Corporate News
Treasury secretary Henry Rotich (right) with Letshego Kenya chairman
Kungu Gatabaki (centre) and group MD Chris Low during the official
launch in Nairobi on June 2, 2016. PHOTO | DIANA NGILA
By DAVID HERBLING
In Summary
Botswana-based micro-financier Letshego has set up a
Sh16 billion housing fund to offer mortgages for low-income housing in
Kenya over the next five years.
The non-deposit taking microfinance institution is eyeing
those locked out of the traditional mortgage market with loans to
finance low-cost houses for both residential and commercial use.
Letshego Holdings, listed on the Botswana Stock
Exchange, is banking on the housing loans dubbed ‘Makao Poa’ and credit
to small and mid-sized enterprises to grow its loan book fivefold from
$36 million (Sh3.6 billion) as at December 2015.
“We want to intervene with housing loans where
mainstream banking cannot get into,” said Charles Njoroge, chief
executive of Letshego Kenya.
“Our housing enterprise finance model enables those
without formal employment or regular salaries to gain access to credit
for building basic low-cost units,” said Mr Njoroge when the
Gaborone-based firm officially launched its brand in Kenya.
Letshego entered the Kenyan market in 2012 by
acquiring Micro Africa Ltd in a deal valued at $5 million (Sh500
million). The buyout also gave Letshego an entry into Uganda, Tanzania,
Rwanda where Micro Africa Ltd had operations.
The micro lender has 25 branches in Kenya with a
client base of 33,000 customers and employs 300 people. Its loan book
grew 110 per cent to hit $36 million as at December 2015 with “less than
two per cent” being non-performing, Letshego said.
The financial services group now has operations in
10 countries, including Botswana, Lesotho, Mozambique, Namibia, Nigeria,
and Swaziland.
Mr Njoroge said average housing loans is about
Sh1.5 million and capped at Sh10 million because the product targets the
base of the pyramid and use of alternative building technologies such
as inter-locking bricks and expanded polystyrene panels.
In total, Letshego plans to lend more than Sh27.5
billion in Kenya in the next five years, mostly in the low-cost housing
sector and providing working capital to micro and small entrepreneurs.
Treasury Secretary Henry Rotich, who presided over
the event, called on financial institutions to structure special
mortgages for the low-income market to plug Kenya’s housing deficit
estimated at more than 200,000 units a year.
“Microfinance can help alleviate the scarcity of
affordable housing especially by using alternative technology to deliver
low-cost housing,” said Mr Rotich.
Official data shows that Kenya had a total of 22,013 mortgage loans as at December 2014
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