Diaspora-linked microfinance set for CBK licence

Money Markets

The Central Bank of Kenya building in Nairobi. Choice Microfinance Bank was started by a group of Kenyans living in the US. PHOTO | FILE 

By GEORGE NGIGI

In Summary

• Choice Microfinance Bank seeks to facilitate investment of diaspora funds in small and medium size enterprises in marginalised areas of Kenya.

The Central Bank of Kenya (CBK) is expected to license a diaspora-linked micro-lender as the eleventh deposit-taking microfinance bank.

Communication to shareholders by the chairman of Choice Microfinance Bank seen by the Business Daily states that the institution has received the regulator’s nod and is only awaiting gazettement to formalise its operations.

“We are finalising the licence application for Choice Microfinance Bank and once the process is finalised, CBK will advise the public accordingly” said the regulator in an e-mail response to our query.

The microfinance institution that has set up its first branch in Rongai was started by a group of Kenyans living in the US. It seeks to facilitate investment of diaspora funds in small and medium size enterprises in marginalised areas of Kenya.

Diaspora remittances have risen significantly over the past few years to average over Sh10 billion monthly.

Choice had been issued with a conditional approval by the regulator last year awaiting fulfilment of pre-licensing requirements before being granted a licence.

Using the conditional approval, the micro-lender invited investors to help it boost its capital levels.

A microfinance bank is required to have a minimum capital of Sh60 million so as to mobilise deposits.

Licensed microfinance banks include Faulu Kenya, majority owned by Old Mutual, Kenya Women Finance Trust, church-owned Smep, Remu and Sumac.

Other micro lenders such as Uwezo and Daraja have opted to mobilise deposits from a defined regional community which requires lower capital requirement of Sh10 million.