%, being M-Pesa (84%)  but ahead of Airtel Money, Orange Money and Mobikash.

Equity Bank has also released a series of Eazzy banking solutions and tools including (an)  Eazzy App, Eazzy Chama (investment group/SACCO management tool) and (an) EazzyAPI (for developers to build on).

Away from the two, the World Bank’s CGAP blog recently highlighted and compared several phone-based borrowing / m-banking solutions and apps available to Kenyans. They are easily accessible but unregulated, and they vary their terms, credit scoring methods, limits (which range from ~S1 to $10,000) interest rates, duration,  and the ultimate cost to the borrower. They include;  Branch, Equitel (Eazzy Loan and  Eazzy Plus Loan), Jumo/ Kopa Cash, KCB-M-Pesa, Kopa Chapaa, Micromobile, Mjiajiri, M-pawa-Sacco, M-Shwari, Okoa Stima, Pesa na Pesa, Pesa Pata, Pesa Zetu, Saida, Tala, and Zindisha.

$1 = Kshs 101

Why SACCO’s Won’t Replace Banks

The banking interest rate cap came into effect last week and some banks, like Coop and KCB have set out to comply with the new rates for new loans. But some people have been saying that they will shift to SACCO’s if banks cut back on borrowing that they consider too risky to make at below the 14.5% set by the new law.

SACCO magazineBut SACCO’s won’t really replace banks.  SACCO’s (savings and credit society societies) in which members register, save, and borrow are very good vehicles for customers who understand their needs and have definite investment goals. They are able to borrow loans, at lower rates than banks and often without the need for collateral, usually by having other members guarantee each other.

But the amount members can borrow is  limited, usually by how much they have saved (you cannot borrow more than five times your savings, how much they have outstanding or how many loans they already have. Also you can’t borrow until you have been a member and built up savings for about six months. They require regular deposits, usually each month so this work with salaried people or disciplined savers. They also work well with rural societies and farmers, though some in sectors like coffee have been plagued by debts following crop failure or society mismanagement.

Finally, some SACCO’s uch as Mwalimu, Harambee, Kenya Police, and Afya have over ten billion shillings in assets, but most SACCO’s are smaller than banks and don’t have the credit to lena or range of products that banks do to lend to millions of borrowers. While some SACCO’s have bank-like services like cheque books, and debit cards, they also don’t have the range of financing – trade finance, overdrafts, credit cards that  bank customers are used to.

23 Things about the 23rd Home Expo (A Review)

For the second time in my life, I got time to go to the 23rd Home expo. I didn’t think it would be much fun being alone but the 4 hours I spent there definitely says a lot.

  1. Entry to the Expo: There were 2 options – to buy a ticket (200/-) or buy a ‘Homes Kenya’ magazine that came with a free copy and bag (350/-) I chose the latter. My mentor says that magazine has everything!
  2. Condos or Condominium if you prefer: I only used to hear about Condos in movies. They are now available in present day Kenya and this particular one cost a whooping 80M. Before going to a home expo, have a budget in mind. It will help you narrow down to what you are looking for.
  3. SACCOs: There was this lady who tried to convince me that there’s wasn’t a cooperative society but told her that is what exactly SACCO stands for. The investment information she shared, though, was good for making future comparisons
  4. Goals: You may have noticed this as a repeated comment on social media. Basically it says I aspire to what you are doing. My goal for going to the expo was to identify a dream house and thereafter pray towards it. Whilst there I got another reason to go for expos, business ideas!
  5. Friends: But the principal reason that saw me get into a matatu and head for KICC was because one of my besties has been looking for a house and keeps dragging me along for her trips. I wasn’t excited about the whole affair but the student has now overtaken the teacher
  6. Technology: And when I thought a presentation via an iPad was ‘it’, I walked into a hall where a number of exhibitors had ultra-high definition displays (UHDTVs) and you can be sure it helped move a dream into actual reality
  7. Everything: and I mean everything to establish a thriving real estate business was here. Generators, solar panels, roofing material, steel beams, sliding doors, kitchen tiles and even simiti was available
  8. Furniture: There was a stand with the most beautiful of mahogany pieces and it felt good to sit on them
  9. Kenya Yetu: Exhibitors came from all over the country were here. Western Kenya, Central Kenya and those from the Coast were well represented. What blew my mind though was this gated community in Red Hill accessed by a road 35 feet above it. The thinking to its designing was absolutely breathtaking!
  10. Dubai: Kenya is a very rich country one of the foreign exhibitors explained and therefore no surprise was it to see Emirati investors scouting for fellow investors
  11. Sales people: Extroverted ones, genius ones, clueless ones and those who knew you didn’t have a cent in your pocket but still went all out to make the pitch. One day I will make one of them commission happy. One day…
  12. Architects: Exhibitors who did not have the advantage of high-definition technology, used architectural models to convince their prospective clients. A closer look betrayed those whose final workmanship would be cheap. These things are (very) important
  13. Off Plan: The expo was not just about selling property but ideas and with ideas, one cannot just jump on board, without seeing the property’s location, knowing who the developers are, and investigating their previous portfolio(s). And what exactly does 58 square metres in comparison to 125 square metres mean? A lawyer? Does one have to have a lawyer?
  14. Chamas or Investment Groups if you like:were here and doing big, hairy, audacious stuff. I can tell you for a fact that those chamas have toiled to reach this live. I salute them!
  15. 2.5 bedrooms: Have you heard of this before? Me neither. But basically what it means that the apartment comes with 2 bedrooms and a miniature room that can either be used as a study area or extra bedroom.
  16. Serviced apartments: Still reeling on this concept because mine is to move from my rented flat to an apartment but when you hear the probable rents, it begins to make investment sense. At this point I pause to clarify that flat is what the Americans refer to as apartments and a condominium is a block of apartments or flats. Ça va?
  17. Marketing: In the entire tour, I only found one stand that didn’t have brochures. Those in the print business definitely made a kill but there was this one brochure where I overtly told the dealer that a “serviced plot behind Kitengela prison” caption scared the potential investment out of me
  18. Carpets: Carpets confuse me especially when there is so much variety of colour and texture to look at. The guy manning the stand generously explained to me the types best for different areas of flooring and I will definitely be looking for him should the opportunity present itself in future
  19. Sadolin: These guys saved me from my desperate such for a colour chart and offered theirs for free. They also gave me the exact type of paint that should be used on a bath tub. Such enthusiastic employees!
  20. Eisenkraft: This is a German company that exclusively sells tools for bending wrought iron at exhibitions. It looked easy and doesn’t every business idea look until you start consider the real resources needed
  21. KRA: The government was here not to collect taxes but to offer amnesty to homeowners. In short, no taxes accrue for the years between 1974 and 2013. For 2014 and 2015, taxpayers will be allowed to claim 40% in expenses and only pay 10% in taxes of the remaining 60% of rental income. For 2016, the 10% of the gross income when received must be paid to KRA. Returns (including nil returns) must be filed monthly i.e. by the 20th day of the consecutive month
  22. St. John’s Ambulance: The emergency services people were present but this time selling their very affordable courses for the individual, the babysitter, and the company.
  23. To do list: It would be a shame to go for such an exciting experience to go to waste and I have promised self to visit some upcoming properties.

 Make sure you visit the next expo!

Review by Tesha Mongi (Visit her blog

Coop Bank launches Diaspora Banking Centre

Coop Bank has opened to serve diaspora customers, 24-hours a day, 7-days, a week. It’s oddly located at the bank’s Co-op House headquarters, in downtown Nairobi, but its actually a centre meant to manage diaspora customers in faraway countries, using dedicated relationship managers.

They will serve people with queries on real estate, account opening and wealth management. They will also offer Coop Bank services to diaspora SACCO’s, which Kenyans abroad used to jointly save and manage challenges. And while in Nairobi, diaspora customers also get to use executive suites at Coop branches.

Since Coop launched diaspora banking in 2010, they have become one of the significant banks in remittances, handling, they estimate $45 million a month, or about 30% of the inflows. At the launch one customer,  who lived in Washington DC for many years, asked them to open a banking centre in the US capitol. While she praised Coop for their good staff  responsiveness and service to her as a customer, she also lamented the generally low-level of services that Kenyan institutions offer to diasporans who live in countries where they are used to efficient processes, and relationship people who actually return calls to customers. Many just want to open accounts in Kenyans banks to save, and all they want is to get prompt and good service.

Coop Bank Diaspora cakeCoop has partners and agents in places like UAE, Qatar, the UK, and the USA (Dallas).  One of the partners is UAE Exchange, and their manager in charge of Africa operations spoke of the changing trend of Africans sending & spending money to one of Africans sending & saving, and also sending & investing. This is the way to emulate Asian counties whose fast growth was aided by remittances by their nationals.

Coop also partners with SACCO’s (savings & credit societies) in North America and Europe such as the Kenya USA Diaspora SACCO, Kenya UK SACCO, and the Kenya Ireland SACCO.

#WhatsNextAgTech

Nest Nairobi held its monthly entrepreneurship speaker series in partnership with the  Kenya Climate Innovation Centre (KCIC) on January 27, at the Strathmore Business School.

#WhatsNextAgTech panel

#WhatsNextAgTech panel

Hosted by Zeynab Wandati (business reporter at NTV Kenya), the panel featured Stefano Carcoforo (CEO/Co-Founder of iProcure Africa), Grant Brooke (CEO at Twiga Foods), Marion Moon (Managing Director Wanda Organic), Charles Odida (a farmer), Linda Kwamboka (Co-Founder at MFarm Ltd), Chris Kolenberg (Director Marketing & Sales at Kenya Biologics), and Munyutu Waigi (Co-Founder of Umati Capital)

Excerpts from the event sorted by subject 

Agri-Economy  Agriculture is 26% of Kenya’s GDP and employs 80% of the rural population. It comprises 40% of exports and 45% of govt. revenue and 7% of industrial raw materials – KCIC rep

Government

  • A law is coming in farming which will require all farmers to be members of an organization ,  and through that, they will be taxed  – Marion
  • I’ve no faith in the government to solve small farmer problems e.g. they allow contaminated maize imports, our borders are porous  and farmers get zero protection, just exploitation from the government – Munyutu
  • The support that governments give to farmer has very little to do with farmers interest e.g. in the choice of fertilizers sold – Charles
  • Ultimately you have to work with government. It’s not as bad as it was in the 90’s – Stefano

Cooperatives

  • We work with cooperatives, providing tech to them; while others devalue them by saying they want a cut, and there are many shady ones, cooperatives aggregate demand on behalf of farmers and play an integral role in rural societies – Stefano
  • We don’t work with cooperative, as we want to pay farmers directly. I’ve never seen a successful corporative, they are more like pyramid schemes. They may work when they are 10-15 people, but go bad when they are 200-300 members and become unions  – Grant
  • Cooperatives are very critical but don’t have farmers’ interest at heart. There is an Eldoret dairy cooperative with $10 million revenue, but it’s farmer members remain poor – Munyutu

Maize

  • Maize is a terrible crop – when you have a bumper season, the price goes down. When you have a bad year, the government imports a lot of maize – Stefano
  • Maize is a good crop. Farmers with good storage, and good planning don’t have to sell maize at throwaway prices. Ugali (made from maize meal) is one of the top foods bought in every household. Also there are institutions that buy hundreds of bags of maize every year e.g. schools to fees students – they need quality and villages don’t trust imported maize – talk to them, negotiate sales in advance and they come to check out the farmers fields, and pay more than the government – Charles

Farmers

  • The average of age of a Kenyan farmer is 62 years; they are used to a certain way of doing things right, and it is hard for them to change – Charles
  • Growing a crop does not happen overnight like the Eurobond;  Farming does not produce quick money, and farmers, by nature, are patient – Charles
  • Farmers trust each other, they trust farmers who have tried things e.g. they will try a pest control fertilizer that they are referred to by others – Linda
  • Farmers will adapt when they see something work. So you often have to give them free samples  – Chris

Finance 

  • 98% of produce is sold to the informal markets and there is little formal financing for that. Debt is about 20-30% of the market cost of foods sold as middle men and mama mboga pass on the cost of default risk – Grant
  • Cash flow in key in agriculture. When a crop needs weeding, you have no choice, you have to do it, or you’ll have no harvest. You have to schedule money for from activities. – Charles
  • SACCO’s are good for farmers, but there are also many Kenyans in the US and Dubai (where investments only earn 1-2%), and who are willing, and do lend their idle cash, to farmers they trust to earn much more (some of them are even on @twitter) – Charles
  • The government has many avenues of financing farmers e.g. AFC lends to sugar farmers at 5% – Charles
  • Bank ads for farmer loans look sexy in TV but in reality, they are too slow  for farmers – they don’t disburse money quickly enough – Munyutu

 Local Markets

  • Food is 51% of household spending – Grant
  • Food safety is the driving concern for a mama mboga as she will want to know and tell her customers which farm her produce comes from –Grant
  • Urban young farmers who want to get rich doing passion fruit and strawberry should instead grow things that you can see a market for everyday – Grant
  • It’s crazy that 100% of our local produce would be rejected at the EU – Chris
  • Processors are getting tired of dealing with brokers and aggregators and want to go deal with the farmers directly – e.g. for dairy, fruits (A company called Fresh & Juicy is working with farmer to supply Nakumatt) – Munyutu

 Inputs

  • It took 2 years to get bio-organic fertilizer approved in Kenya – Marion
  • Ultimately, what farmer can produce is declining, and those who are increasing productivity are doing so using chemicals, but that is only a short-term (5 years) measure  – Marion

Export Markets

  • Italian companies that produce canned beans and used to source them from South America,  are now looking to get them in Kenya, but are struggling to find enough farmers – Marion
  • Kenya can compete with Brazil in passion fruit; that market is big – Marion.
  • Kakuzi has 300 small-scale farmers that they used to grow their produce. They know what they spray on their own 6,000 acres, and work with 300 other farmers who they advise, but ultimately, they can’t establish exactly what inputs these farmers are adding to fruits – Chris
  • Small scale farmers wont be able to compete in future – 1st world farmers are 40X more efficient – Chris

 Logistics / Middle Men

  • Kenya is not food insecure,it is logistics insecure. A banana is Kshs 10 (sometimes  20), which is the same price as a banana in London;  that’s because we stopped investing in markets, and there are many bottlenecks, broken links and 5-7 people between the farm and the market  – Grant
  • Supply chains are longer in Kenya that they need to be – there are too many brokers, and the farmer is not visible in the farm to fork story – Charles
  • Middlemen exist because farmers don’t understand what the markets want – Linda
  • Middlemen add zero value, and that’s why the price of food is high – as they hedge against their defaults – Munyutu.

Tech

  • Farming is putting a seed in the soil, nurturing it and harvesting – it’s not phone or apps or tabs – (which only bring in efficiency) – Marion
  • Kenya has been slow to get/adopt farm smart phone apps & software compared to Brazil and South Africa – Charles
  • Kenyans don’t use Kenyan products, but use our apps so we can make them better  – Linda

 Whats the Next Big Thing in AgTech?  

  • Traceability fake products look more real than the original product – so the next big thing in agri-tech will be clever apps to provide assurance through traceability of inputs. There’s now a lack of traceability, farmers will tell you what you want to hear, and counterfeit products are prevalent – Stefano
  • Distributed Commodity Exchanges, which used to be in Chicago and Ethiopia (ECX) are now in the cloud with firms like Twiga that act as warehouses – Grant
  • Mid-size farm management as a career. There are people in this room who inherit 30-40 acres in rural areas, but want other people to profitably manage farms for them – Grant
  • Partnerships – Marion
  • Farmers specializing in certain crops and increasing their yields drastically – Chris
  • Financial capacity building – financial products in simple math, loan calculations in easy language – Munyutu

The outreach manager of KCIC said they provide entrepreneurs with an enabling environment (policy) for innovation, business advisory services and financing opportunities [for (1) proof of concept financing  and (2) a seed facility of climate change venture funding of $100,000-500,000 of  growth capital for entrepreneurs from June 2016]