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New banking strategies for the Jamii Bora Bank

By Moses Michira | August 4th 2015

It has been Kenya’s tiniest bank but the new executives are angling for a major turnaround through unconventional banking strategies. Jamii Bora Bank top managers and the bank’s tea girls alike have set annual targets on customer deposits that they must achieve, in a drive that has enabled the bank grow its customer deposits 20-fold over the last four years.

Managing Director Samuel Kimani talked to Business Beat about the bank’s prospects and the expected changes in line with the new capitalisation proposals. He is optimistic of breaking into the top-ten lenders bracket by 2022.

What has it been like since you took over the bank?

We have been here for three and half years, and it has been an exciting time. Unlike the more established lenders, here, we all have to think entrepreneurial rather than just following systems and procedures.

It is a competitive field which means we have to find a niche that sets us apart from everyone else. The challenge is even bigger when you are starting out as a small player. But we have grown so fast that we have had to lease office space but we will be putting up our own bigger office block.

Why would you commit so much capital to a new office block, why not just rent space?

Renting space is so expensive in this town. A month’s rent on office space is Sh1,000 per square metre around Nairobi, while the construction cost for the same size of space is Sh40,000 on average. In 40 months, you would have paid as much in rent as building your own office. It is for that reason we are breaking ground in August for our new office block next to the French School in Hurlingham. We should be able to recover half the cost of that construction by disposing off the present headquarters along Koinange Street.

How have you been able to mend your books so far?

Shareholders have injected a lot of new capital through four rights issues, including investment by strategic investor, Asterisk Holdings. Our core capital is at Sh2.5 billion. We have also set targets for each of our staff, including myself to bring in customer deposits. My current annual target is Sh500 million. My secretary has a target of Sh20 million. Everyone here is a partner in our shared vision as a company.

Being a small bank, what do the proposals to raise the core capital to Sh5 billion mean for you?

I am in support of the higher capitalisation since we need stronger institutions in our banking sector. Jamii Bora Bank can comfortably meet that requirement in the given timeline, but I am sure several other banks might not. All we need is to raise Sh1 billion a year starting now, and I think that is doable. Mergers seem like a real possibility in the banking sector but we would never need one.

How different is your strategy from the one you found at the bank?

We came in and found a social enterprise, which was not entirely for profit. Its target market was to lend to customers organised in groups - mostly in the informal sector. Many of the members of the groups were involved in some form of income-generating activities.

But that could not be sustainable in the long-term, considering there was a whole segment of SMEs that is not nearly tapped. Now, we are the enterprise bank focused on trade cycle financing, mortgages and personal lending.

What are your projections after becoming an enterprise lender?

Jamii Bora Bank is planning to lend at least Sh4 billion to support businesses run by women and the youth between August and end year. We now have over Sh8 billion lent to enterprises. The bank has also introduced an unsecured loan that allows women and youth to access up to Sh3 million without collateral.

How do you feel after committing huge cash into struggling Uchumi?

For us, Uchumi was and still is a strategic investment. Looking at the huge number of customers who walk through its doors daily, which is a market we could tap into through the various products and services we could provide. Uchumi itself is a business that we could provide services to, not counting its suppliers who are mostly medium size enterprises. We are disappointed by the past management, but I am confident that its board will find the right people to take the business forward.

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