Conquering Towns From a Rural Area

Mr. Patrick Gathondu, CEO, BIMAS.

By Catherine Kuria

Headquartered in Embu, lender strategically spreads its tentacles into new regions

Bimas Kenya Limited is a credit only microfinance institution that was established by Plan International in 1997. It was started in Embu, but it now has a presence in 18 counties with 22 branches and 36 outposts, touching the lives of its customers – especially in the rural areas – in the process.  Its focus is transforming lives by creating livelihoods to promote economic development and eradicating poverty.

The lender’s flagship product is a loan for small scale businesses.  In addition, it offers agri-business loans as well as loans for purchasing and installing energy saving products like cooking stoves and solar panels. Green financing is a new trend in the market whose objective is to enable households acquire energy products which are cost effective and friendly to the environment.  It has gained popularity in the rural areas that are off the national grind and therefore, households mainly rely on firewood for cooking and kerosene lamps for lighting.


Dr. Patrick Gathondu, the executive   director of   Bimas is an experienced microfinance   professional.    “I have served in the microfinance sector for the past 16 years, witnessing its tremendous growth in the process,” he says.   The most impactful change has been brought about by technology. In this regard, the market has been disrupted by fintechs offering short term micro loans which are expensively priced.   They have posed very stiff competition to the traditional microfinance lenders.   “Back in the day, we used to fill pass books, ledgers and interact physically with our customers,” says Dr. Gathondu adding that today,   they are mainly interacting with their customers via the mobile phone technology.

In order to remain relevant against a background of numerous changes in the sector that have been occasioned by technological disruption, microfinance institutions and banks have become more innovative. In that regard, Bimas has developed an elaborate mobile banking platform in partnership with M-Pesa which has enabled the lender to enhance efficiency and reduce costs.

Embracing technology has come with its fair share of challenges.   “Before the advent of mobile banking, we used to interact with our customers frequently on a one-on-one basis, but this has now reduced,” Dr. Gathondu avers.   Since most customers are now applying for loans via their mobile phones, Bimas has cushioned itself   from the risk of default by integrating its systems and processes with credit reference bureaus (CRBs) and the Integrated Population Registration System (IPRS). By so doing, the lender is able to know the credit history of those applying for loans.   Before technology became a key driver of its business, BIMAS loan officers would recruit customers, train and journey with them before offering them credit.


Only microfinance finance banks are regulated by the Central Bank of Kenya (CBK) as per the Microfinance Act of 2006. “We applied to be a deposit taking microfinance institution (DTM) – as microfinance banks were then known- way back in 2008 but because of the stringent requirements and the high cost of investment involved in the transformation process, we shelved those plans,” notes Dr. Gathondu.  Nevertheless, Bimas is now on a firm road to becoming a microfinance bank. In that regard, it has invested heavily on a robust information technology (IT) system and it has changed its legal status from a company limited by guarantee to a company limited by shares.  “ Within the next two years, we shall have diluted our shareholding in line with the  2016 Microfinance Act  and we have already started sensitizing our staff members about any  new developments in our organization arising from the need of becoming a microfinance bank as well as how to conduct business in a regulated regime,” Dr. Gathondu emphasizes.

Most importantly, even before achieving the said goal, Bimas has already started embracing some of   the prudential guidelines outlined in the 2016 Microfinance Act, in particular, provisioning for non-performing loans.  “One of the key benefits of being regulated is that there is no risk of being associated with the rogue players who have in the recent past invaded the microfinance sector in droves,” Dr. Gathondu points out.


The key mission of players in the microfinance sector is to alleviate poverty among the economically active low income earners by providing them with innovative and affordable products. “The sector is more developmental than commercial in nature and that is why it should be regulated to weed out rogue players whose motive is to generate huge profits at the expense of their customers’ socio-economic welfare,” Dr. Gathondu points out.  Over the years, Bimas has enabled its customers to create wealth sustainably by offering them affordable and innovative financial as well as non-financial solutions.

He further observes that the capping of interest rates among commercial banks in the country has led to a significant reduction on borrowing from the formal lenders, microfinance institutions like Bimas included.  “Most people are now borrowing from fintechs and informal lenders (shylocks) at very exorbitant rates which defeats the spirit of microfinance,” he laments.

In as much as the microfinance sector is thriving, it has been plagued by quite a number of challenges. The major one has been an increase of default cases. “ The portfolio at risk in most institutions has gone up and this has mainly been attributed to the volatile electioneering period in the last half of 2017 which had  adverse effects on many  businesses and households countrywide,” Dr.  Gathondu avers.  Secondly, the microfinance model is labour intensive. Consequently, this has significantly increased the cost of doing business in the sector to the players’ detriment.

Thirdly, the sector is grappling with the challenge of multiple borrowers especially in cases where information on the same has not been shared with the credit reference bureaus.  More often than not, customers who borrow from many lenders become financially overburdened and ultimately, they are unable to service their debts. As a responsible lender, Bimas educates its customers on the need to be prudent while borrowing in order to avoid falling in the debt trap.

Aiming high

BIMAS has come a long way. The lender started by doing business within one division (Gachoka) in Embu County twenty years ago.  Over time, it now has a presence in 18 counties. In its new strategic plan (2019- 2013), Bimas is focusing on conquering new territories like Mombasa, Kericho, Eldoret and Voi among other 24 counties.  Its current customer base is 40, 000 but it is planning to   grow the figure to 70,000 within the next five years.  By the same token, it is aiming at growing its loan portfolio by 30 per cent.

“Our strategic direction takes a critical view of  various opportunities that are available to grow our business and we leverage on them in a sustainable way,” observes Dr. Gathondu. In its 2013-2018 strategic plan, Bimas focused on penetrating deeper   the areas where it already had a presence. That wise decision yielded   good results. In Nairobi County for instance, the lender grew from one branch at Ngara to four.  That was after opening three new branches at   Kasarani, Kitengela and Rongai.

Even as it aims at gaining a national presence, Bimas headquarters is still at Embu. This decision has been informed by   what Dr. Gathondu refers to as the ‘grab’ strategy –  conquering the cities from the rural area.





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