Church in Kenya Consortium Capital Finance Initiative Through UFALME CAPITAL FINANCE AND HELPERS OF AFRICA BENEFITS AND BENEFIARIES FOCUS TO ERADICATE POVERTY AND EMPOWER MILLIONS OF CHRISTIANS IN KENYAN AND AFRICA THROUGH ECONOMIC EMPOWERMENT INNITIATIVE OF BUSINESS START UP, BUSINESS DEVELOPMENT, GROWING AN ENTREPRENUERSHIP CULTURE TO PROMOTE SELF EMPLOYMENT AND JOB CREATION ALONG WITH ENTREPRISE DEVELOPMENT AND TALENT DEVELOPMENT BY PROVING IDEAS, FACILITES AND FINANCING STRATEGIC PLAN GROW THE COMPANY INTO A MICRO-FINANCE AND FINALLY A BANK UFALME -Kingdom Finance Capital Limited Ufalme Finance Capital - Microfinance institution that has been Registered with an aim of providing a platform for the Christian .Entrepreneurs to be equipped with Business skills and micro loans so as to Enhance business growth and Economic empowerment within the Christian community. OUR FOUNDATION It is based on the Bible and in particular Deuteronomy 8 verse 18(NIV) “But remember the LORD your God, for it is he who gives you the ability to produce wealth, and so confirms his covenant, which he swore to your forefathers, as it is today”. VISION It is based on the Bible and in particular Deuteronomy 8 verse 18(NIV) “But remember the LORD your God, for it is he who gives you the ability to produce wealth, and so confirms his covenant, which he swore to your forefathers, as it is today”. MISSION To empower and equip Christian entrepreneurs with Biblical business principles and skills through trainings and mentorship programs and financial empowerment through loans to members OBJECTIVES • To create employment and income opportunities through creation and expansion of micro-enterprises • To increase the productivity and incomes of Christian entrepreneurs • To help existing businesses grow or diversify in their activities. • To equip Christian entrepreneurs with business skills by providing technical and financial assistance Core Values- Empowerment, Integrity, Lordship of Jesus Christ, Job Creation, Excellence, Accountability and making Christianity relevant. Reward of Financers and Partners 1) We shall have the joy together to see millions of Kenyans empowered 2) We shall participate in transforming lives and communities economically 3) Job creations through enterprise development and self employment 4) Community humanitarian work and Charity as we return to the community 5) Sharing of Profits ( which can be discussed ) 6) Wealth transfer thus fulfilling scriptures SWOT ANNALYSIS Micro-enterprise and Microfinance Potential Report in Kenya Two major factors play into Kenya’s economic situation – wealth disparity and a lack of economic growth. Currently, the richest 10 percent of the Kenyan population controls almost half of the nation’s wealth while the poorest 10 percent hold less than 1 percent. The continuous extraction of resources from the poor to the rich perpetuates many negative economic influences, including a lack of hope that hard work will pay off – a belief that is vital to the economic growth and motivation of developed nations. During the past 15 years microfinance has gained enough support from both the Government of Kenya (GoK) and International Donors to be considered an industry in itself. An estimated USD 80 Million has been received by the micro-finance industry in Kenya thus far. In the early 1990s, the GoK established a Structural Adjustment Program that liberalized the economy and caused the GoK to support micro-enterprises to counter possible negative effects of this liberalization. Kenya was interested in supporting entrepreneurial development, hastening economic growth, and creating employment opportunities that were all considered to be hindered by lack of credit, and limited access to financial services in rural areas. Kenya's banking infrastructure is so poor that it doesn't reach 81 per cent of the adult population. Even though just 19 per cent of the adult Kenyans own bank accounts, over 54 per cent of the adult—including the rural poor—own mobile phones. The use of mobile phones for micro-transactions has attracted huge interest in a country like Kenya, where only 6.4 million out of a population of 36 million have bank accounts. Kenya has a large potential of unreached, unbanked population. Many of whom are involved in various small income generating projects but have no avenues of saving or accessing credit. Currently it is estimated that there are about 6.4million people in Kenya who are banked. Over the last 20 years, microfinance institutions in Kenya have largely developed through concerted grant funding. This situation prevailed up to the late 1990s when key donors started pushing MFIs to start moving towards sustainability in their operations. Most MFIs in Kenya had started off as NGOs and had built significant supply side competencies. The push towards sustainability was therefore not going to be easy for institutions previously focused on free spending outreach drives, rather than sustainable operations. It was also difficult for those that had significantly grown and expanded operations on grant funding to suddenly have to look for alternative sources of capital as donor funds either dwindled or became inadequate to sustain the growth momentum. During this period, many MFIs seized the moment and incorporated as private capital companies. Others, like K-Rep, chose the route to formal commercial banking with a multiplicity of ownership. By early 2000, the landscape for microfinance was changing, and changing for good. What eventually became clear was that donors were willing to provide funding for capacity building but not capital for lending purposes. This new shift heralded the beginning of an almost desperate search for capital from various sources, a case applicable to all MFIs. Microfinance is the provision of a wide range of financial services and products ranging from savings credit facilities, money transfer and micro insurance to the economically active poor, low-income households and Small and Micro Scale Enterprises (SMEs) in both rural and urban areas, using innovative delivery methodologies and channels. Microfinance plays a key role in increasing access to financial services and products thus empowering households improve their welfare and manage risks. It ultimately contributes to poverty reduction. Microfinance is provided by a variety of institutions of different institutional forms that can be clustered into three broad categories, namely: Formal {commercial banks and Kenya Post Office Savings Bank (KPSOB)},Semi-formal{Savings and Credit Co-operatives (SACCOs and Microfinance Institutions (MFIs)} and informal institutions such as Accumulation and Rotating Savings and Credit Associations (ASCAs and ROSCAs), shopkeepers and money lenders. As at 31st December 2007, there were 4 mainstream commercial banks undertaking microfinance business in Kenya, namely: Equity Bank , Co-operative Bank, K-REP Bank and Family Bank. The number of commercial banks involved in microfinance, though still small, is growing and the current ones are increasing their microfinance portfolio rapidly. Several commercial banks have shown a lot of interest in the microfinance sector and a number of them are down-streaming. On the other hand, KPOSB as at 31st December 2007 had approximately 1.3 million clients and Ksh 11.54 billion savings. KPOSB offered its products and services through a network of 80 branches, 5 sub-branches, 395 outlets and over 400 savings locations operated on agency basis by the Postal Corporation of Kenya (POSTA) throughout the country. As at 31st December 2007, there were 5,122 registered SACCOs with an estimated 3.3 million members, a share capital and deposits base of Ksh 160 billion and loans outstanding amounting to Ksh 110 billion. SACCOs are classified into different categories based on their commonbond for example, salary, jua kali, cash crop (coffee or tea), transport, community or trader based. The SACCO movement is indeed a key vehicle for expanding affordable financial services and products to majority Kenyans, especially the low-income households and SMSEs in both urban and rural areas. The number of MFIs countrywide is largely unknown. However, the Association of Microfinance Institutions (AMFI), as at 31st December 2007, had a membership of 34 institutions comprising of NGOs, companies, trusts, societies, and commercial banks, among others (AMFI, 2008). Twenty one of these institutions were retail Microfinance Institutions with an aggregate of 742 outlets with 2,494 staff; and a loan portfolio of Ksh 4.261 billion. These institutions had an estimated 1.1 institutional savers and 250,000 borrowers. Access to Financial Services and Products There is widespread understanding among Kenyans and financial sector stakeholders that there is constrained access to financial services and products in Kenya, particularly amongst the economically active poor, low-income households and SMSEs in both rural and urban areas. Efforts have been undertaken to measure and track progress in access to finance. According to the Finances study, undertaken by the Financial Access Partnership (FAP), and launched in January 2006, only 19 per cent of Kenyans had access to formal financial services through commercial banks and the KPOSB. An additional 8 per cent of Kenyans were served by SACCOs and MFIs, while 35 per cent of Kenyans depended primarily on informal financial service providers such as ASCAS and ROSCAs, shopkeepers, and money lenders. These findings indicated that about 62 per cent of the Kenyan population accessed financial services and products using formal, semi-formal and informal providers, leaving about 38 per cent of Kenyans with no access to any form of financial services and products. Hence, there is constrained access to financial services and products in the low income bracket. The banking industry and KPOSB as at 31st December 2007 had about 4.4 million and 1.3 million savings accounts, respectively, while MFIs and SACCOs had about 1.1 million and 3.3 million savers respectively. This brought to about 10.1 million saving clients served by the formal and semi-formal financial service providers out of a total population of about 37.2 million Kenyans, translating to about 27 per cent of the total population.The CBK financial sector development strategy is based on three pillars namely: Efficiency, Access and Stability, in line with the Government policy as outlined in Kenya’s vision 2030. Government policy is to expand access to financial services and products. Access to Financial Services in the Banking Sector One of the key pillars of the financial sector is to increase to financial services and products to the majority of the Kenyan population. There continues to be many impediments that prevent the approximate 38% of the un-banked Kenyans from accessing financial services. A number of financial institutions have put in place strategic programs to expand their outreach to rural areas that are not adequately served. Consequently, the banking sector branch network increased by 165 from 575, branches in December 2006 to 740 in December 2007. As shown in Appendix vii the total number of deposit accounts in the sector increased by 42.3% from 3,329,916 accounts in 2006 to 4,738,144 in 2007. The total number of deposit accounts in the sector increased by 42.3% from 3,329,916 accounts in 2006 to 4,738,144 in 2007. As shown in appendix viii, in the large category, Equity Bank Limited registered the highest growth of 183.96 per cent in the level of insured deposits up from Ksh 8,610 million to Kshs 24,450 million in 2007. Chase Bank and Equatorial Bank in the medium and small peer group category recorded an increase in the DPFB exposure by 145.21 per cent and 116.62 per cent respectively. Overall customer deposit increased from 597,874 million in 2006 is Kshs ADDATIONAL CENTRAL BANK MICRO-FINANCE ANALYSIS POTENTIAL REPORT 1.2 million active deposit accounts/clients,a 7.7% drop compared to 1.3 million in 2007 and 1.1 million in 2006,Kenya post office saving bank total deposit dropped by 12.4 % to Ksh 10.1 billion in 2008 compared to Ksh 11.54 billion in 2007 and Ksh 12.1 billion in 2006.The institution’s total assets slightly dropped by 5.0% to Ksh 15.3 billion in 2008 from Ksh 16.1 billion in 2007 and ksh 14.9 billion in 2006.KPOSB operates a nationwide network comprising of 87 branches,an increase of 2 branches compared to 85 in 2007 and 75 in 2006. Microfinance institutions. The exact number of microfinance business practioners operating country wide is largely unknown.However,the Association of Microfinance Institutions(AMFI),as at 31st December 2008,had 34 registered members.30 AMFI members are retail microfinance institutions with 1.44 million active deposit accounts/clients,an increase of 41% from 1.02 million in 2007 and 0.72 million in 2006.The value of total deposits excluding commercial banks increased by 33.8% to Ksh 15.80 billion in 2008 compared to Ksh 11.81 billion in 2007 and Ksh 8.19 billion in 2006,whilst the total assets increased by 42% to Ksh 45.83 billion in 2008 compared with Ksh 32.28 billion in 2007 and Ksh 21.41 billion in 2006.These institutions had an aggregate of active loan clients of1.26 million, a 32.6% increase compared to 0.95% million in 2007 and 0.66 million in 2006 and value of total loans disbursed during the year increased by 41.6% to Ksh 47.52 billion compared to Ksh 33.56 billion in 2007 and Ksh 22.84 billion in 2006;whilst the total outstanding loans increased by 67% to Ksh 35.38 billion from Ksh 21.18 billion in 2007 and Ksh 14.04 billion in 2006.These 30 AMFI members operated a total of 825 branch offices in 2008 a 27.3% increase from 648 and 531 in 2006. According ti information available,the number of sacco societies as at December 31,2008 was 5350,a 4.5% growth compared to 5122 in 2007 and 4876 in 2006;Sacco Societies’ membership increased by 15.7% form 5.35 million in 2006 to 6.19 million members in 2007.The aggregate savings deposits increased by 39.3% to Ksh 53.61 billion in 2007 from Ksh 38.47 billion in 2006,while the share capital increased by 11% to Ksh 123.16 billion in 2007 from Ksh 110.93 billion in 2006.The total outstanding loan portfolio increased by 8.9% to Ksh 104.98 billion in 2007 from Ksh 96.36 billion in 2006. Strengths • Goodwill from the Christian community we are addressing through the provision of business training initiatives and micro loans to start up. • Product & service diversification thus gaining a competitive advantage. • Back up of the 40,000 churches and 2000 christian para church institutions. • A very dedicated & Professional SMART team • The only Christian MFI with a mentorship programe • The management(SMART) team is made up Christian entrepreneurs from a various churches with very strong entrepreneurial backgrounds & Professional skills Opportunities The opportunity market base is very huge and already networked reaching huge potential customer base of about 24 Million. I have impacted and reached over 25,000 Pastors and Church leaders who influence this target group and the induction is still on. The training have already prepared people to receive the financing and management through a comprehensive entrepreneurship training to motivate and train on business ideas generation, Business start-up, Business Development, Talent development and professional advancement. • There is a potential to grow the economy through a multiplier effect. • Employment creation • Government backup because of the Vision 2030 • Availability of financial intermediaries who can offer commercial loans for on lending (e.g. Jitegemee Trust, OIKO, MESP) • Existence of potential clients outside Nairobi • Reduction of poverty • Increase in Christian entrepreneurs bargaining power and self esteem • Economic evangelism • Because of economic recession many people lost their jobs as such there is a huge client base who are willing to go to business.. Threats/ Challenges • Emerging competition from new entrants in the market and the already existing ones. • Lack of proper legislation to control the credit MFI’s • Existence of clients who take loans from many MFIs at the same time PRODUCTS Business Loans • Business start up loans • Short term business loans • Mid term loans • Business Development/ expansion loans Business Investments • Equity Partners • Strategic Partners • Expert Advise • Annual Dividends SERVICES • Technical Assistance • Business Incubation • Management Training from our Business Academy Department. Religious Statistics Ownership of Kenya's Economy • It is clear that despite African Christians being 80% of the Kenya Population, they only own 3% of the Economy. • It is therefore imperative to empower them through training and access to capital to help them own their economy. • The last two years have seen an emergence of three Muslim Banks and not a single Christian focused Financial institution. • Introduction of a Micro-Finance with reasonable interest rates and management training back up will see Christian businesses grow over a time. HOW SHALL WE MAKE THE MFI KNOWN TO CHRISTIANS • We don’t intend to do any media advertising to avoid unnecessary cost since most of our target group can be reached easily through church announcements. • We shall announce in churches ones we are ready to start disbursement. • The brochures will be given to different churches that we target and will outline all the conditions • Many of the churches in the city have membership of more than 2000 members. Assuming 20% are in business, we shall have reached 400 business people in an individual church. Advertising in 20 churches means 8000 members. Our target first quarter of launch is 300 members and thereafter improve to 500-1000. • Looking at this number, it is clear that the demand may outstrip supply in the initial stages of start up. Lending Methodologies Grameen Group Lending • Solidarity “peer” Group Lending Advantages: a) Economies of scale b) Economies of scope c) Mitigated information asymmetry through the group’s knowledge of individual borrowers d) Improved loan collection e) Costs and risks are transferred to clients f) Reduced moral hazard risks through group member monitoring and peer pressure g) Substitution of joint liability for individual collateral h) Lower administrative costs Loan Collateral Management This includes the following approaches: a) Compulsory Savings – Loan Security Fund b) Peer pressure c) Group guarantee d) Character based lending e) Risk of Public Embarrassment f) Assets Pledge g) Personal Guarantees MEMBERSHIP • All individuals who have committed their lives to Jesus Christ as their Lord and Savior. • Must be a member of a local Church and submitted to the authority of a Pastor/Church leader and evidence in the form of a letter from the Pastor/ church leader must be availed. • Must honor the Lord with his/her first fruits, tithes and offerings. • Must uphold a character of integrity and demonstrate excellence in his/her relationship with other Christians. • Must not lie, or attempt to defraud other Christians anywhere and particularly on this system. • All collaborations, joint-ventures, syndications and transactions that arise as a result of Kingdom Finance Capital platform shall be governed by the Code of Ethics that will be strictly Biblical. Other Benefits from this innitiative 1) The profits will fund and sponsor education and training seminars to empower more people in the community who include ? jobless, ? students through schools, ? community youth, women and men ? Leadership and management courses to business people and professionals to facilitate growth and expansion ? Train Pastors and Church leaders on ministerial and leadership dynamics to grow the ministry and make them solid. 2) Support Missions and Missionary work including regional crusades, conferences and seminars that impact many. 3) Finance humanitarian, charity and community development projects through the Helpers of Africa and Brothers, Sisters Keeper Initiatives and Good Samaritan initiatives, projects and programs. Organization Structure Our Core Values to maintain integrity and accountability. 1) Regality- All transactions will be regally done and executed through our legal officer 2) Lending- The procedures will be done after intense scrutiny , guidance and training to ensure that the money given generates profits to enable the clients to repay back 3) Group Guarantors systems- We shall set up groups where people will co-guarantee each other with valuables and church groups will be guaranteed by Pastors 4) Administrative Audits and Account- Strict scrutiny of financial audits regularly conducted both internal and external audits to facilitate checks and balances LOOKING FORWARD TO YOUR PARTNERSHIP, FACILITATION AND FUNDING TO GROW THIS VISION THAT WILL IMPACT MILLIONS IN AFRICA GOD BLESS YOU AND REWARD YOU AS YOU BECOME A BLESSING TO OTHERS