Mwananchi Credit has reduced the rate on higher-risk emergency logbook loans from 6% to 3.50% to increase credit inclusion when borrowers are dealing with the effects of Covid-19.
All qualifying clients will receive a 100% waiver on all penalties and costs accrued during the pandemic period, thanks to the micro lender’s special Covid-19 alleviation program.
Dennis Mombo, the CEO of the micro finance company, revealed this on Thursday, stating that the company is aware of the country’s current economic condition, which has been exacerbated by the consequences of Covid-19.
“Our customers stood with us, and it is imperative that we stand by them as well. Hence our reason to waiver penalties and charges. As regards our rates, we are reviewing downwards our risk profile to accommodate more people affording our emergency financing solutions,” Mombo said.
Mwananchi Credit is the only microfinance institution in the country to use a risk-based lending model, a program that allows people to negotiate an interest rate depending on their risk profile. The lowest risk bracket presently qualifies for emergency funding with interest rates as low as 1.5 percent, while some of the larger risk brackets have rates as high as 6%.
This allows anyone with a logbook, whether adversely rated on CRB or not, to qualify for funding using an unique future-earning capacity credit scoring algorithm that qualifies applicants based on their future goals and ability to repay rather than their previous financial history.
Last week, the lender announced ambitions to expand to all 47 counties across the country by the end of the year, with at least one office in each of the country’s major cities. Kitengela, Thika, Mombasa, Eldoret, and Kisumu each have one branch of the Nairobi-based microfinance institution.