Mr. John Njihia, Chief Executive Officer, Sumac Microfinance Bank.

Established as an investment club (chama) by a group of investors, lender grows to become an award winning and profitable microfinance bank

By George Gichuki

The microfinance sector in Kenya is among the most developed on the African continent. By offering innovative financial products and services, players in the vibrant sector have transformed the lives of countless people. Under the umbrella of the Association of Microfinance Institutions – Kenya (AMFI-K), the sector comprises both microfinance banks and credit only microfinance institutions. Microfinance banks are regulated by the Central Bank of Kenya (CBK) and besides credit, they also offer savings products to their customers. Currently, they are thirteen in number and Sumac is one of them.

The lender has a rich history having been established in 2004 as a credit only microfinance institution. Its founders had initially joined hands to establish an investment club. Nevertheless, they soon realized that many people were facing challenges while trying to access credit from the mainstream banks. Consequently, they opened a window for members and non-members to borrow the funds they had mobilized at a profit. They named the business Sumac Credit Limited.


In the quest to become a formidable lender, Sumac was awarded a nationwide deposit taking license by the Central Bank of Kenya (CBK) in 2012. Towards that end, it opened its first branch at Park Road in Nairobi’s Ngara area. Thereafter, the second branch was opened at Nginyo Towers in Nairobi’s central business district. The branch also served as the headquarters.

In 2015, Sumac microfinance bank opened its third branch in Githunguri, Kiambu County which is renowned for dairy farming. “The decision to open that branch was informed by the need to provide the farmers in that area with one of our major products – kilimo biashara,” says Mr. John Njihia, the chief executive officer. The innovative product targets farmers who are engaged in agribusiness.

In 2017, the microfinance bank opened its fourth branch in Nakuru. Currently, it has managed to mobilize deposits amounting to Kshs. 540 million.

International Funders

In a bid to grow its lending muscle, Sumac has joined with international funding organizations. To start with, in 2015, Regmifa from Netherlands came on board. The others are Triple Jump B.V and Social Investment Managers and Advisors (SIMA) from USA. The three have given Sumac a combined debt capital of Kshs. 650 million. Its current loan book is Kshs. 1.4 billion, while the balance sheet is Kshs. 1.8 billion.

Sumac target market is small and medium enterprises ( SMEs). “ We do not lend for consumption and most of our products target the business people – especially SMEs that comprise 50% of our loan book,” says Mr. Njihia.


Sumac was the overall winner of the 2018 Think Business Award in the agriculture and livestock category among the microfinance banks. Its kilimo biashara product has grown in popularity among the dairy farmers because of its unique benefits. “We purchase dairy cows on behalf of farmers which act as the security for the loans that we advance to them,” Mr. Njihia says adding that they also organize for the cows to be insured. Consequently, the farmers are compensated in case of the cows’ death. Once the loan is approved, it is dispersed within 48 hours.

In addition, Sumac finances farmers to set up biogas production units using the waste from cows and to purchase solar energy kits. According to Mr. Njihia, they get repeat business from most of their customers and some have been financed for more than ten times. “ They borrow from us, settle the same as agreed, which opens a window for them to seek for more financing,” observes Mr. Njihia.

Product offering

Sumac offers a wide array of business loans. The first one is ‘ inua biashara’ which offers customers a maximum of Kshs. 300,000 as loans. The entrepreneur’s stock once registered with the bank’s common registry acts as security to the loan. In the same vein, household items such as television sets and refrigerators can also be used for securing this facility.

The second business loan is ‘ biashara dhabiti’ where the customer combines securities ( for instance title deeds, logbooks, stock and household items) in order to access a loan with a value as high as Kshs. two million. Thirdly, Sumac also finances customers who are in need of working capital – for instance clearance of imported goods. “We give our customers a period of up to thirty six months to settle their loans,” says Mr. Njihia adding that the customers are therefore able to get ample time of investing the money in their businesses and generating some profit.

Sumac also finances its customers to acquire assets such as personal vehicles, trucks as well as pick-ups . Under this arrangement, the customer contributes 30% of the asset’s value, while the bank offers the remaining 70%. Lastly, Sumac offers school fees loans for secondary school, college and university students. The money advanced in this regard is paid directly to benefiting institution. Its loan portfolio is currently standing at Kshs. 1.4 billion.

Sumac also offers savings products including savings, current and fixed deposit accounts. The customers operating current accounts are offered cheque books as a benefit . In the same respect, those with fixed deposits earn a handsome interest rate of up to 14% per annum. Other products include : forex, bid bonds, performance bonds and trade finance.

The lender stands out because of offering high standard customer experience which enables it to benefit from repeat business. In a market that is characterized by cutthroat competition, Sumac has been able to remain profitable because of prudent management of its overheads and elaborate appraisal of the loan applicants. It also gives the customers who may be facing challenges in servicing their loans an opportunity to reschedule the same, effectively prolonging the payment period.


In line with the market trends , Sumac has put in place a robust core-banking system which effectively supports its business. Its customers can conveniently make various ( including depositing, withdrawing and settling loans) using their mobile phones and in the near future, it shall be able to offer mobile loans by riding on its technological platform.

According to Mr. Njihia, mobile banking popularity among customers has grown a lot in the recent past because it allows them to make transactions without necessarily visiting the branches and beyond the normal banking hours.

Sumac is aggressively growing its market share among the microfinance banks in order to attain the tier one status. “ In order to attain that growth, we have to keep close to our customers so that they can give us more business,” Mr. Njihia observes.

One of the major threats that is facing the microfinance sector ( and by extension the banking industry) is the proliferation of fintechs which disburse micro loans via the mobile phones without requiring any security, albeit at exorbitant interest rates. To overcome this hurdle, Sumac has continued to strength its mobile banking offering and to mobilize more funds so as to meet the ever growing needs of its customers.



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