Kenya: Faulu Unveils Plans for Banking

The Nation (Nairobi)
25 April 2008Posted to the web 25 April 2008
Nation Reporter

Nairobi

Faulu Kenya, a local microfinance institution, has unveiled Sh460 million expansion plan, as it prepares to change into a microfinance bank, and grow its customer base aboveone million.
Currently, the 17 year-old organisation's customer base is slightly over 100,000, and it holds over Sh1.5 billion in loans and advances. To mark its new look, Faulu Kenya rebranded, changing its corporate colours and logo.

"To finance our aggressive growth plan, last year Faulu obtained a Euro 5 million term loan from Deutsch Bank," said chief executive officer, Lydiah Koros. She was speaking after signing a currency swap agreement between her institution and Standard Chatered Bank, Kenya.
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The agreement will see Standard Chartered take over Faulu's Euro denominated loan, in return for an equivalent facility in Kenya shilling (Sh460 million under current exchange rates). Under the arrangement, StanChart will assume Faulu Kenya's obligations under the Euro loan to repay Deutsch Bank in Euros while Faulu Kenya will repay StanChart in shillings. "As our business is shilling-based, it became necessary to hedge the foreign currency risk," added Ms Koros. The money will be used to restructure its offices to meet Central Bank of Kenya requirements, as it seeks to turn itself into a deposit taking micro finance institution.

Established by Food for the Hungry, an international non-governmental organisation in 1991, has 60 offices in the country. "We are currently in the process of preparing to transform into a deposit taking microfinance institution, in line with the recently enacted Microfinance Act," said Faulu Kenya chairman, Ken Wathome.

The Act was passed last year. It is also in the process of acquiring a new banking system, T24, from Temonos Limited, joining five local banks that are already using the system in Kenya.

Source - http://allafrica.com/stories/200804250042.html