Microlender sets aside Sh300m for SMEs in Nairobi estate

Money Markets

Speed Capital CEO Daniel Githua at his office in Nairobi. PHOTO | DIANA NGILA  NATION MEDIA GROUP

By JOHN GACHIRI, jgachiri@ke.nationmedia.com

In Summary

• Microfinancier Speed Capital has set aside Sh300 million for its newest branch in the populous Kawangware area in Nairobi.
• The microfinacier targets small businesses that need to buy equipment such as food warmers, tea urns and handcarts.
• Speed Capital has an asset base of Sh400 million, but it expects this to grow to Sh1 billion by the end of this year and add another three branches over the period.

Microfinancier Speed Capital has set aside Sh300 million for its newest branch in the populous Kawangware area in Nairobi.

The institution said its eighth branch targets small businesses in the area, requiring working capital of up to Sh2 million.

“We will be spending over Sh300 million on business borrowers in the region taking working capital of between Sh100,000 and Sh2 million for their business expansion,’’ said chief executive Dan Githua in a statement.

‘‘Speed Capital will cut down the usual loan processing bureaucracy by offering quick financial solutions to the SMEs in this region,” the statement read in part. The microfinacier targets small businesses that need to buy equipment such as food warmers, tea urns and handcarts.

Speed Capital recently said it plans to raise as much as Sh2 billion within the next three years to expand its core business of lending to SMEs that need quick access to finance.

Equity Investment Bank was appointed the transaction advisor for the planned fund-raising.

READ: Microfinancier inks deal with Equity to raise Sh2bn

Speed Capital has an asset base of Sh400 million, but it expects this to grow to Sh1 billion by the end of this year and add another three branches over the period.

Other microlenders that have also revealed plans to increase capital bases include Sumac DTM and Choice Microfinance.

Unaitas Sacco also said that it will increase its lending to SMEs in areas other than agriculture whose returns are more volatile due to fluctuating prices of commodities.

READ: Unaitas boosts share capital ahead of change to bank

“Credit strategy 2015 is an effort to employ various activities that are aimed at reducing the high level of risk on agri-based loans by moderating the concentration to high-return low risk sectors such as real estate, asset finance and investment groups,” said Unaitas Sacco’s 2014 annual report.

The sacco doubled its asset base in 2014 after it increased membership.

This was made possible by the strategic decision to move its base to Nairobi from Murang’a where it was founded.

Unaitas Sacco’s total share capital increased to Sh1.44 billion in 2014 from Sh693 million a year earlier as a result of an aggressive membership recruitment drive that has resulted in members increasing by 43 per cent to 200,000 from 140,000 over the same period.