Milliam Murigi @millymur1
Having worked in the banking industry for more than two decades, Peter Macharia knew too well where the gaps were.
That is why when an opportunity for an early retirement emerged in his company, he did not hesitate to take it up. Although his decision didn’t go down well with his family, he was determined to leave formal employment and venture out on his own.
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“I was so much determined to start my own business that immediately after quitting employment, I started my company. Because of the rush, I made some few mistakes, which I have managed to solve now,” says the 49-year-old father of two.
Macharia, who was working for a local bank, rose through the ranks from a bank clerk to a regional manager in charge of Mt Kenya region before he left in 2014 to start Jijenge Credit Limited (JCT), a non-deposit taking micro-finance lending institution headquartered in Nairobi.
Target market
“When I was working in the banking industry I realised there was a group of small–scale businesspersons often neglected by banks when it came to offering credit. This is why I started JCT with the idea of providing credit facilities to this group of people.”
With a capital of around Sh1 million, Macharia registered the business formally and rented an office in Westlands, Nairobi. However, things didn’t work as expected because the location was not accessible to a majority of his target customers.
After three months of running a loss-making business, Macharia decided to relocate. He rented another office in the central business district. By then, the company was offering unsecured loan services, meaning one needed not to provide any property or collateral to secure or guarantee the loan.
“Our main target ranged from small-scale businesses such as salons, vegetable vendors, beauty parlors, etc. We were interested in customers who make money on a daily basis.”
However, upon realising the risks involved in an unsecured loan such as higher interest rates, which made individual loan payments higher and more difficult to afford, the company decided to move to a new model: offering secured loans against logbooks, NSE shares and title deeds.
He also reduced interest rate charged from 30 per cent to 5.9 per cent. Additionally, to ensure that the company remains competitive, they reduced the turnaround time (the amount of time taken to complete a process or fulfil a request) to just one hour, something never done before. This has made the brand grow countrywide.
“We have entered into different contractual agreements with various service providers who are able to service our customers in different parts of the country,” he says, adding that even though secured loans offer lower profit margins unlike unsecured loans, the risk of losing your money is almost fully eliminated.
With the new model, their focus is on growth-oriented SMEs and individuals seeking to unlock the banking and financing potential in the financial industry.
“We have partnered with different agencies and third-party service providers to ensure that all our paperwork is done immediately. This has helped us achieve our turnaround time,” he adds.
On how they keep ahead of competition especially with many upcoming lending organisations and mobile application, Macharia says that competition is healthy for every business and they don’t fear competitors. But their model, experience and the quality customer service have helped them remain relevant.
“We disburse between Sh5,000 andSh10 million to individuals, something other lending organisations such as banks and mobile apps cannot manage because they have a limit,” says Macharia.
Expanding services
He revealed that they have also expanded their services to asset financing, local purchase order financing, cheque discounting, bid bonds, car/good import duty finance, financial /business consultancy, check-off/salary loans, and emergency loans.
His future plan is to grow the company base, currently at 25,000 customers, to over one million and also expand to the East African region. Equity Bank is their role model and they are aiming at making JCT something similar to this in the long run.
But what keeps the company going? He says that unlike other institutions, which move faster to possess customer’s property once the customer has challenges in paying, JCT works closely with such customers and if the case is genuine, they can write off the unnecessary penalties or the whole loan.
“We have a very good customer relationship management policy. We visit our clients and listen to them, something which can lead to an extension of the payback period,” he adds.
Currently, the company has 15 full-time staff and has managed to open branches in Kiambu and Nakuru. It has also introduced an online platform where one can directly apply for a loan without visiting their offices.
