The Transparent Pricing Initiative in Kenya has published standardized pricing data from 18 institutions, representing the vast majority of Kenya’s active microloan borrowers. The Kenya Initiative was launched in January 2010 with a range of pricing and transparency workshops.Microfinance in Kenya
The Microfinance Act of 2006 set the blue print for regulating microfinance services in Kenya. The Act drew the distinction between regulating deposit taking and non-deposit taking microfinance service providers. The Central Bank of Kenya is entrusted with regulating and supervising deposit taking microfinance service providers. Subsequent Acts such as the 2008 Microfinance Regulations Act and Microfinance Categorization Act have strengthened and improved the general regulatory environment.
Although truth-in-lending legislation has not yet been enacted in Kenya, commitment towards consumer protection and the importance of truth in lending legislation is being recognized in the industry. Directive No. I/2011, issued by the Central bank, contains specific provisions relevant to consumer protection, disclosures and articles promoting public awareness.
The price graph presented below shows the prices of all the microloan products in the Kenya dataset. Each data-point represents a real loan given to a real borrower, calculated using original loan documentation from the institution. The size of the data-point correlates with the number of borrowers that have a loan of that product at that loan amount. The color of the data-point correlates with the Transparency Index of the sample. The interactive legend beneath the graph can be used to change the graph axis and labels. Try the custom feature to see price correlations with attributes such as loan purpose, institution type, loan term and percent of gross national income.
The pricing dynamics of the Kenyan microfinance market mirror the global trends observed, with an increase in prices correlating with a decrease in loan sizes. The Kenyan microfinance industry’s favoured pricing calculation method is flat interest rate – just 13% of Kenya’s borrowers access loans that use the declining balance interest rate method. Pricing trends are observed according to institution type and whether an institution is regulated.
|Institution||# Borrowers||Portfolio (US$)||Products||Transp. Index||Participating Since||Age of Data|
|Adok Timo||4,200||570,000||4||25||2010-Sep||92 mos.|
|ECLOF Kenya||20,500||5,455,000||8||25||2010-Sep||60 mos.|
|Equity Bank||135,500||94,746,000||9||48||2010-Sep||60 mos.|
|Family Bank||43,200||90,700,000||5||48||2010-Sep||92 mos.|
|Jamii Bora||2,400||3,374,000||4||31||2010-Jun||60 mos.|
|Juhudi Kilimo||10,400||4,436,000||2||57||2010-Sep||60 mos.|
|K-Rep Bank||65,000||28,743,000||4||41||2010-Sep||92 mos.|
|KWFT DTM||294,600||165,982,000||6||35||2010-Sep||60 mos.|
|Opportunity Kenya||9,100||4,866,000||5||27||2010-Sep||60 mos.|