By engaging in the communities, the lender not only provides financial support, but also equips entrepreneurs with the necessary skills and knowledge for sustainable business growth
During this year’s Think Business Banking Awards, Caritas Microfinance Bank emerged the Overall Best Microfinance Bank and the Fastest Growing Microfinance Bank in Kenya. The lender also became 1st Runners-Up in the Most Efficient Microfinance Bank and in Customer Satisfaction categories.
This victory, according to the MFB’s chief executive officer David Mukaru was due to the lender’s 8 years of focused faith-based business model.
Caritas MFB was licensed by the Central Bank of Kenya (CBK) in 2015, and since then it has been experiencing exponential growth, something that can be attributed to the massive success.
The MFB is one of the leading microfinance banks in the country. It provides financial and non-financial services to micro and small businesses, as well as individuals.
The decision to focus on microfinance was informed by the mission and support of the biggest shareholders, the Catholic self-help groups. Recognizing the need for accessible financing options for micro and small businesses in communities, Caritas MFB was established to facilitate easier access to financing and uplift these enterprises. By offering secure loans backed by collateral instead of requiring guarantors, the lender aims to create a more inclusive and supportive environment for individuals seeking financial assistance. The dedication of the Catholic self-help groups has greatly influenced the focus on microfinance and commitment to provide financial support to a wider range of individuals.
Road to Success
Caritas MFB has implemented several effective strategies to achieve success in the competitive industry. Firstly, the lender has fostered strong partnerships with local communities and organizations, particularly the Catholic self-help groups, who serve as significant shareholders. Their commitment and support have been instrumental in the success journey.
Secondly, the microfinance bank has prioritized financial inclusion by offering innovative and tailored financial products and services to cater to the needs of micro and small businesses and other individuals. Loan facilities have significantly simplified the borrowing process and increased accessibility to customers.
Thirdly, Caritas has made significant investments in financial literacy programs and capacity-building initiatives. These are aimed at empowering clients with the knowledge and skills necessary for sustainable business growth. For instance, during the second quarter, the MFB organized a Business Breakfast Meeting at Karuri Branch, conveniently located at St Martin De Porres Karuri Catholic Church. The primary objective of this event was to educate and express heartfelt gratitude to the esteemed Business Customers in the Karuri Area and to extend a warm welcome to new clients joining the network.
Overall, the combination of strong partnerships, customized financial solutions, and comprehensive capacity-building programs has been the key to Caritas MFB’s success in microfinance, enabling the lender to make a positive impact on the lives of individuals and communities it serves.
Caritas MFB Kawangware branch hosting a successful business breakfast meeting.
Caritas MFB has adopted various strategies to stay ahead and differentiate itself from its competitors in the microfinance market. Majorly, it focuses on its tagline, ‘Twaimarishajamii’. The lender strives to assist individuals in various ways to help them become self-sufficient. One aspect is by providing very competitive rates in the financial market.
Additionally, Caritas MFB has established partnerships with Radio Maria and Capuchin TV. These collaborations have enabled it to organize financial literacy programs. These programs aim to educate and empower clients with the knowledge and skills needed to make informed financial decisions.
An Uphill Task
Caritas MFB has encountered several key challenges in the microfinance industry. One significant hurdle is visibility in a highly saturated banking market. To overcome this challenge, the dedicated marketing team, in collaboration with the staff, has adopted an innovative approach aligned with our tagline, ‘Twaimarishajamii’ Recognizing the importance of reaching out to communities, Caritas MFB has strategically infiltrated spaces such as the ‘mama mboga’ space and’ bodaboda guy’ space by providing tailored financial solutions that are favorable to each target group and simultaneously imparting financial literacy. The aim is to empower individuals in these sectors.
Following the philosophy of ‘teaching a man to catch a fish,’ Caritas goes beyond traditional banking services. By engaging in the communities, the lender not only provides financial support but also equips entrepreneurs with the necessary skills and knowledge for sustainable business growth.
By addressing the specific needs of the communities and actively promoting financial literacy, Caritas MFB has successfully navigated the challenge of visibility while making a positive impact on the lives of individuals and the broader community.
Significant Trends in the Industry
The microfinance sector is experiencing major trends in the current time. Among them:
Technological Advancements which has impacted the microfinance industry in a major way. Mobile banking, digital platforms, and innovative payment solutions are transforming the way microfinance institutions operate, improving efficiency, reach, and accessibility for clients.
Focus on Financial Inclusion: This remains a prominent development in the microfinance industry. There is a growing emphasis on providing access to financial services for underserved populations, including women, rural communities, and small business owners, to promote economic empowerment and reduce poverty.
Blending Microfinance with other Financial Services: Microfinance institutions are expanding their offerings beyond traditional microcredit. They are incorporating savings accounts, insurance products, and financial education to provide holistic financial services, fostering long-term financial resilience and stability to clients.
Impact Investing: This seeks to generate both financial returns and positive social or environmental impacts. It is gaining momentum in microfinance. Investors are increasingly looking for opportunities to support microfinance institutions that align with their values and objectives, driving the industry towards greater sustainability and social impact.
Caritas MFB is adapting to stay ahead of the curve by implementing the ESG (Environmental, Social, and Governance) journey.
Environmental Aspect: Caritas MFB partners with organizations to advance sustainable development, indicating a commitment to environmental responsibility.
Social Aspect: Caritas MFB develops financial solutions that improve the quality of life and generate social impacts. Additionally, they strengthen consumer financial health, showing a focus on social well-being.
Governance Aspect: Caritas MFB fosters a culture of transparency and ethical behavior, demonstrating a commitment to strong governance practices. These actions align with the current trends and changes in the microfinance industry, where there is an increasing emphasis on sustainability, social impact, and good governance. By implementing these measures, Caritas MFB is adapting to these trends and positioning itself ahead of the curve.
Mr. David Mukaru, CEO, Caritas MFB (3rd left) is joined by other members of staff in receiving the 2023 overall Best Microfinance Bank Think Business Award.
Going forward, Caritas MFB has several strategies and initiatives in place to continue growing and expanding.
Firstly is geographic Expansion. Caritas MFB plans to expand its operations to new regions, aiming to reach a larger number of individuals and communities in need of microfinance services. Early this quarter, the institution successfully opened its Nakuru Branch on the 8th of May 2023. In line with expansion plans, Caritas aims to open four more branches in Kiambu, Githurai, Ruiru, and Nyeri. Furthermore, it will establish a marketing office in Homabay, enhancing its brand presence across the country. Progress is already underway in Nyeri, and is excited about the opportunities that lie ahead.
By expanding the geographic presence, Caritas MFB can extend its impact and provide financial inclusion to a wider population.
Secondly is product diversification. To meet the evolving needs of clients, Caritas MFB will focus on diversifying its product offerings. By offering a comprehensive range of financial products, the institution can better serve its clients and enhance their financial well-being, including financial services that are specifically targeted towards the youth in our communities and women.
Thirdly, is forging strategic partnerships and collaborations. Caritas MFB aims to forge strategic partnerships and collaborations with other organizations that can provide additional resources, knowledge, and networks. This will accelerate its growth and impact in the microfinance market.
Lastly, Caritas will engage in monitoring and evaluation. This will involve continually assessing the effectiveness of products, services, and initiatives, gathering client feedback, and making data-driven decisions. The aim is improving operations and ensuring maximum positive impact on clients and communities al large.
By implementing these strategies and initiatives, Caritas MFB aims to grow sustainably, expand its reach, and make a significant impact in the microfinance market.