From a young age, Janet Kuteli had dreamed of challenging the status quo in the financial services sector and making it work for the bottom-of-the-pyramid segment, especially women.
She would then join one of the leading banks as a junior staff and worked her way up to senior management.
“I always thought that there is a different way of looking at things and accommodating people who are out of the mainstream banking industry who have the ability to grow the economy, so I opted to resign in 2014 to start Fortune Credit,” opens Janet Kuteli, founder and CEO of Fortune Credit Limited, a Nairobi based microfinance institution.
Janet says that opting out of a promising career in the banking industry with well-defined structures for entrepreneurship was not a difficult decision to make as she was just following her dreams and being a top achiever, she did not see any possibility of failure.
“Having acquired enough expertise and experience, I was sure I would pull it off,” she says, adding that hers was to transform one life at a time, make some money, and get the gross salary she was earning while employed. That was her measure of success.
Her budding microfinance firm immediately started by targeting and issuing loans to the boda boda riders using M-Pesa statements as a financial analysis tool. This became the firm’s anchor product.
“I had done my research and realised that a good number of them were riding other people’s motorbikes and paying on average Sh500 daily. So giving them access to a motorbike as an income generating asset, which then becomes the collateral and paying the Sh500 towards owning the motorbike would work well,” recalls Janet.
Unfortunately, within three months of starting the programme and activating the market, she ran out of money to lend to new clients. She didn’t know what next.
The former banker says that she used her Sh10 million savings to start the business and was also lucky to have a business partner who chipped in. She says that contrary to popular belief, you don’t need millions to start a lending business.
“You can start with whatever little money you have but you need to have done proper research and know how much you really need to start the programme,” she advises.
With claims she had heard that boda boda operators were uncivilised and that one must use unorthodox means to collect loans, she started off by lending only to those in formalised groups with clear leadership structures.
“It was easier to work with their leaders who knew their members’ credibility with their own mechanisms of repossession in case of default,” she adds.
Janet says that it is about understanding how people work and letting them know that someone trusted in their dreams to own an income-generating asset and giving them flexible repayment options. That, she says, worked for them with little struggle.
Later, they realised that the boda boda referred other clients to her company, so they came up with working capital products for other small-scale business people.
“We were responding and giving solutions to a client base we were serving and ended up coming with insurance products in partnership with local and foreign insurance firms for agriculture and livestock in Arid and semi-arid areas.”
Janet says that most of the time, entrepreneurs know their market and understand what they want to provide, but access to capital is limiting. “We are a lending organisation but at some point, we had many customers but lacked money to lend.”
She advises that as one goes through that phase of growth, they need to know who is available to support because the same way they wanted to provide financial inclusion to the vulnerable, they were also not able to access money from the banks,” she explains.
Janet advises that as you look for capital, you need to have structures in place, adding that some people start a company, run it alone without a board and skilled staff, something that investor shun.
“I have a mentor and that helped. A mentor will tell you what to put in place at formative years to enable you move to the next level.”
Janet says that initially, growth was slow due to capital constraints. From 2014, they have served over 50,000 customers and target five million clients in Kenya to provide financial inclusion with impact across Africa.
“Massive growth has happened over the past two years because we understood the market pretty well and knowing the challenges small businesses in Kenya go through, it was easier for us to move forward in partnerships with organisations that believed in our dreams and pumped in capital,” she notes.
Fortune Credit Limited now has six branches countrywide and 85 staff members, serving customers in 24 counties, with 99 percent of their investors being women.
“We have a young and vibrant board that I attribute the massive growth to. I tried it alone but our growth was stifled,” she offers, advising fellow entrepreneurs that investors are looking for impact numbers and as an entrepreneur, you need to be clear about where you are, where you want to go and how you will get those numbers.
“They will look at your vision, goals and how fast you will achieve them and the problems you are resolving,” explains Janet.
She adds that entrepreneurs need to know the problems the society is facing how easily they can replicate the solution and whether the problem they are solving is unique to a particular area or a global one so that it is easy to scale.
“Be organised, have clarity of what you want to do, how you will do it when you want to do it and whom you want to work with and translate it in terms of figures,” she says.
With that, she says people will have the confidence to invest in your model because you have already figured it out.
“If you want someone else to figure it out for you, they don’t have the time.”
Janet clarifies that microfinance institutions charge higher interest rates than other financial institutions because banks have deposit customers while microfinance institutions do not.
“The cost of capital is high and we look beyond just giving money and solving your problem. We are providing timely access to finance and sustainability and a lot of donkey work happens on the ground, but if you are looking at financial indicators as a standalone, then we could charge less,” she explains.
Janet says they are looking at lowering customer acquisition costs, and cheaper client maintenance cost through technology.
“We are looking at getting capital at a lower rate, then passing that to our clients and we will not change our vision to focus on the middle-class, upper-class clients, we are still dealing with the bottom of the pyramid clientele,” says Janet.
When she left employment to start Fortune Credit Limited, she realised she knew little about how that particular market works and that so many things happen at the ‘back office’ before they come to the surface.
“There was a mismatch between repayment of money borrowed and the repayment period by our clients and this created a lack of trust in us by some investors,” Janet shares.
“In formative years, I didn’t know I could pay myself a salary, but when the board was constituted, they decided that I must have a salary,” she adds, noting that a proper finance team helps separate the owner from the company and ensure professionalism.
Know your growth and plan in advance and change, either to collect more or stop lending, she advises.
“I used to send staff to do market activation, hoping I would get money but most of the time, it was disastrous because you have clients but no money to lend and it was frustrating. Staff morale went down with some resigning.”
Janet urges fellow entrepreneurs to focus on their goals irrespective of the challenges they face.