Sumac CEO John Njihia: Five years on, this is our story

By: Oliver Owuor

It’s been five years since Sumac Microfinance Bank appointed John Njihia the CEO of the rapidly growing bank. Our writer Oliver Owuor sat down with Mr. Njihia to find out, first hand, what has been the driving factor in the unprecedented growth of the institution in the Kenyan financial market space – and here are the excerpts of that interview.

1] How did you end up as the CEO of Sumac Microfinance Bank?

Well, for about 22 years, I had been working in the insurance industry in and out of Kenya. Three of those years were spent in Rwanda. At some juncture during my stay in Rwanda, I felt the urge to come back home and settle here in Kenya. It was during my quest to make this happen that I was shortlisted for an interview in 2015 at the Sumac Microfinance Bank Ltd. To my delight, I emerged top and was appointed the CEO.

I took up this appointment having worked as the Finance & Administration Manager at UAP Insurance Rwanda Ltd, Kigali Rwanda, Deputy Divisional Director – Finance & Administration at Eagle Africa Insurance Brokers Ltd in Nairobi, among other employment engagements I had with other institutions. After the three years in Rwanda, it was an absolute relief for me to come back home to continue building the nation from the proximity of family and friends.

2] What was the financial status of the bank then, and what did you and the Board of Directors consider to be your immediate [short-term] and long term goals you needed to achieve?

My first target was to grow the business profitably. In other words, I needed to raise the stakes for the firm by deploying various strategies that would enable us to improve profitability in the short and in the long term, whilst broadening our clientele reach in the Kenyan market.

At the height of my appointment in 2015, the bank’s loan book stood at Ksh289 million. By the end of 2019, that figure had risen to Ksh1.4 Billion, which is a substantial increase in the space of five years. The growth has indeed been remarkable and tremendous all the way, and I’m grateful we have achieved some of our goals so far.

In the same vein, the customer deposits at the bank were at Ksh127 million. We have managed to grow that to Ksh700 million in the past five years. In 2015, we only had a savings account product [in as far as deposits are concerned]. Customers prompted us to rethink our strategy, and that’s how we came up with the Current Account, which is very popular with most of our clients, as well as the Fixed Deposit Account, Jipange Account, Call Deposit Account and Mapato Account. These have gone a long way to help us secure more funds and improve the bank’s asset base.

The board also tasked me, at the time of my appointment, to look for funding institutions that would provide us with debt financing to help us grow our portfolio. We got our first funding partner in 2015 in the name of RegmifA, who extended to us a debt finance facility of USD1 million [Approximately Ksh100 million]. We have since entered into funding partnerships with other institutions including Triple Jump, MESPT, Credit Bank, Development Bank and SIMA [USA].

Sumac only had two branches at the time – Koinange and Ngara branches. I was to oversee the expansion of the branch network of the bank with the help of the Board. Five years down the line, we have been able to get three more branches. They include Githunguri, Nakuru and Thika. From our strategic plan, we hope to add other branches to this fold as the situation will dictate.

I was also tasked with reviewing the competitiveness of our products portfolio, upon which I successfully engineered the emergence of new loan products and accounts, which have since been vital in our growth as a bank. We have since tweaked most of our loan products to accommodate a flat-rate model to enable us stay much more competitive. Our loan products include Business Loan, Inua Biashara, Nafaka Loan, Biashara Plus, Biashara Thabiti, Landlord Loan, Pepea na Karo, Sumac Asset Finance, Bridging Loan, Kawi Loan, Overdraft, Kilimo Biashara and Jumuia Loan. We later institutionalized Forex, Trade Finance and Bid bonds, which have been very critical to the sustainability of our business model.

3] Have these goals been achieved?

As I have enumerated, most of our goals have been achieved, but we are in the process of expansion and growth, so some of the goals keep changing with time, based on the emerging needs and the demands of the ever-changing business landscape. But I’d confidently say, we are on course to achieve most of the goals that were set by the Board of Directors at the time of my appointment.

We have posted profitability since my arrival, and have continued to manage costs, even though the cost of acquiring funds is sometimes quite high. We have tried to manage these costs using all available tools, and with the help of a very exceptional, trusted and professional team of management and staff members, we hope to keep improving.

We are also bound to continue scouring the globe for cheaper debt financing. With our growth so far, we are hopeful that eventually we will get it right on this one.

4] Who has been very influential in enabling you set out on your objectives?

On this one, allow me to thank, first and foremost, the Almighty God for His help through and through. Beyond God’s ever-present help, I owe a lot of gratitude to the Board of Directors at Sumac Microfinance Bank who have been more than supportive. The chairman, who always leads from the front in offering support and guidance, as well as each board member, have truly been pivotal in our efforts to get to our preferred destination. I give them a big hand of gratitude, as I also celebrate my management and staff for their commitment to our course. They have constantly done the dirty work, and I’m glad I have one of the best teams to work with.

Last but not least, my family has been very instrumental; always supporting me and encouraging me to scale greater heights of success. I owe them for this far I have come.

5] Would you say being the CEO of Sumac Microfinance Bank is challenging? To what extent is that so?

All businesses must experience challenges on a daily, weekly, monthly and even yearly basis. And there is competition everywhere because there are so many financial institutions in the country offering similar services as we do. That in itself makes for a very tough, bare-knuckles and aggressive engagement in the market in the quest to obtain and retain clientele.

We have done our part as Sumac to be able to stay competitive, and often is the way we package our products, and how we ensure we strictly and eternally adhere to the promises we give to our clients. For instance, it only takes 48 hours upon approval of a loan for it to reach the loan applicants account. This is a promise we have kept all through.

Word of mouth and referral efforts by most of our clients have also played a key role. Our clients are often delighted by our services that they take it upon themselves as a solemn duty to refer others to Sumac Microfinance Bank. This has gone a long way to help us rapidly grow. Customers have a lot of confidence in our services, and that is why our deposits keep growing, and our loan book is so significant.

The Kenyan economy, since 2017 elections, hasn’t really recovered, and businesses have been gravely affected. Interest rates capping by the Central Bank of Kenya a few years ago also negatively influenced the way money moved in the economy. Equally, the fall of Imperial Bank and Chase Bank meant that customers became jittery of smaller banking institutions. There was capital flight for a while from smaller banks like ours to bigger commercial banks in the country. But I’m happy to report that most, if not all, of our clients who took off at the time of that particular crisis, have since rejoined us and even brought new referrals for business. Our model continues to help us stay strong and profitable each year.

Other challenges we have had to endure include the fact that we are relatively still a small banking institution. Our staff members are sometimes forced to take on double assignments, but we are managing so far.

6] Having enumerated the financial gains you’ve made so far, what are the other key components of the bank’s success you may want to highlight?

Due to our rapid and steady growth, Sumac was last year among three of the only profitable microfinance banks. It wasn’t an easy achievement given that most of our competitors, owing to the factors I have mentioned, have had a rough time just as we have had in the past few years since 2017.

We are thankful too, that we have since been recognized in financial circles for our growth. In 2018, Sumac was recognized as the 2nd Fastest Growing Microfinance Bank in Kenya, by the Think Business Banking Awards. It was the first time we were conferred such an accolade as a bank. In 2019, the same Awards recognized Sumac as the Best Microfinance Bank in Livestock and Agriculture Financing. The Automotive industry also conferred upon Sumac an Award in the same year, where we emerged the Most Promising Microfinance Bank in Automotive Finance.

This goes a long way to enumerate our strength in the market. We can only grow stronger from hereon.

7] Where do you see Sumac Microfinance Bank in 10 years [this decade], and what are the new aspirations the bank may have in this regard?

First and foremost, before this year [2020] ends, we are looking forward to joining TIER I of the Microfinance Banking sector. Based on our growth so far and the market share we control, we believe this is achievable. We will continue our trade in the Microfinance Banking industry, since that is where our niche is.

We are also looking forward to opening new branches in North Rift and the Coastal Region. Coupled with that, we will be looking to actualize Agency Banking and Digital Banking, both of which are high on our agenda this year. On digital banking, for instance, we hope to be up and running by April 2020.

8] What would you say about the competition in the market, and how does Sumac stay relevant and sustainable as a bank?

Competition will always be there in any sector of the economy. For Sumac, we will do our bit to remain relevant by constantly reviewing our products so they can stay competitive.

We are glad that our flagship products – including the Working Capital [business loan], Inua Biashara loan [no conventional security required], Kilimo Biashara Loan [popular with farmers] and Sumac Asset Finance, are very competitive and preferred by most of our clients and businesses. We will keep them competitive in the long run.

We also recognize the need to venture into the Mobile Loan platform, and this should come this year. We will also introduce Check-Off Loans for those who are employed to keep expanding our clientele base.

Renewable (Clean) energy is big business today. This too is an area we want to expand in our products offering. We have so far provided loans through Kawi Loans as a facility, but will be growing this product for a greater clientele reach.

Nafaka Loan will also be implemented soon to enable farmers receive money in advance for the planting season.

Sumac is always raising funds. Shareholders are planning to give a Rights Issues to help us raise a further Ksh100 million to improve our capital base. We are also keen to invite like-minded investors who would like to take up a stake in the bank so we can continue growing this profitable venture to higher heights.

We expect the economy to grow this year, and with it, the growth of all businesses, meaning a better economic performance for all of us. We will sustain our competitive rates for the Fixed Deposit Account, and hope that more clients will take advantage of this ongoing offer. You can always visit any of our branches for more information in regards to this product and others on our stable.

9] What is your parting shot?

As a business person, Sumac Microfinance Bank is where you need to be in 2020 for all your financial requirements.

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