FinCorp Credit Limited (FCL) is a “credit only” financial institution that offers financial services to a wide range of clients in Kenya and abroad. It was granted a “no objection” letter by the Central Bank of Kenya on 13th February 2020.
The inspiration towards starting Fincorp Credit was to empower customers and stakeholders towards achieving their financial dreams through inclusivity and tailor made solutions.
The financial institution hopes to become the leading and trusted financial partner in Africa providing exceptional services while creating value to stakeholders and a conducive rewarding environment to employees.
Why FinCorp?
FinCorp Credit stands out due to various reasons. To start with, is the level of staff professionalism, integrity, compassion and passion to truly serve and provide solutions to clients. Besides, FinCorp Credit offers a wide range of quality products and services that meet customers’ needs.
Furthermore, customers believe in the financial institution and offer an opportunity to partner with them in their journey of empowerment and building their businesses. Lastly, the brand consistency in the purpose, values, tone of business and personality has made clients aware of the financial institution and hence they remember, trust and differentiate FinCorp Credit from its competitors.
As a one stop shop financial hub, FinCorp Credit competitive edge is premised on the effective corporate governance to complement the below:
- Customized/tailormade solutions
- Quick turnaround time (TAT)
- Leverage on supply chain embedded value adding aspect
- Flexible collateral structure
- A “one stop shop” on financing, insurance, and investment solutions
- Excellent customer service
- Affordable pricing
- Solid partners.
- Solution provider.
- Branches closer to the target market
- Shariah Compliant Products
Trade Finance Solutions
As the first Kenyan Trade Financing Hub, Fincorp Credit has partnered with Commercial Banks, Micro-Finance Banks and Insurance Companies for tailor made and customized solutions to support local, regional and international trade for contractors, suppliers, importers and exporters to enjoy a range of products and services at preferential rates, first class turn-around time and flexible collateral structures. The trade finance solutions include:
Unsecured Bid Bonds:
Owing to the short timelines involved in tendering process, bidders/tenderers find it convenient working with FinCorp Credit through its partner banks and insurance companies. The key value propositions are quick processing without the requirement to open a bank account, fast credit services and doorstep delivery.
Performance Bonds:
Owing to conventional collateral requirements by banks to secure performance guarantees, Fincorp Credit has entered into tripartite arrangements with banks and insurance companies, hence eliminating the collateral barrier.
Advance Payment Guarantees:
FinCorp Credit has partnered with commercial banks to allow contractors mobilize funds from procuring entities by issuing Advance Payment Guarantees. The contractor is able to access the funds riding on the tripartite collateral arrangement between Fincorp Credit, its partner banks and insurance companies.
Retention Bonds:
The procuring entity may withhold a certain percentage of contract payment to cover “Defects Liability Period”. By issuing a retention bond, the contractor is able to access the retained funds hence unlock the cashflows to finance other projects instead of taking facilities.
Custom Bonds:
FinCorp Credit through its partner banks and insurance companies offer custom bonds to importers to allow release of cargo to avoid incurring storage and demurrage charges.
Cheque Encashment/Discounting:
This product is meant to offer immediate value to our clients due to working capital constraints especially in businesses that are highly cash intensive hence reduce the delay process involved in cheque clearing procedures.
Express LPO Financing: Being a trade financing working capital facility, suppliers to reputable procuring entities are able to access professionally structured financing with customized repayments to match cash conversion cycles.
Invoice/Certificate Discounting: This product is for Fincorp’s Credit customers in supplies /construction business who intend to unlock working capital after invoicing.
Structured Trade & Supply Chain Financing: Structured trade financing is an alternative means of providing customized/tailormade trade finance solutions outside the traditional/conventional financing approach. The focus shifts to the underlying cash flows and the structures agreed upon by Fincorp Credit and trading partners. FinCorp Credit experts in structured trade financing negotiate the best trading terms for their customers with their counterparts, locally, regionally, and globally.
Import Duty Financing: FinCorp Credit finance 100% of calculated duties and taxes as per Kenya Revenue Authority (KRA) guidelines. The importer is able to clear the cargo immediately to avoid demurrages.
Access to Government Procurement Opportunities (AGPO) to Youth, Women & Persons Living with Disabilities:
Where supply orders are backed by Letters of Credit (LC’s):
Procuring entities, through mutual agreement/contract, shall issue local Letters of Credit (master LC) to special category suppliers. The LC terms shall be a replica of contract / Purchase Order terms. Subsequently, the supplier shall engage Fincorp Credit through its partner banks for facilitation of working capital financing by way of back- to-back LC to the ultimate supplier. This overcomes performance and payments risk challenge.
Where supply orders are backed by Local Purchase Orders (LPO’s):
FinCorp has entered into Memorandum of Understanding (MOU) in partnership with reputable procuring entities for tailormade/customized LPO financing, on a case-to-case basis.
Other Financial Products and Services
FinCorp Credit offers a range of other financial services and products to its clients.
They include:
Loans:
Entrepreneurs face different opportunities as well as emergencies. This requires a financial partner who is in sync with day-to-day realities hence eliminates bureaucracies /rigorous procedures when offering such unique business solutions.
Insurance Services:
FinCorp Credit under its insurance agency has partnered with insurance companies to offer FinCorp clients convenience, competitive premiums and quick turn -around in claims processing, with the key products being the following:
- Workers Injury Benefits Act (WIBA) – This covers liability under the Labour Laws about health and Safety of employees
- Contractor’s All Risk (CAR) – This covers contract works, raw materials and equipments on site, workers and third party liability.
- Contractors’ Plant and Machinery Insurance – This provides cover against loss or damage to construction equipments, plant and machinery such as excavators, bulldozers, cranes wheel loaders etc.
- Marine Insurance (warehouse to warehouse) – This insurance category covers cargo (goods) as well as other incidental losses/liability when transporting goods. This applies to goods transported by sea, air, road, rail until final destination.
- Insurance Premium Financing (IPF) – You get to enjoy cover benefits immediately without having to pay full insurance premium amount at once. FinCorp IPF offers flexibility to pay insurance premiums in instalments. No collateral is required. This covers – Medical – Motor – Fire & Perils – Industrial All Risks – Burglary.
Investments Portfolio: Fincorp Credit has entered into agency business model with various financial institutions to tap /market various investments in the money market instruments for clients targeting risk free fixed income and access to derivatives instruments
Islamic Finance: FinCorp Credit offers shari’ah complaint products. This is to cater for the unbanked Muslims craving for Riba free facilities and in general shari’ah compliant products and services.
How FinCorp Credit has Impacted its Clients
Since establishment, Fincorp Credit has created a positive impact on all its clients. The financial institution has been instrumental in enabling entrepreneurs and small businesses to access credit, trade finance, insurance and shari’ah compliant products and services.
Moreover, the financial institution has been at the forefront in the provision of advisory and financial education to clients on how to manage their finances and make informed decisions about their businesses. This is especially important for startup entrepreneurs.
Some of the evident success stories include:
Assisted thousands of entrepreneurs to thrive in their businesses.
Facilitated entrepreneurs start businesses in industries such as transport, construction, agriculture, retail, and manufacturing.
Expanded the footprint in Thika and sales offices in Mombasa and Eldoret.
Disbursed loans/facilities to over 2500 clients.
Facilitated trade instruments to over 5000 clients.
Set up an insurance agency to complement FinCorp’s strategy of becoming a one stop shop.
- Only microfinance offering shari’ah compliant tawarruq products in liaison with Bursa Malaysia.
Growth and Expansion Plans
FinCorp Credit hopes to transform into a deposit taking microfinance and fully digitize its products and services. It also hopes to have a training hub for entrepreneurs and expand its branch network by 2027.
Challenges
Although the microfinance has been successful in supporting entrepreneurship, there are various challenges faced.
Firstly is difficulties in hiring the right people who would share your vision and have similar goals.
Secondly is delayed payments. Entrepreneurs face challenges in receiving timely payments for their services. This limits their ability to grow their businesses and generate income.
Thirdly is high interest rates.
Higher interest/profit rates as compared to traditional banks due to the higher risk associated with lending to clients and high cost of source of funds. This makes credit products less attractive to the entrepreneurs and those who take up the loans/facilities would face repayment challenges.
Lastly is lack of business skills. Entrepreneurs may lack the skills needed to run a successful business. This includes financial management, and business planning.
Lessons Learned
Microfinance has been a key driver of entrepreneurship in many parts of the world. The loans/facilities, insurance and trade finance products provided have helped entrepreneurs to start and grow their businesses.
Despite the challenges, microfinance has helped to create jobs, generate income, and improve the lives of millions of people living in poverty.
Advice to Aspiring Entrepreneurs
Entrepreneurs to persistently seek the truth about their ideas through customer feedback as these would guide their passion. Have a research attitude to guide new ventures e.g. we started up as a trade finance hub that led to other business opportunities i.e. credit, insurance and Islamic finance. Identify clients’ business constraints and explore ways to close the gaps e.g. the birth of FinCorp Credit, was as a result of observing challenges clients were facing with banks.
- Hire the right minded and with the right culture – i.e. those ready to build as opposed to those who want to join an existing company.
- Persistence and consistence key to success.
