Small Loans, Big Dreams: How Jambo Capital Initiative is Transforming Lives

The Microfinance seeks to be the go-to financial institution that provides resources geared towards supporting the lower end section of the society

By Jennifer Nyawira

Registered in 2012, Jambo Capital Initiative is a non-governmental organisation with the sole mandate of alleviating poverty through the provision of microfinance services to the less privileged members of the society. Its main objective is to increase access to micro-scheme funding to micro, small and medium enterprises (MSMEs). “This is important because most MSMEs have no access to a bank account (they are unbanked), and they lack collateral to access the services offered by mainstream banks,” says Beth Micah, CEO of Jambo Capital Initiative.

Jambo Capital also seeks to promote financial deepening by contributing towards a steady increase in the number of adults and businesses that can access affordable financial services. “By so doing, we provide them with an opportunity to increase their income, become self-employed and improve their economic situations,” offers Micah.

Inspiration behind Jambo Capital Initiative

Having worked in the mainstream banks for a span of twenty years, Micah saw a need in the market that was not being addressed. She says that in one of the departmental rotations, she found herself in the sales department where they were called personal bankers. “During this period, I realized that quite a good number of people who wanted access to financial services e.g. loans did not qualify because they did not meet the minimum criteria that were required.” She therefore saw an opportunity, and that was how the idea of Jambo Capital was born.

In 2010, the Initiative was started in a very small way. They started by giving out business loans to start-ups. Within two years, Jambo Capital was able to break even. In 2013, the CEO took a step of faith and left the mainstream bank. This allowed her to dedicate all her time and services towards the Initiative. “My main inspiration to start Jambo Capital was to help the lower end customers who are in need of financial support, but cannot access it from the mainstream banks,” says Micah.

Services Offered

Jambo Capital Initiative offers a range of services from business loans, bodaboda loans, tuktuk loans and asset financing. They also offer solar and clean cook stove loans. The latter was introduced in a bid to participate in climate change and mitigation measures.

It also provides loan guarantee fund opportunities for the customers- also known as savings account. It is within Jambo Capital’s mandate to help their customers to save for their own use and for their loan guarantee.

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Why Jambo Capital?

The microfinance is led by a team of individuals who have the requisite knowledge and expertise. The CEO for instance has a stint of two decades in the mainstream banks. This means that Jambo Capital was not started from a level of learning, but rather from a level of leveraging on the experience and knowledge accumulated from the financial industry.

Furthermore, Jambo Capital has a reliable operating system that allows customers to access its services from wherever they are as long as there are M-Pesa services. This helps in serving customers within and outside the country.

“We have also incorporated the four pillars of sustainability in our business that is the human, social, economic and environmental pillars.” In the environmental pillar, the lender started the production of clean cook stove. This came after the realization that most people in the villages continue to use the three cook stones that are firewood intensive and releases a lot of carbon monoxide and fumes that affect their health. “We have actually started a production center where we do ceramic stoves, and so far, we have invented one that has a-four tier efficiency.” It is light, affordable and easily accessible.

All in all, Jambo Capital prides itself in getting it right every time it handles its customers. Certainly, it has stood the test of time, having been in business for over ten years.

Encouraging the Culture of Saving

There is no doubt that Kenyans are not saving enough. Factors such as low income, lack of access to formal financial services, lack of knowledge and cultural factors contribute greatly to the poor saving culture among individuals. Question is, what efforts are financial institutions putting forth to help Kenyans save more?

For Jambo Capital Initiative, leveraging on training is one of the ways it encourages its customers to save. “We do this by training them on how to access their fixed monthly expenditure.” They achieve this by recording and tracking their daily expenses. Jambo Capital then evaluates the expenditure to see what is necessary in terms of needs and wants, and helps them cut unnecessary expenses.

“We also help them create a savings goal – where do you want to be in one year? How much do you want to save in one year?”

Jambo Capital also helps its customers get accountability partners in the form of guarantors. Wherever somebody opens an account, they are supposed to provide a friend or two who will guarantee the loan. The guarantors help keep customers on track so that they can save consistently and borrow when need arises.

Monitoring their customers’ progress continuously through visits, phone calls and direct interactions also plays a major role in their saving journey.

Partnerships and Collaborations

Jambo Capital has partnered with major organizations in its bid to offer affordable financial services to its customers. For instance, it has partnered with Kenya Commercial Bank (KCB) who is their main banker.

It has also partnered with Safaricom who have given them a platform to attach their system.

Another partner is an environmental services company based in China that gave Jambo Capital a grant that it used to supply cook stoves to majority of homes in Kiambu and Muranga Counties. “So far we have given out over 25 thousand cook stoves and the feedback from people we have impacted is positive,” reveals Micah.

“At Jambo Capital, we continue to make partnerships that are meaningful and beneficial not only to us, but to the people we serve.”

Fostering Financial Inclusion

According to the CEO, financial inclusion means individuals and businesses have access to useful and affordable financial products and services that meet their needs. It captures the usefulness of the products that are being given and their affordability. “Our effective approach is to offer our customers affordable and accessible banking services which ensure they that are unbanked or under-banked are able to participate in a formal way.”

Challenges and Mitigation Measures

One of the main challenges faced by Jambo Capital is funding. Many people do not understand the difference between a non-profit and a for-profit Non-Governmental Organisation (NGO). ?In this case, some institutions tend not to fund NGOs. “We mitigate this challenge by constantly looking for partners who have similar ethics with us, those who buy our visions and leverage on the funding needs.”

Another challenge is repayment defaults. After the lending Act was passed, customers became aware of their rights. They for instance can borrow and fail to pay and nothing can be done to them. This in turn has affected the productivity and the quality of Jambo Capital’s portfolio. “To solve this, we have embarked on a rigorous way of vetting our loans, and covering about 90 percent of loans through the loans guarantee fund and guarantors,” says Micah. We also ensure that before loan disbursement, we understand what the customer does, where their businesses are located, and where they live. We also insist on knowing their rural origin so that we can follow them up in case of default.

Furthermore, inadequate investment in the rural areas is another challenge. Lack of enough investments lowers the economic power of people living there. ?In this case, while supporting them in their businesses, the lender is forced to start at the start up level, which is very risky. This means trying to start at the customer’s level and gradually grow together.

There is also the issue of inadequate social capital. You realize that because of the many informal groups that people have had before, and the experiences of money getting lost, many shy away from being guarantors for their peers. This slows down the amount of funding given, and in turn their growth.

Additionally, there is the human resource challenge. Many people seeking jobs, especially the youth are not settled. Their level of commitment in the workplace is very limited. The sales team is not as vibrant as it should be. Jambo Capital is resolving this by embarking on better recruitment criteria so that they can get the best who can be retained.

There is also the misconception of microfinance institutions (MFIs). Some people have lost their money having entrusted it to MFIs and Saccos. Therefore, many people continue shying away since they fear losing money. Jambo Capital is resolving this through continuous training and awareness forums where they let customers know the benefits of being in an MFI and how they can ensure that their funds are safe with them. “We have ensured that through our USSD code 48399#, customers can access their money at any time. You can open an account, save, refer a customer, and apply for a loan,” offers Micah. This has given customers some form of confidence explained by the way they have continued to embrace the Initiative.

Impact of Technology on MFIs

The impact of technology on microfinance institutions and particularly Jambo Capital Initiative cannot be overemphasized.

One of the major impacts technology has had on the lender is that its services have become more accessible. When Jambo Capital started, it had a large team that could go to the field, moving from one customer to the other collecting cash manually. The system was so inadequate and time consuming. This made its services inaccessible by many people. However, after automating the system, Jambo Capital did away with almost a half of the workforce.

Technology has also made the work more affordable both to Jambo Capital and its clients. We have for instance reduced the workforce, the cost of transport and also the expenses met by the clients during the field visits.

It is also much more efficient. Customers can efficiently get their balances, updates, and they can save at their own convenience.

Technology also helps in reducing the risk of fraud. Transacting via M-Pesa brings accountability since you can have an audit trail of all the transactions.

With technology, the underserved population can also save, borrow and repay their loans from wherever they are.

Future plans

Going ahead, Jambo Capital seeks to transform into a fully-fledged financial institution. The CEO reveals that a name has already been reserved.

“We also aspire to be the go-to financial institution that provides resources geared towards supporting the lower end section of the society. We want to be the place where people want to be in terms of their financial journey.”

Furthermore, Jambo Capital seeks to continue evaluating the options available to help eradicate poverty at a much faster rate. To achieve this, the lender is continuously looking for partners that are willing to offer affordable grants to clients.

In line with its environmental pillar, Jambo Capital seeks to have a fully automated production system so that it can include some of its customers by making them suppliers and distributors of the cook stove. By so doing, it leverages on its partnership to improve their living condition and give them a source of livelihood.