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Micro lender Jijenge, Public Service in deal to lend staff

Firm plans to loan out up to Sh200 million in first 6 months

In Summary

•The firm whose core business is motor vehicle and asset financing says move driven by steady rise in demand for loans during Covid pandemic.

•Local banks and other financial institutions are expected to continue offering an extended capital relief to struggling businesses and individuals hit by the coronavirus.

Jijenge Credit chief executive Peter Macharia/COURTESY
Jijenge Credit chief executive Peter Macharia/COURTESY

Micro lender -Jijenge Credit limited has signed a deal with the Public Service and Gender ministry to extend commercial loans to government-backed employees with existing pay slips.

The micro lending firm yesterday said it will roll out a digital interface of a check off system that will see it reach out to civil servants drawn from various ministries and Parastatals for loan offers against their pay slips.

“We already have the approval from the Ministry. Civil servants can now borrow through us and that one will be done digitally with no paperwork,” said the firm’s chief executive Peter Macharia in an interview.

He said the firm is targeting to loan out up to Sh200 million to government employees in the first six months of the system’s operation.

The firm whose core business is motor vehicle and asset financing said the move was driven by the steady rise in demand for loans since the lifting of restrictions in July, as businesses and individuals hit by the pandemic take up loans to boost their operations.

“This office has examined and verified your application together with your supporting documents and is satisfied that the company has met the requirements for change of name for a check off code,” noted a letter signed by Wangari Ndia, Principal Secretary Ministry of Public Service and Gender, State department for public service.

Faced with lockdowns across major counties and restrictions on movement in certain towns, Macharia said that the company like many others had been staring at a decline in collections and increased demand for working capital from borrowers, most of who continue to struggle to qualify for loans.

As a result, the lender has had to vary its security margins to accommodate more customers while staying afloat.

While banks can offer some relief to corporate and small business borrowers, there are few options to ease the pain for retail borrowers, which is the current case for non-bank lenders and other financiers.

Local banks and other financial institutions are expected to continue offering an extended capital relief to struggling businesses and individuals hit by the coronavirus pandemic.

Microfinance in Kenya consists of microfinance facilities and regulations in Kenya which has been developing since the mid-1990s.

Legislation was passed in 2006 with the Micro Finance Act which became active in 2008.

By 2010 there were 24 large micro finance institutions in Kenya, which provided $1.5 billion to approximately 1.5 million active borrowers.