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Centenary becomes third bank to unveil micro-loans to customers via mobile phones
Kampala, Uganda | ISAAC KHISA | Despite talk that micro-loans may not create a big impact on the economy, the scramble for a share of the small loans business by Uganda’s banking industry continues to gain momentum.
Centenary Bank and a fintech firm have become the latest financial institutions to unveil a mobile platform for micro-loan applications known as Cente Mobile Loan.The product comes via a partnership with Craft Silicon, a Kenyan-based software company.
Cente Mobile Loan Service runs on iOS, Android, Windows devices as well as USSD for those with non-smart phone devices, enabling customers registered with Cente Mobile to borrow instant loans from as low as Shs5, 000 to a maximum of Shs2million.
Planning to do some shopping but your debtors have not yet paid you?
Do not worry!
With #CenteMobileLoans, you can access money instantly to take care of that shopping. pic.twitter.com/XsLBcXh8zF
— Centenary Bank (@CentenaryBank) April 15, 2018
The loans are payable within 30 days at an interest rate of 5%, which translates into 60% per annum. It will not require one to pay for loan applications as well as processing fees as is the case withtraditional loans.
Robert Conwat, the head of micro-credit at Centenary Bank, said potential borrowers using the new service will be required to hold an account with the bank and also acquire a financial card.
“Once loan processing is complete – usually taking less than 10 seconds – themoney will be wired directly to the customer’s bank account,” he said. “It is from here that the account holder can decide to either withdraw the money using an ATM Card, Cente Mobile or transfer directly to another person or account.”
He said the loans are mainly meant to cater for emergency needs such as paying school fees, purchase of goods and services, paying medical bills, buying fuel among others.
The Bank’s Managing Director, Fabian Kasi, said the introduction of the new service is intended to promote financial inclusion.
“We serve over 1.4 million customers, majority of whom are low income earners located in rural areas,” he said, adding that the service is meant to enable the customers to access small instant loans, conveniently using mobile phones wherever they are, without the need to fill any paper work or visit the branch.
The entry of Centenary Bank, the country’s largest bank in terms of customer base, into the micro-loan business demonstrates commercial banks’ appetite to grow their business through such innovations.
In August 2016, Commercial Bank of Africa (CBA) unveiled MoKash – a micro-savings and loans platform – in partnership with MTN Uganda, and has seen customers grow up to over 2.5million.
The product, which enables customers get loans of up to Shs 1 million repayable within 30 days at an interest rate of 9% per month or 108% per annum, has so far seen the bank’s loan book grow within a year by more than Shs30bn.
Finance Trust Bank, unveiled Loan Ku-Ssimu service through its Trust Bank’s mobile banking platform dubbed Trust Mobile in March last year, and has seen a surge in the product uptake, with the customers hooked onto the system now standing at 5,420 as at the end of July last year.
The bank had disbursed Shs371million ranging between Shs100, 000 and Shs1million via mobile phones, charging a 5% interest rate per month or 60% per annum, payable within three months during the same period under review.
