Financial technology (fintech) enterprise Branch International has welcomed the approval from Central Bank of Kenya (CBK) backing its plan to buy Century Microfinance Bank Limited (Century MFB).
Branch International Limited (Branch), a digital lending financial solutions provider through its local subsidiary Branch Kenya, has secured the necessary Ministerial exemption and regulatory approvals allowing it to conclude the acquisition of a majority stake in the deposit-taking microfinance bank.
With the acquisition, Branch Kenya will soon be making a landmark transition as the first digital lender to expand into the microfinance banking market, allowing for deposit-taking financial services and enhanced lending for individuals as well as Small and Medium Enterprises clients with the controlling stake acquisition approval.
In a legal notice dated January 24, 2022 and published in the Kenya Gazette, National Treasury Cabinet Secretary Mr Ukur Yatani confirmed the exemption of Branch International from the legal provisions, specifying that no person shall hold more than 25% beneficial interest in a Microfinance institution.
CBK described the transaction as a critical component of Century MFB’s transformation plan. The transaction, CBK said, will strengthen Century MFB and support the stability of the microfinance banking sector.
The Ministerial exemption and Regulatory approvals herald a new dawn for the digital lender. It follows a similar regulatory approval secured by Branch International from the Competition Authority of Kenya (CAK) last May.
Regulated and licenced by the CBK as a DTM, Century Microfinance Bank was established in 2012 as the seventh Micro Finance Bank (MFB) in Kenya. The firm says it provides financial services such as savings accounts and credit facilities to more than 26,000 clients in Kenya.
According to Branch East Africa Managing Director Rose Muturi, the National Treasury’s exemption and Central Bank of Kenya’s approval of the acquisition bid will accelerate efforts by Branch International to expand its local operations in their strategy towards a Pan-African digital bank.
The acquisition, she said, allows Branch Kenya the opportunity to ramp up the power of financial access by delivering world-class financial services to the mobile generation. She added that the corporate acquisition would also provide a platform to bridge the financial services access gap using digital solutions.
“This approval is a major national milestone towards the deepening of financial access and continues to enhance Kenya’s position as an investment destination,” said Muturi. “It will also allow the conclusion of this transaction which has been made possible by the support and co-operation of Century Microfinance Bank, one of the leading players in the Microfinance banking space.”
According to Century MFB chairman Mr Peterson Mwangi, the acquisition would boost the national financial inclusion efforts as the firm continues to adapt and deliver digital-driven solutions.
“Century Micro Finance Bank was first set up as a deposit-taking microfinance institution focusing on agricultural finance and offering agriculture-based credit and savings products. We have, however, expanded our portfolio to cover other financial services to the micro, small and medium enterprises (MSMEs) that serve the farmers as suppliers and buyers, and the acquisition by Branch International will provide much-needed impetus for growth,” Mwangi said.
Credit worthiness
Branch has created an algorithmic approach using machine learning to determine credit worthiness via customers’ smartphones. While this tech-forward approach requires transparency and trust, it also enables a fair, secure and convenient path for customers to build capital and save for the future – the fintech pioneered the use of artificial intelligence to assess credit risk in markets with poor credit bureau infrastructure, and mostly targets the mobile generation.
Headquartered in San Francisco, United States, Branch operates in India, Kenya, Tanzania, and Nigeria. Branch has been working to break the traditional financial access barriers such as a credit score and bank account by tapping into the rise of mobile technology to reach underserved populations in its operating markets.
Currently, Branch has managed to digitally disburse more than $600mn to a growing customer base of more than 4mn customers. Century MFB on the other hand, has more than 26 customers, and was ranked the third smallest with market size of 0.4% and an asset base of Sh336mn as of end of 2019.
Investment support
Founded by Matt Flannery and Daniel Jung, the pioneers of microlending, finance and technology, Branch has received equity investment support from several venture capital firms. Including Andreessen Horowitz, Formation 8, CreditEase Fintech Investment Fund (CEFIF), IFC, Khosla Ventures, Trinity Ventures, Victory Park, Triple Point Capital, Foundation Capital and Visa.
Founded in 2015 in Kenya, Branch is a digital finance app providing access to instant loans and other digital banking products across Africa and Asia. The company serves customers in Kenya, Tanzania, Nigeria and India, with offices in Nairobi, Lagos, Bangalore, Mumbai and Silicon Valley.
It’s mission is world-class financial services to the mobile generation mission is to provide world class financial services for the mobile generation. (
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