Kenya: Faulu Bank in deal with NGO Council to grow deposits

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  • Faulu Bank has entered into a mutual partnership with the Non-Governmental Organization (NGO) Council
  • The partnership will enable the partners to mobilize affordable deposits, as well as grow its Non-Funded Income (NFI) Line
  • The council will support the bank by ensuring that it partners with as many NGOs as possible and onboard them to get a product customized for NGOs, CBOs, and Churches

Kenya’s Faulu Bank has entered into a mutual partnership with the Non-Governmental Organization (NGO) Council, in a bid to mobilize affordable deposits, as well as grow its Non-Funded Income (NFI) Line.

Through pursuing partnerships such as this, the lender is banking on a long term and sustainable strategies that will ensure the growth of its Current and Savings Account (CASA) and NFI line.

Commenting during the ratification ceremony held in Nairobi, Faulu Bank CEO Apollo Njoroge said, “Signing of this Memorandum of Understanding today will offer us an opportunity to support the council in capacity development and providing financial literacy to NGOs and Community Based Organisations (CBOs) while advancing our products and service to the NGO sector”.

On the flip side, the council will support the bank by ensuring that it partners with as many NGOs as possible and onboard them to enjoy the benefits of its Imani Account – a product customized for NGOs, CBOs, and Churches.

The Account offers interests of up to 5% for an account balance of Ksh 10,000 and above in KES. This is besides allowing access to competitive Fixed deposit rates, access to Salary processing, 1st free cheque book and its available in KES, USD, GBP, EUR, ZAR.

“As a council, we have been having discussions with the bank and in the process expressed our desire for them to be pivotal in supporting and complementing the work that the NGOs are undertaking within the country. We are positive to support Faulu in any way we can to ensure that they partner with as many NGOs to achieve their mandate of capacity building through financial education,” said Samuel Githinji – Chairman NGO Council.

Currently, there are over 11,262 registered NGOs in the country that pursue various charitable purposes out of which 8,893 are active. In 2018/19, NGOs received a total of Ksh 165.97 billion which was an 8 per cent increase from the previous year. 88 per cent of these funds were raised from sources outside Kenya.

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Total expenditure for the NGOs was Ksh 172.1 billion, representing a 15 per cent increase from 2017/18. On project implementation, NGOs spent Ksh 78.8 billion on projects in various parts of the country.

The bulk of the project expenditure was on health, HIV/AIDS, education and relief/disaster management at Ksh 13.0 billion, Ksh 10.6 billion, Ksh 9.4 billion and Ksh 8.8 billion, respectively. Most charities implemented projects in areas with good infrastructures, such as Nairobi, Kiambu, Kisumu, Nakuru and other urban Centres.

Findings by the Bank shows that CBOs are doing more work in the community and as of 2020 it’s estimated that they utilized Kes 12,325,671 in terms of project funding.

The MoU signed today showcases the potential for the bank to open over 100 NGO accounts, mobilize over Ksh.150 million in deposits at rates lower than 1 year T-bill rate and earn over 2million in foreign exchange income.

The Bank shrugged off a tough operating environment due to the coronavirus pandemic, to record increased uptake of insurance products through its bancassurance unit. Photo: Business Daily Africa.

Growth in bancassurance

The deal comes at a time when the microfinance bank has seen significant growth in its bancassurance business following the successful automation of its insurance sales last year.

The Bank shrugged off a tough operating environment due to the coronavirus pandemic, to record increased uptake of insurance products through its bancassurance unit.

Overall sales from the bancassurance agency have so far hit Ksh 327 million this year, a 31 per cent growth compared to a similar period last year, driven by strong demand across the general and life insurance segments, as well as automation of services to boost efficiency.

Njoroge attributed the significantly improved performance in the bancassurance agency to enhanced operational efficiency, convenience and speed of service due to automation of processes.

Bancassurance is the selling of life assurance and other insurance products by banks, usually through a partnership with an insurance company.

Last year, Faulu completed the automation of its bancassurance operations at its more than 60 branches countrywide. The Rensoft system facilitates quick quotations and faster processing of insurance covers as well as the processing of insurance products underwritten by UAP Old Mutual Group and other licensed insurance companies in Kenya.

Kenya: Faulu Bank records 31% growth in bancassurance owing to automation

Wanjiku Njuguna is a Kenyan-based business reporter with experience of more than eight years.

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