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Africa Outlook

Sumac Microfinance Bank
Africa finance
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Kenya banking
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SUMAC MICROFINANCE BANK

Sumac Microfinance Bank’s rapid growth over the course of little more than a decade is showing no signs of slowing down as it stays true to a philosophy of helping others succeed

Empowering Business

Writer: Matthew Staff

Project Manager: Callum Philp

 

Sumac Microfinance Bank’s wide range of products has made waves in Kenya’s industry due to its bespoke nature and close adherence to the very latest market trends.

Varying across fixed and savings accounts, short and long-term loans, the business which originally began as a credit-only financial services provider continues to diversify its offering with the most timely and appropriate solutions available in the sector.

“The fixed account offers attractive interests while the savings accounts are flexibly designed to meet the banking aspirations of various customers,” explains the Company’s Chief Executive Officer (CEO), John Njihia. “The savings accounts include the Mapato Account that gives salaried customers more value and flexibility in account transactions; the Jumuiya Account designed for organised and investment groups; and the Jipange Account for customers who want to save regularly for a future project.

“In terms of loan products, the Bank offers a wide range of facilities cutting across personal loans (salary advances), group loans and business loans, working capital, LPO financing, asset financing, insurance premium financing, bid bonds, bridging loans, and many others.”

Established in 2004 with a seed capital of only $5,000, Sumac Microfinance Bank was able to mobilise the $600,000 share capital required by the Central Bank of Kenya in a span of just a few years to be licensed as a deposit taking microfinance bank.

Today the Bank boasts a share capital in excess of $900,000 and continues to innovate and update its service range to align itself with its ambitious growth plan and ultimate goal to transform into a fully-fledged commercial bank. 

“Sumac Microfinance Bank is driven by the inherent philosophy that ‘there is no more noble occupation in the world than to assist another human being to succeed’. Based on this philosophy, the Bank is constantly analysing the changing trends and needs of customers and responding with appropriate solutions,” Njihia says.

He adds: “As the Kenyan economy continues to grow and businesses are more empowered, the demand for bigger loans is growing. As a response, the Bank has been mobilising for cheap and long-term loans from both local and international investors to shore up its capital base. Already a number of investors have come onboard and negotiations are ongoing with others.

“In terms of products, the Bank has, in recent times, launched products like ‘PataRaha’ that is aimed to finance individuals and families who have not saved for a holiday but nonetheless wish to enjoy one; and ‘PepeanaKaro’ that enables parents to access school fee loans at affordable interest rates.”

Seamless and real-time services

Agricultural and religious groups are also aided by Sumac’s commitment to quick market responses, which have been largely facilitated by its equally focused mission to embrace the very latest technologies and mobile banking avenues as alternative delivery channels.

Extensive levels of research and development and market analysis have been the driving forces behind Sumac’s ongoing drive for operational excellence, the success of which is becoming all too evident when exploring its inception only 12 years ago.

Sumac Microfinance Bank was established in 2004 by a group of 14 friends who came together as an investment club, popularly known as a chama (group methodology) in Kenya. The Bank subsequently started as Sumac Credit Ltd with a mission to empower entrepreneurs who could not unleash their full potential due to the tough condition of accessing credit from commercial banks.

The Bank later transformed into a microfinance institution and upon the enactment of the Microfinance Act in Kenya, it applied and was licensed by the Central Bank of Kenya as a deposit taking microfinance bank.

Today, Sumac Microfinance Bank is a fully-fledged operator with a clientele spanning both small and medium-sized enterprises and is one of only 12 licensed deposit taking microfinance institutions in Kenya with a presence in both the Nairobi and Kiambu counties.

“There are now plans to venture into other parts of the country to follow our clients who are distributed all over,” Njihia continues. “Internally the Bank has invested heavily in a core banking IT system integrating all its branches, thus being able to offer seamless and real-time services.”

Strong strategic partnerships with the likes of Kenswitch and Safaricom further compound the growing footprint that Sumac is enjoying in the country, with customers being the main beneficiaries as they are able to access banking services around the clock as well as a host of multiplatform banking opportunities and the full range of account services.

Competitive edge

When on such a steep growth trajectory, the need for equally ambitious and competent staff is heightened, and Sumac Microfinance Bank ensures this requirement is catered for by employing the most qualified and experienced personnel across all departments.

Engulfed within this workforce is a similarly driven pool of young employees who also understand the dynamics of the ever-changing market, before receiving optimum training and guidance to hone those skills in the long-term.

“While retaining talent in the industry is a challenge, we strive to hold on to our best talents through training opportunities, both in-house and external, and by creating a ‘family setup’ where employees feel their welfare is of importance to the management. Indeed, we strive to make Sumac an employer of choice,” Njihia explains.

As a responsible corporate entity, this ethos stems further into the business via its corporate social responsibility (CSR) activities, understanding the environments in which it operates before striving to generate opportunities, innovations and competitive advantages for organisations while solving pressing social needs.

“Product innovations are another critical strategy for Sumac,” Njihia adds. “The Bank is currently working on a non-collaterised product as part of its commitment to continue serving the bottom of the pyramid customers who have largely been ignored by mainstream financial institutions.”

Selling value and efficiency across everything the Bank does, its CSR initiatives aren’t too much of a stretch from its everyday functions, and this streamlined and entrepreneurial structure overall looks set to cement its position as one of the fastest growing and reliable microfinance banks in Kenya.

“Sumac’s competitive edges include our unmatched speed in delivery of services and products – our turnaround time is 48 hours – our dedicated workforce and our flexibility; and our five-year strategic plan will see a significant transformation in terms of brand visibility – four new branches every year from 2016 – as well as our clientele base tripling in the next five years, and the size of our loan and deposit books doubling every year,” Njihia concludes. “This will be achieved by the continued focus on the micro, small and medium enterprises which is our niche market.

Sumac is seeking to deepen its presence in the banking sector and the journey towards this noble proposition has begun with the introduction of current accounts, foreign exchange services and joining the national payment system, which are all in the offing.