Commercial Bank of Africa Ltd. plans to become the nation’s biggest lender by clients through its mobile-banking service.
Closely held CBA plans to increase the number of M-Shwari mobile-banking customers by 32 percent to more than 10 million by the end of this year, bank Chief Executive Officer Jeremy Ngunze said in a July 8 interview in the capital, Nairobi. Those accounts hold an average of 1,000 shillings ($11.40), he said. Mshwari means smoothen in Swahili.
The bank’s M-Shwari unit has a loan-loss ratio below the industry average of 5 percent on the $80 million of lending it has made since starting in November 2012, Ngunze said. CBA will eventually target all 15.2 million mobile-money service customers on the network of Safaricom Ltd., Kenya’s biggest mobile-phone operator.
“We shall then become undoubtedly the largest account holder, including the top lender by number of people in the market,” Ngunze said.
M-Shwari allows individuals without assets to build a credit record through regular savings after which they are allowed to borrow small loans that can be increased progressively to as much as 20,000 shillings. Loans have to be repaid within 30 days at a flat interest rate of 7.5 percent.
Safaricom and Kenya Commercial Bank Ltd., the nation’s biggest lender by market value and outlets, on July 9 introduced a mobile banking product branded biashara smart, a Swahili phrase for smart business, targeting small companies.
CBA plans to have operations in 16 African nations by 2022, Ngunze said. The lender will build a presence in South Sudan, Rwanda, Burundi, Ethiopia, Mozambique, Angola, Zambia and the Democratic Republic of Congo through acquisitions, joint ventures or direct investments, he said. The company also currently has operations in Tanzania and Uganda.
In Tanzania, where CBA introduced a mobile-money service branded M-Pawa, which means gift in Swahili, in May, the bank already has 400,000 customers, Ngunze said.
Increasing capital requirements for Kenyan lenders will boost financial stability and spur mergers and acquisitions among the 43 commercial banks in East Africa’s biggest economy, Ngunze, who is vice chairman of the Kenya Bankers Association, said.
“The minimum capital requirements are still pretty low at $15 million,” he said. “There is probably room for us to consider increasing the level of capital which perhaps would force a level of consolidation in this market.”