MICROCAPITAL STORY: Jamii Bora Trust, Microfinance Institution Based in Kenya, Reaches $38m in Loans; Backers Acquire City Finance Bank

The Jamii Bora Trust reached a total loan portfolio to KES 3 billion (USD 38.3 million) this week. Over 329,000 loans have made by the microfinance institution (MFI) since being established in 1999. The Founder and managing trustee of Jamii Bora, Ingrid Munro said, “we expect the total loan disbursement to hit the Sh4 billion (USD 51 million) mark by the end of this year, if the current pace is maintained”. The MFI’s shareholders have also acquired a controlling interest in City Finance Bank, a public company. A trustee on the board of Jamii Bora, Kibuga Kariithi, declined to provide details, saying that “the transaction is confidential because it is still subject to regulatory approvals”.

City Finance Bank was established in 1985 as a finance company and converted to a commercial bank in 1996. In 1998 the bank collapsed along with several others at the time. It was the only bank to reopen and at that time became a public limited company. A year ago a consortium of local investors, Baraka Africa Fund (BAF), and other individual investors acquired a 51 percent controlling interest in the bank, looking to restructure it. As at 30 June 2007 City Finance had KES 510 million (USD 6.5 million) in Total Assets and a Net Loss of KES 10.7 million (USD 137,000).

Jamii Bora Trust, meaning ‘good families’, was established in 1999 when the Founder extended loans to 50 street beggars in Nairobi, Kenya. Currently it has 100 branches across Kenya run by staff who were originally members of Jamii Bora. Many of its members are street beggars or former street beggars, prostitutes and thieves. Members become part of a five member credit group who guarantee each other’s loans. Loans are small with an average loan size of KES 7,209 (USD 92).  Members must open saving accounts first and can then borrow twice as much as they have saved after a minimum of 6 weeks. A variety of loans are offered to members – loans for microenterprises, school fees, health and housing. Technology is increasingly playing an important part in the expansion of Jamii Bora with POS (point of sale) machines being used to register new members and track each transaction thereafter. No detailed financial information is available as Jamii Bora does not report to the MIX Market, the microfinance information clearing house.

Jamii Bora also offers microfinance add-on services such as health insurance and housing. The 2009 State of the Microcredit Summit Campaign Report highlighted the work of Jamii Bora and its unique health insurance and housing initiative for the poor. The health insurance program was developed in response to the finding that 93 percent of members that defaulted did so because a family member was sick and in hospital.

Unitus, an international non-profit organization, and Jamii Bora formed a partnership in July 2004 when USD 300,000 (in local currency) was loaned to Jamii Bora. The loan was refinanced in February 2005 with Unitus providing the USD 1 million guarantee. Unitus has also disbursed USD 218,000 in grants to Jamii Bora. In December 2008 it was reported by MicroCapital that Unitus and the Whole Planet Foundation (WPF) formed a partnership with Jamii Bora to expand into the coffee-growing regions of Kenya. The exact details of the partnership were not disclosed.

By Sally Levy, Research Assistant

Additional Resources:

The Standard: With Sh3b war chest, Jamii Bora can play the big league

The Standard: City Finance Bank in makeover bid

Jamii Bora Trust: Home

Microfinance Insights, vol. 9, Nov/Dec 2008. Off the Streets and into a ‘Good Family’, a conversation with Ingrid Munro, Founder, Jamii Bora.

MicroCapital Story: Unitus, Inc. and Whole Planet Foundation Announce Partnership With Jamii Bora Trust, a Kenyan MFI

State of the Microcredit Summit Campaign Report 2009, by Sam Daley-Harris, pgs 6 -9.

Unitus Inc.: Home

City Finance Bank: Home

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