Wakanda buys stake in micro-lender to bolster Kenyan presence

The firm is running two digital lending apps: Kashway and Ipesa under XGO

In Summary
  • The company is incorporated in the United Kingdom and is wholly owned by a Chinese entrepreneur, Robin Duan Wei,
  • Last week, President Uhuru Kenyatta signed into law a Bill bringing digital lenders under CBK's supervision 
CBK Headquarters
CBK Headquarters
Image: FILE

Informal digital lenders have started to formalise after President Uhuru Kenyatta signed into law the Central Bank Amendment Bill 2021 last week. 

The law brings unregulated non-deposit-taking credit providers into the ambit of the Central Bank.

Yesterday, the banking regulator announced the acquisition of 85 per cent shareholding of Choice Microfinance Bank Limited (Choice MFB) by Wakanda Network Limited (Wakanda) effective October 22.

''This follows CBK’s approval on September 21, 2021, under Section 19 (4) of the Microfinance Act and approval by the Cabinet Secretary for the National Treasury and Planning on October 5, 2021, pursuant to Section 19(3)(b) of the Microfinance Act,'' the apex bank said in a statement.

According to CBK, Wakanda was incorporated in the United Kingdom on February 26, 2020, and is wholly owned by Robin Duan Wei, a Chinese entrepreneur and the founder of Mobvista Inc, a digital advertising company listed at the Hong Kong Exchange.

The firm's market capitalisation stood at $11.7 billion (Sh1.3 trillion) as at August 31, 2021. 

Wakanda currently runs two mobile lending apps: Kashway and Ipesa in the country under a subsidiary, XGO which has a Chinese national Junjie Zhou and Kenyan Elijah Ng’ang’a Ikahu as directors.

The two mobile lending apps are among those flagged by users for debt shaming, unethical practices that the new law is expected to cure.

It gives CBK powers to revoke the permits of digital lenders who breach the confidentiality of personal information to pursue defaulting borrowers.

It was, however, not clear if Wakanda Limited is buying a majority stake in Choice MFB to formalise its digital lending activities.

We had not reached any of the two listed directors by the time of going to press. The receptionists at XGO declined to put us through.

Choice MFB was granted a licence by CBK on May 13, 2015, to carry out community microfinance banking business within Kajiado County.

The MFB has its Head Office and one branch both located in Ongata Rongai Town, Kajiado County.

It is categorised as a small microfinance bank with a market share of below one per cent of the micro-finance banking sector as of October 31, 2021.

The Kenyan microfinance sector has evolved in the past decade underpinned by advances in technology, innovation and customer drive towards any time Anywhere services.

Latest data by the Association of Microfinance Institutions (AMFI), the sector has been growing at eight per cent since 2017 when the total value of 15 institutions was estimated at over Sh50 billion. 

In response to this changing terrain, CBK has been working with MFB’s to transform their operations. All MFB’s formulated transformation plans in 2020, to adapt to the New Normal.

''These plans are anchored on review of business models to be customer-centric, leveraging on technology and innovation, and strengthening capital and liquidity buffers,'' CBK's statement read in part. 

According to the banking regulator, the acquisition will strengthen Choice MFB and support the stability of the microfinance banking sector in the country.