Microfinance in Kenya – Mwananchi Credit


Microfinance offers financial services made for people with low income or credit score who cannot fit in traditional banking. These institutions focus on giving funds through loans to enable those stuck in poverty or limited financial resources to start businesses.

The credit offered by microfinance in Kenya is sometimes referred to as microcredit or microloan. But they are not limited to giving loans only; they may also facilitate other services such as money transfers and insurance. The best thing is that the government regulates them to ensure the safety of users.

Microfinance aims at addressing the needs of thousands who are unbanked. This fosters economic justice while ensuring everyone is attended financially. A microfinance loan is one of the easiest ways to expand businesses and comes with minimal risks.

Microfinance in Kenya

Understanding Microfinance

People who live with low credit a day are not included in most banking services. This is the audience that microfinance understands. This service helps you save, get credit, and even insurance. It eliminates the need for people living below the average income to borrow from friends, family, and loan sharks who charge incredibly high interest rates.

Microfinance gives small businesses loans based on consistent ethical lending practices. They are the leading way for small businesses to get capital funding in Kenya. These organizations allow you to save money, and you can check your balance whenever you wish to. Unlike other banks where the lender is mainly focused on your collateral before starting a loan application process, these institutions are more focused on helping you succeed and grow financially.

Some microfinancing organization offers some basic financial management classes. They help the borrowers understand interest rates, cash flow, fund agreements, and budget and manage debts. After being educated, potential borrowers may apply for a loan. A loan officer will take you through steps and takes you through the process before eventually approving the loan.

The loan may be as little as Ksh10 000, which may seem like little money to some people. But it’s a significant figure to someone impoverished and financially limited. It is enough for someone to start a small business or engage in activities that can give you some financial profits. Mwananchi comes in to help those businesses or individuals with huge capital issues. This is why they offer secured loans from 150, 000 to 25,000,000.

Microfinance Loan Terms

Microfinance meaning is different from regular banks. But, it charges interest and gives the lender a specific repayment plan. The loan repayment installments are due within regular intervals. Some microfinance institutions in Kenya require a loan recipient to save some money in their savings account, and it is used if the customer is unable to repay the loan. If the customer repays the loan without any issues, the money in the savings account is released to them. To making borrowing, these institutions may also pool borrowers into a group to create a buffer. Once they get the loans, they start repaying the loan as a group. If one person fails to pay, the whole group pressures them until the payment is made.

Moreover, you can also borrow a loan directly from a microcredit service. You may be required to give collateral to get a loan. In the case of Mwananchi Credit, you need security to get a loan. This is a way to leverage risk and still help business access huge capital without having to go through CRB check.

History of Microfinance

The microfinance concept is not something new. Different microcredit types have existed since the 18th century. The first time it took place through the Irish Loan Fund system, Jonathan Swift introduced it to help poor Irish citizens. However, today it’s now modernized and has become popular in different parts of the world.

In 1976, a microfinance institution known as the name Grameen Bank was started by Muhammad Yunus in Bangladesh. It attracted a lot of attention and still provides loans to its customers, but they have to adhere to the institution’s “16 Decisions,” which are meant to help low-income persons improve their lives.

The “16 Decisions” addresses various subjects, including the issuance of dowries during marriages and water sanitization. In 2006, the Grameen Bank and Yunus won the Nobel Peace Prize for their microfinance services.

There are also other microcredit companies around the world. Some are big and connected to the World Bank, but others are small groups that connect to their local microfinance bank. Most microcredit members are categorized in criteria such as business type, geographic location, and poverty level.

Some of the microfinance products and services are specifically targeted. For example, they may focus on funding women. But, institutions such as Mwananchi Microcredit give loans to anyone who qualifies and meets their criteria.

In the history of microcredit institutions, the primary purpose is to improve the community as a whole. They do this by providing capital, training, and education for better financial lives.

Benefits of Microfinance

There are many benefits of microfinance institutions. The primary one is economic development. But there are more, including:

  • Through microcredit, many households have expanded their financial opportunities. This means they get incomes that elevate the economic stander of families.
  • People with low credit score get access to credit, which means they can end capital deficiencies in their lives. This is something that traditional banks will not give without assets as collateral.
  • About 95% of these products are for people who are overlooked by society financially. Activities of these institutions are for everyone, including women, and the unemployed.
  • It creates excellent opportunities for the impoverished to make future investments. This aims at ensuring your family needs are paid for along with proper housing and healthcare.
  • The loans are sustainable. Microfinance personal loans can be 150,000 to 25,000,000 for the case of Mwananchi credit, a considerable risk to the company.

Frequently Asked Questions

What is microfinance?

Microfinance services are designed for low-income earners. The loans may be given to an individual or a group, and most people would not get a loan from a traditional bank. These institutions mostly focus on giving small businesses capital loans.

What is microfinance, and how does it work?

Microcredit services offer banking services to unemployed people who would have a problem accessing financial assistance from regular banks. These institutions lend based on excellent ethical practices to give small businesses loans in a safe and friendly way.

What is an example of microfinance?

An example of microfinance is the award-winning Mwananchi credit. But we offer secured loans to those with low credit scores.

What is the primary purpose of microfinance?

The primary purpose of microcredit services is to serve unbanked people with income and security.

What is the difference between microfinance and a bank?

Microfinance offers financial services to small businesses and entrepreneurs who cannot access banking and other services, while banks accept deposits from people of all walks .

Microcredit has had a worldwide impact. These services have been in existence for the last four decades. They come in handy for small businesses that need some cash or quick but affordable credit to explore opportunities. Mwananchi Credit is safe and adheres to the microfinance act in Kenya. You should avoid being stuck in securing funds because of poor credit score- ask for logbook loans, car financing, import financing, title deed loans among other loan products that suite your needs.

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