MICROCAPITAL BRIEF: Administrative Costs Erode Profits of Microfinance Deposit-Takers Faulu Kenya, Kenya Women Finance Trust (KWFT)

Faulu Kenya, a microfinance institution that was licensed to take deposits in 2009, reported a loss of KES 5.3 million (USD 63,400) in 2010 while Kenya Women Finance Trust (KWFT), an MFI that was licensed to take deposits in 2010, reported a 53 percent decrease in profits from 2009 to KES 321 million (USD 3.8 million) last year as a result of restructuring costs and increased regulatory expenses. KWFT reported restructuring costs in 2010 totaling approximately KES 500 million (USD 5.9 million) including branch setup costs, system upgrades and an increase in staffing costs.

KWFT was able to mobilize KES 6.1 billion (USD 72.5 million) in deposits by the end of 2010. According to the nonprofit, US-based data provider Microfinance Information Exchange (MIX), KWFT had total assets of USD 195 million, a gross loan portfolio USD 134 million, 334,000 borrowers, return on assets (ROA) of 5.24 percent and return on equity (ROE) of 28 percent as of 2009.

According to MIX, by year-end 2009, Faulu Kenya had USD 56.8 million in total assets, a gross loan portfolio of USD 39.6 million, 102,000 active borrowers, ROA of -1.76 percent and ROE of -12.02 percent. In 2009, Faulu Kenya mobilized USD 26.3 million in deposits.

By Julie Moksim, Research Associate

About Faulu Kenya: Faulu Kenya was founded in 1992 as a pilot microlending program of Food for the Hungry International (FHI), a relief and development organization based in the USA. In 1999 it spun off into a limited liability company 70 percent owned by FHI. According to the Microfinance Information Exchange (MIX) Market, by year-end 2009, Faulu Kenya had USD 56.8 million in total assets, a gross loan portfolio of USD 39.6 million, 102,000 active borrowers, a return on assets of (ROA) of -1.76 percent and return on equity (ROE) of -12.02 percent. Faulu Kenya received a license to accept deposits in 2009 and was able to mobilize USD 26.3 million in deposits that year.

About Kenya Women Finance Trust (KWFT): Established in 1982, KWFT provides microfinance services exclusively to women. KWFT received a license to accept deposits in 2010. According to the nonprofit, US-based data provider Microfinance Information Exchange (MIX) KWFT had total assets of USD 195 million, a gross loan portfolio USD 134 million, 334,000 borrowers, return on assets (ROA) of 5.24 percent and return on equity (ROE) of 28 percent as of 2009. KWFT was able to mobilize KES 6.1 billion (USD 72.5 million) in deposits by the end of 2010.

Sources and Additional Resources:

Business Daily: “Microfinance Firms Profits Drop on High Setup Costs” by George Ngigi, April 1, 2011, http://www.businessdailyafrica.com/Corporate+News/Microfinance+firms+profits+drop+on+high+set+up+costs/-/539550/1136556/-/6faaptz/-/

MicroCapital.org Brief, April 22, 2010: Central Bank of Kenya (CBK) Licenses Kenya Women Finance Trust (KWFT) as Deposit Taking Microfinance Institution (MFI), https://www.microcapital.org/microcapital-brief-central-bank-of-kenya-cbk

MicroCapital.org Story, June 23, 2009: Faulu Becomes First Microfinance Institution in Kenya Licenses to Take Deposits, https://www.microcapital.org/microcapital-story-faulu-becomes-first-micro

MicroCapital’s Microfinance Universe Profile: Faulu Kenya
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Fau

MicroCapital’s Microfinance Universe Profile: Kenya Women Finance Trust (KWFT)
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Kenya+Women+Finance+Trust+%28KWFT%29

Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/

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