Case study 2: Equity Bank, Limited, Kenya

Tea farmer in Kenya. Credit, G. Smith, CIAT.

Tea farmer in Kenya. Credit, G. Smith, CIAT.

Equity Bank provides microfinance services via local branch offices and mobile units to more than 250,000 people in Nairobi and Kenya’s Central Province. In 1994 Equity Bank started to tailor its loan and savings products to a microfinance market by adding 2 loan products targeted at tea and dairy farmers that are secured by agribusiness contracts. The deposit base of Equity Bank grew as a result to US$ 44 million by 2003, and its outstanding loan portfolio was more than US$ 22 million.

Equity Bank launched a new Bank 2000 system in 2000, aimed at customers in more remote rural areas who needed small loans. The new computerised system reduced customer turnaround time from 35 minutes to 5 minutes compared to previous manual systems, which meant the administrative time on each ‘loan dollar’ was decreased, making it a viable operation for the bank. Furthermore, Equity Bank put 2 4-wheel drive mobile banking units into action in the same year, helping them to reach more remote customers.

By the end of 2003 the mobile banking units made weekly visits to 30 rural villages, serving more than 12,000 people and accounting for more than US$ 1.3 million in deposits.[1] In 2015 Equity Bank will launch its new Eazzy 247 mobile phone banking service, which hopes to further reduce costs to both the bank and farmers. Participating farmers will pay KSh50 (US$0.5) per transaction, compared to the average bank charge of KSh200 (US$2).[2]

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