Microfinance to cash in on festive season with holiday loans

The festive season is always a time to be extravagant. Many households and individuals overshoot their budgets by miles, meaning that 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, offering credit to offset school fees and holiday splurge at a discounted rate of 5.9 percent.

“In order to make this season memorable, we are advancing school fees loans, holiday loans and asset financing to our clients at discounted rates,” said Jijenge Credit Limited managing director Peter Macharia.

For school fee loans, the applicant needs to come with the admission letter, fees structure, their National ID, KRA PIN, and bank or M-Pesa statements.

The lender also says it will process the loans fast in between between 30 minutes and one hour, once all paper work has been approved.

Mr Macharia noted that this ability to quickly disburse huge amounts up to a maximum of Sh10 million has seen Jijenge stave off stiff competition from money-lending apps.

The firm, he added, will also quickly process the holiday and school fee loans because of the urgent need of the applicants.

Clients are able to 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,” he added.

The repayment schedule is weekly or monthly, and repayment period is betwen three months and one year.

“Higher amounts attract lower interest rates,” he told Enterprise.

Mr Macharia noted that 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.

“It is expected 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,” said Mr Macharia.

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, Mr Macharia said, 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,” he said.

Rental income loans, a new loan product for landlords to renovate their property or access quick cash for personal use attracts 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.

“We vet carefully from their bank statements and assets. The elimination of double registration of motor vehicles by the National Transport and Safety Authority (NTSA) has helped to keep logbook loan defaults and frauds at a minimum,” he added.

Jijenge Credit Ltd is also involved in bid bonds issuance for business people in government tender projects. The firm charges 0.8 percent of the amount of bid bond, which is also bank guaranteed.

Contractors only need to take their national identity card and tender documents to have their bid bond processed within 30 minutes.