(3 minutes read)
· A Djibouti lender has acquired a 100 per cent stake in Uwezo Microfinance Bank in Kenya, which has been struggling to make profits despite its existence for the last 12 years
· The CBK has given the approval for the takeover on December 24, 2020 under Section 19(4) of the Microfinance Act
· Uwezo MFB had a market share of 0.45 percent of the microfinance banking sector
A Djibouti lender has acquired a 100 per cent stake in Uwezo Microfinance Bank in Kenya, which has been struggling to make profits despite its existence for the last 12 years. In a communication, the Central Bank of Kenya (CBK) announced that Djibouti’s largest lender by branch network Salaam African Bank (SAB) has completed the transaction on March 25, 2021. However, the regulator did not disclose how much the Djibouti lender paid for the takeover.
The CBK has given the approval for the takeover on December 24, 2020 under Section 19(4) of the Microfinance Act. The approval from the Cabinet Secretary for the National Treasury and Planning was obtained on January 12, 2021.
According to CBK, the transaction would strengthen the business model of Uwezo MFB and enhance the resilience of Kenya’s microfinance banking sector. The Islamic lender, which holds 30 per cent of the total bank accounts in Djibouti, has a representative office in Ethiopia. It also operates in Kenya through an investment bank licensed by the Capital Markets Authority. Uwezo microfinance was founded in 2008 and was licensed by CBK on November 8, 2010 as a community microfinance bank carrying out business in Starehe Division of Nairobi County.
Uwezo MFB had a market share of 0.45 percent of the microfinance banking sector. It was ranked 10 out of 14 MFBs as at March 31, 2021. Microfinance banks are struggling to keep customers as large banks and digital lenders are pushing them away from the t space. For instance, the 14 CBK-regulated microfinance banks posted a Sh1 billion loss in the 12 months to June—an increase from Sh0.7 billion loss that was recorded in a similar period the previous year.
