The Central Bank of Kenya has announced the 100-percent acquisition of Uwezo Microfinance Bank (Uwezo MBF) by Djibouti-based lender Salaam African Bank.
The Djibouti-based lender chaired by Ali Abdallah Hettam completed the transaction on March 25, the Central Bank was reported as stating by Business Daily.
“This follows CBK’s (ed. Central Bank of Kenya) approval on Dec. 24, 2020, under Section 19(4) of the Microfinance Act and approval by the Cabinet Secretary for the National Treasury and Planning on Jan. 12, 2021, pursuant to Section 19(3) (b) of the Microfinance Act,” the Central Bank stated.
The Central Bank did not reveal the amount paid for the acquisition.
In 2019, Kenyan microfinance banks saw massive losses as micro-lenders lost customers to mobile lending platforms, Standard Media reported. Of the seven microfinance banks in Kenya, only Faulu and Sumac Microfinance reported a growth in profit in 2019. Uwezo has maintained its loss-making streak as it struggles to navigate the financial sector’s process of digitization, according to some experts.
As of March 31, Uwezo MFB had a 0.45-percent market share of the microfinance banking sector and ranked tenth of 14 microfinance banks.
It has struggled to post profits in recent years after 12 years on the market. The apex bank thus stated: “The CBK welcomes this transaction which will strengthen the business model of Uwezo MFB and enhance the resilience of Kenya’s microfinance banking sector.”
Salaam African Bank is Djibouti’s largest lender by branch network and leading regional provider of financial services. An Islamic bank, it holds 30 percent of the bank accounts in Djibouti, with a presence in Ethiopia through a representative office. It has a presence in Kenya through an investment bank licensed by the Capital Markets Authority.