Sumac, a first-rising bank that grew from selling hope

Armed with experience, a strong resolve and hope but no finance, John Njoroge embarked on an adventurous journey to sell hope that culminated in Sumac Microfinance Bank

In Summary

• It has grown from a four-man chama to one of the best SME lenders in the country

• The founder urges entrepreneurs to be disciplined, honest and persistent

Sumac Microfinance Chairman of the Board John Njoroge speaking to the Star journalists on August 5, 2019/FAITH MUTEGI.
Sumac Microfinance Chairman of the Board John Njoroge speaking to the Star journalists on August 5, 2019/FAITH MUTEGI.

Imagine working yourself up the corporate ladder, only to resign when appointed to head a regional subsidiary. Who does that?

This is exactly what John Njoroge, 55, a high-flying accountant, did 19 years ago.

He upset friends, colleagues and family when he declined to take a lucrative role as head of East Africa Breweries Limited in Tanzania to chase shadows.


Armed with experience, a strong resolve and hope but no finance, Njoroge, now the chairperson of Sumac Microfinance Bank, embarked on an adventurous journey to sell hope, netting four disciples along the way.

“I had this burning desire to liberate the credit market. The job at EABL was rewarding, but it was time to go beyond the normal,’’ Njoroge told the Star.

After quitting his job at the beer maker, the enterprising father of three, who names the late Njenga Karume and former Equity Bank chairman Peter Munga as his role models, teamed up with four friends to form a small saving scheme, commonly referred to as a chama.

“We used to hang out at least once a week along Kiambu Road. It was during one such session that I proposed the chama idea. They all agreed and contributed the first Sh5,000 each,’’ Njoroge said.

That was the first baby step for the towering blue and orange-branded microfinance that is now spreading its wings outside Nairobi.

The group then embarked on a recruitment drive that saw 10 more people join the saving plan. It also raised the weekly premium to Sh10,000.

“After collecting funds, we ensured at least every member borrows or guarantees a friend. Lending was purely on mutual trust, hence collateral-free. All was not rosy. We encountered hitches along the way but remained steadfast,’’ Njoroge said.


One major challenge was members’ ability to raise Sh10,000 every week. For instance, he remembers with nostalgia how he could ride on his chairmanship position to add his name on contributors’ list not to disappoint friends and show commitment.

“It was tough. Sometimes, I had to break the rules of the book to inspire confidence in the group. This challenged me to work extra hard to clear the balance the next meeting,’’ the entrepreneur said.

In one year, the group of 14 friends had raised over Sh2 million, which they used to open a savings and credit firm. They used Sh500,000 as a seed fund, lending to entrepreneurs with viable business ideas.

In 2004, Sumac Credit Limited was unveiled to the public with a mission to empower entrepreneurs who had found the going tough due to the stringent loan requirements by commercial banks.

The group unanimously appointed Njoroge as the chairperson, with three other inaugural members taking other leadership positions.

“I looked for a university don friend of mine to help us develop structures and unravel legal puzzles touching on savings and credit. We used to lend at five per cent,’’ he said, eyes shining bright, reflecting satisfaction.

In 2012, the company transitioned into a microfinance institution, and upon the enactment of the Microfinance Act, it successfully applied for and obtained a deposit-taking licence from the Central Bank of Kenya to operate as a deposit-taking microfinance bank.

The bank has since grown in leaps and bounds to attract international investors, sowing the seed of a dreamy vision of a young accountant back in 2000 to the global arena.

In December last year, Sumac Microfinance Bank received $2 million (Sh2 billion) loan from US-based Social Investment Managers & Advisers (Sima) to boost its loan portfolio in areas such as off-grid solar products.

The loan came barely five months after Sumac welcomed on board Badoer Investments, a Dubai-based firm, as a new partner, which pumped in Sh100 million for a 15.6 per cent stake in the bank.

We sought to know what drives him, challenges encountered along the way and lessons learnt in a decades-long journey that has birthed one of the fast-growing microfinance banks in the country.

“There are still millions of innovative ideas in virtually all sectors of the economy. The copy-pasting mentality has led to duplicity of services, limiting returns.”

The Star: Who is John Njoroge?

Njoroge: He is an ambitious accountant determined to realise and pass on entrepreneurial vision and hope to current and generations to come. I am a strong crusader of microfinance as a tool for socioeconomic transformation.

The Star: What has your long entrepreneurial journey taught you?

Njoroge: You can achieve anything as long as you keep your eyes trained on the vision, work hard, create a strong network of friends, be honest and be ready to learn from mistakes. It is sad that most young people think of instant success. That is what makes them drop the ball.

Life has no defined formula. The misplaced notion about going to school, attaining high grades and landing a lucrative job should be buried in a deep pit.

People should use knowledge gained in school to become job creators. There are still millions of innovative ideas in virtually all sectors of the economy. The copy-pasting mentality has led to duplicity of services, limiting returns.

The Star: What are some of the challenges you faced building Sumac? What kept you going?

Njoroge: Nothing worthy enough lacks challenges. It is one thing to dream big, actualising is another. My first challenge was how to start. It is difficult to sell a vision. I went to my trusted friends, who luckily bought the chama idea.

After recruiting 14 other members, the next challenge was to sustain weekly contributions. Contributing Sh10,000 every seven days comes with high discipline, sacrifice and dedication. I worked more than double to inspire hope in members.

Mistrust was also another huge challenge. Many borrowers took advantage of our porous lending mechanism built on nothing but trust to escape with our money. It is for this reason that we introduced guarantors and collaterals to minimise risk.

Challenges are opportunities upside down and the best teacher. My team and I took every challenge as a learning curve. It is only a fool who cannot learn from a challenge.

We also encountered regulatory, technological and legal challenges of running the business. The biggest lesson I learnt from this is that no man is an island. You have to reach out to people, seek help where necessary.

The Star: What are some of your exciting memories in this journey?

Njoroge: Every day came with its memories. My best memory is of course the priceless faces of my colleagues at EABL when I turned down the managerial offer in Tanzania. I still remember that day when I went back home to figure out what I had just done.

I still giggle when I remember some of the funny antics I used to pull to get my name among weekly contributors of Sh10,000. I could write my name top on the list, knowing too well that I have no penny in my pocket. It was a way to psyche myself and resolve to work towards clearing my debts.

I am also always on the moon whenever I meet a successful entrepreneur who got the first capital from Sumac. It is extremely fulfilling. Those are things I used to dream of. There are now over 10,000 testimonials and still counting out there.

There is more. If growing a business from a simple dream to an asset value worth billions of shillings cannot tickle you… you must be really an ungrateful soul.

The Star: Have you achieved your purpose? What next for Sumac Microfinance Bank?

Njoroge: The vision is big enough to be passed to generations. Yes, my team and I have achieved a lot in the past two decades. The evidence is all over for everyone to see. Sumac Microfinance Bank has grown from a four-man chama to one of, if not the best, SME lenders in the country.

Even so, there is still a lot to be achieved. I hope to see Sumac become a go-to international lender. We have just scratched the surface of technology, there is a lot to be exploited in this area to liberalise the money market, boost entrepreneurs and grow the socioeconomic fabric of the world.

Kenya, and indeed Africa, has one of the most youthful populations, averaging 19 years. The richest resource in this world is time. Our youths have priceless opportunity to convert this rich accessory into wealth.

I will one day exit Sumac. We are mentoring future leadership. We hope that they will never drop the ball.

The Star: What is your take on the state of lending in the country? Do you think mobile/app lending is revolutionising the sector?

Njoroge: The money market space in Kenya has really grown. Other countries are envying our vibrant mobile money system, thanks to M-Pesa. The ease of transaction and financial services deepening is exemplary. We can, however, do more with sound policies that protect both borrowers and lenders.

Although mobile app lending is on rise, I do not fully support it in its current form. The country is now witnessing one of the highest non-performing loan menaces. We need to inculcate the virtue of honesty in the new generation.

Imagine a person taking a loan and later decides to destroy the mobile phone card used to register for the facility? I know of many mobile lenders who have incurred huge losses and are on the verge of collapse.

While instant loans are good, those done without purpose promote consumerism, leaving borrowers in a debt cycle.

I am also opposed to the lending cap introduced in 2016. I think the law was hurriedly passed without clear foresight. See, it has now crippled private sector lending, the engine of any given economy.

The Star: What is your final word to upcoming entrepreneurs?

Njoroge: Be disciplined, honest and persistent. They should network and find like-minded individuals to grow their visions with. It is not easy but achievable.

Edited by Tom Jalio