Bimas Kenya: Champions of Financial Inclusion

For millions of Kenyans living on less than two US dollars a day, financial shocks such as illness, funeral expenses, livestock deaths, or crop failures can tip them or their families below the poverty line. 

While the traditional microfinance model provides financial tools to create buffers against such setbacks, there’s no “one size fits all” solution. The Grameen Bank model of microfinance gained global acclaim after early data showed that it was associated with high repayment rates and low default.

This model involves advancement of small loans, usually to women, without requiring collateral. In Embu County, Eastern Kenya, one microfinance institution is solving market failures and creating real value across the country, with a special focus on rural populations.

Headquartered in Embu town, Bimas Kenya mirrors the original Grameen Bank model: high repayment rates and low default.

At a time when the Kenyan banking industry is struggling with sky-high nonperforming loans, Bimas Kenya is one of the few credit-only institutions that have managed to contain nonperforming loans at around 3 percent, a major feat for any financial institution.

If data from the Central Bank of Kenya is any measure, nonperforming loans in the entire Kenyan banking industry stood at a staggering 15.5 percent as of February 2024.

“Nonperforming loans are a nightmare for any lender. For Bimas Kenya, we provide quality loans in small amounts that don’t place a huge burden on individuals and businesses. Our 2023-2024 loan book has a low NPL of 3 percent, attributed to our co-guarantee mechanism that’s efficient and effective, says Dr. Patrick Gathondu, Chief Executive Officer of Bimas Kenya.

With a presence in 19 counties, Bimas Kenya is a credit-only microfinance that provides access to financial and technical assistance services to customers for sustainable wealth creation.

The microcredit institution started as the lending arm of Plan International in the 90s when microfinance institutions were mushrooming to serve people at the bottom of the economic pyramid. Back then, Plan International was supporting parents in the former Gachoka division, now Gachoka constituency, to educate their children through microloans. The NGO would become foster parents to these children and cater for their school fee needs. Within a short time, their intervention grew in popularity, and the organization soon realized they couldn’t cater to the needs of as many students as they wished. That’s how the idea of Business Initiatives and Management Assistance Services (BIMAS Kenya) was born. It was incorporated in 1994 as a company limited by guarantee.

“BIMAS KENYA started really small, with a budget of Kes 5 million. Our goal is to realize sustained economic growth and employment in the rural sector with an end goal of enhancing social welfare and increasing the income of the rural population in Kenya.”

Having established a sustainable method of extending microloans to customers, the credit-only microfinance was on a growth trajectory.

Under the wings of Plan International, the new entity flourished, netting new customers and advancing credit to groups to transform their lives. Plan International supported the microfinance institution for three more years, providing financial and technical assistance (FATA) to prop the fledgling microfinance institution on its own feet.

In 1997, Bimas Kenya was incorporated as a company limited by guarantee, kicking off its eventful journey of transforming livelihoods.

In 2015, the board of directors at Bimas Kenya felt that the company had grown into a formidable lender with a significant number of customers and decided to build it into a limited liability company, far from the’NGO-like’’ identity that it had carved for itself.

With a clear vision and razor-sharp focus, they incorporated Bimas Kenya as a company limited by shares in 2017, enabling it to craft its bold future.

What began as a small office in 1994 with a loan budget of Kes 5 million has grown into a behemoth worth Kes 1.5 billion in assets and a loan book of Kes 1 billion.

Beyond its headquarters in Embu, Bimas serves over 45,000 customers from all parts of the country, thanks to their footprint of 40 offices spread across 19 counties.

Bimas Kenya understands the pain points of rural populations and innovates to create financial tools and products that offer promising economic opportunities to customers, uplifting their lives.

Today, the microcredit institution provides an array of products and services, all tailored to meet the needs of customers. They range from agribusiness loans, motorbike loans, water, sanitation and hygiene loans, business loans, insurance products, and consumer loans. Others include logbook loans and social product loans.

Central to Bimas Kenya’s success is their co-guarantee lending model that allows customers in groups to guarantee each other for loans. This method allows the lender to disburse quality loans in small amounts that customers are able to repay. With time, the loan limit for customers rises gradually as they walk the financial journey with the customer.

“Our average loan stands at Kes 30,000. For us, we look at what the customer needs and disburse the right amount so customers are able to repay on time.”

Looking back at the microfinance institution’s journey over the years, Dr. Gathondu is proud of the kind of impact his organization has made.

“From the onset, our goal was to alleviate poverty. We can proudly say we have achieved a lot more, transforming the lives of our customers.

He proudly shares about one customer who started with a loan of Kes 5000 and now qualifies for as much as Kes 15 million.

“For us, it’s not just about lending. It’s about a legacy of creating sustainable development. Our customers moving from small loans to qualifying for millions of shillings says a lot about the impact we are creating on the ground. Our rallying call to customers is to always be on the lookout for the next big thing.”

His greatest pride and joy is seeing farmers and business people scaling their businesses through Bimas Kenya, parents getting empowered to educate their children, customers moving from grass-thatched houses to modern structures, and entrepreneurs creating empires.

“We have also supported customers to get micro-insurance, helped others to pay for their medical covers, or even catered for funeral covers.”

How has Bimas Kenya managed to stay ahead at a time when the microfinance industry is facing headwinds? Dr. Gathondu attributes this to Bimas Kenya’s innovative ways of doing business.

“We uphold transparency with our customers. One of our differences with fintechs is that we have technology and touch, while fintechs are “tech and no touch. Nowadays, customers are no longer looking at costs; they are looking for quick turnaround times, efficiency, and good customer service.

He says that Bimas is among the few organizations that have never suffered from mission drift, a situation where companies move away from their initial mission and adopt new ones along the way.

“We were created to eradicate poverty, and that’s what we do even today.”

To remain true to their singular mission of eradicating poverty, Bimas Kenya aspires to stay focused on its target market, lending model, and transparency, and to continue advancing credit to youth and women.

“We always ask ourselves, are we still serving the bottom of the pyramid? What is the collateral? What percentage of women and youth do we serve? Once these questions have an affirmative answer, it’s an indication that we are still rooted to our mission.”

He says that most microfinance players have had mission drift and are now known for their opaque pricing models, which makes loans very expensive for customers.

“Some call themselves microfinance lenders, yet they charge hefty interest rates, sometimes on a daily basis. Others have hidden charges. For us, transparency is the key.”

Over time, the lender has partnered with various organizations to achieve their mission. These include the government of Kenya, UK-AID, GIZ, and many others.

Dr. Gathondu, a passionate pig and poultry farmer, knows a thing or two about the challenges that farmers and businesspeople face in their daily struggles to put food on the table.

Various studies have shown that relatively simple tweaks to microcredit products, including flexible repayment periods, grace periods, or the use of technology, could help customers to access and be able to repay loans and improve lenders’ bottom lines.

For Bimas Kenya, one of their tools of business is technology, which the lender has used to great effect. Credit officers using their tablets can carry the banking system with them to the field, enabling them to upload and process loans on the go.

“If you are in the market for livestock and you spot a cow that you really want to buy, you can call us immediately, and once the system approves your loan, you will get money disbursed to your phone to complete the purchase. That’s how fast our system is.”

Beyond technology, the lender has invested heavily in training customers, creating a place where they can easily interact with customers.

For Dr. Gathondu, a leadership and management expert, training customers ranks highly in his priorities, as he believes that there’s no financial inclusion where there’s no financial literacy.

“We endeavor to reach out to those who have been financially excluded to give them an opportunity to participate in financial markets.”

Training of customers on financial literacy is a win-win situation for Bimas Kenya. While their customers become prudent borrowers, the lender also gets lots of feedback from these sessions, allowing it to address customer issues on time.

With his knowledge, expertise, and experience in leadership, he plans to steer the lender to greater heights. For a long time, Bimas Kenya has incorporated social performance management (SPM) in their strategic plans, with great results. The lender is now transitioning into an Environmental, Social, and Governance framework (ESG) to gauge its sustainability efforts as well as its ethical impact, risks, and opportunities.

Having grown organically over the years, Bimas Kenya looks at a bigger, brighter future of empowering livelihoods. The lender has created over 180 direct jobs and uplifted thousands of people in various localities.

Going with their strategic plan, they would love to reach all the 47 counties in Kenya to enable their customers to get the benefit of convenience.

“Our plan is to serve five more counties in the next five years and all counties in the long term, says Dr. Gathondu.

Dr. Gathondu at a glance

Born and raised in Nyeri County.

Went to St. Mary’s School in Nyeri.

Attended Kagumo High School for his O’Levels education.

Is an alumnus of the University of Nairobi.

Is a CPA(K)

Holds a PhD in leadership and management.

Is a pig and poultry farmer