Kenya: Mega Gearing Up for Money Lending - AllAfrica.com

Jim Onyango

After failing to open up up a commercial depository financial establishment last year, a social welfare society that have been raising working capital from the public is preparing to establish a microfinance establishment next month.

Even though functionaries of the Mega Microfinance Company Limited state they will open their doors for concern on July 1, regulators-the Cardinal Depository Financial Institution of Republic Of Kenya and the Association of Microfinance Institutions (AMFI) -are yet to register the institution to have sedimentations from clients as provided for by the Microfinance Act 2006.

The Microfinance Act 2006, which was gazetted last month, states that no individual shall transport out any deposit-taking microfinance concern unless such as a individual is a company registered under the Companies Act or a wholly owned subordinate of a depository fiscal establishment or a financial institution.

The Microfinance Act additional gives the Central Depository Financial Institution of Republic Of Republic Of Kenya authorization to oversee microfinance institutions.

The Act came into being following numerous ailments by depositors who had lost their money in some microfinance establishments which collapsed between 2004 and 2005.

Officials of the Meru Embu and Gikuyu Association (MEGA) Enterprise Social Welfare Society said yesterday that the registrar of companies have got registered the Mega Microfinance Company Limited to run a money loaning concern in Nairobi.

"We don't have to register with the Central depository financial institution of Kenya since we will not be taking sedimentations from clients. We volition be loaning to the public" said Mister Kamau Muchuha, who have taken over as the president of Mega followers the surrender of politician Simon Peter Kuguru last year.

Caroline Karanja, a programs military officer with the Association of Microfinance Institutions, said Mega MicroFinance Company was not registered with the association which functions as an umbrella organic structure for 23 of the approximately 50 microfinance groupings that run in Kenya.

"But they can transport out their concern without taking in sedimentations from clients since they are registered only as a limited company" said Karanja.

A fiscal adviser linked with the launch of Mega Microfinance Company Limited said the company will be operating under the Companies Act since it have been registered as a "Limited" company.

The adviser who requested us not to advert his name because he is a manager in another microfinance establishment said Mega Microfinance Company Limited will progress between Sh5,000 and Sh400,000 to the little concern at 18 per cent involvement rate.

Mega have recruited about eight people to pull off the business, which will open up in Capital Of Kenya adjacent calendar month before spreading to other towns.

"We desire to project ourselves as a concern outfit that will make concern with the remainder of the country. We are not a regional outfit" said Muchuha.People championship the mega enterprise helped the organisation to raise Sh37 million to begin the microfinance institution.

Last year, the Mega social welfare grouping sold its shares to the public with an purpose of raising Sh250 million to begin up a banking institution.

The money raised from the sale of the shares which were trading at five Ugandan shillings each were pooled into a pool called the Mega Depository Financial Institution Promoters Fund and was meant to be used to pay-up the capitalisation amount required by the Central Depository Financial Institution of Kenya.

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But functionaries of the organisation clashed with the Central Depository Financial Institution of Republic Of Kenya (CBK) which dismissed the planned gap of the depository financial institution because its boosters had not even applied for a banking license.

Further the social welfare grouping failed to raise the targeted amount. "We raised about Sh37 million. We have got used Sh20 million as the initial working capital to begin the microfinance institution" said Muchuha.

Even though Microfinance establishments are famed the human race over as the vehicle to draw people out of poorness the conception of microfinance in Republic Of Kenya risked losing its entreaty followers outgrowth of pyramid strategies that collapsed that mutate into new word forms as soon as they are shud down by the authorities.