This archive report was first published on 25 November 2019.
Monday, November 25, 2019, marked the beginning of the festive season, a time when many households and individuals tend to be extravagant, often overshooting their budgets by miles.
As a result, a rough time awaits them in January when schools open and children need fees, books, and uniforms. It's this financial difficulty that micro-lending institution, Jijenge Credit Limited, is seeking to cash in on.
According to Peter Macharia, the managing director of Jijenge Credit Limited, the firm is advancing school fees loans, holiday loans, and asset financing to its clients at discounted rates of 5.9 percent.
For school fee loans, applicants need to provide their admission letter, fees structure, National ID, KRA PIN, and bank or M-Pesa statements. The lender promises to process the loans fast, within 30 minutes to one hour, once all paperwork has been approved.
Mr. Macharia noted that Jijenge's ability to quickly disburse huge amounts up to a maximum of Sh10 million has seen the firm stave off stiff competition from money-lending apps.
The firm will also quickly process holiday and school fee loans due to the urgent need of the applicants. Clients can apply for loans through the website portal, scan and email their original documents, which are verified and approved, after which the loan is processed.
The money is wired electronically to their bank account, and they can access it on the same day. The repayment schedule is weekly or monthly, and the repayment period is between three months and one year.
Higher amounts attract lower interest rates, Mr. Macharia explained. The removal of the law capping interest rates will enable lenders to extend credit to startups and small enterprises considered risky as they lack sufficient collateral.
Mr. Macharia believes that the repeal on interest rate capping will synergise the financial sector and increase the loan uptake by lending more to the perceived risky clients.
Jijenge has thrived on issuing business loans for Micro Small and Medium Enterprises (MSMEs) market segment, which accounts for a big share of their loan portfolio. In motor vehicle asset financing, the client identifies the vehicle and pays either 20 percent, 30 percent, or 50 percent, and Jijenge pays for the remaining balance.
The interest on asset finance depends on the type of usage of the vehicle. A personal car attracts lower interest rates than a passenger service vehicle. Their logbook loans facility provides 60 percent of the total value of the vehicle.
Rental income loans, a new loan product for landlords to renovate their property or access quick cash for personal use, attract only 4 percent interest because it is low risk.
To keep default rates low, the micro-lender thoroughly vets all loan applicants to assess their repayment abilities and the purpose for the loan. Jijenge Credit Ltd is also involved in bid bonds issuance for business people in government tender projects.
