Salaam African Bank (SAB) of Djibouti recently acquired 100 per cent stake in Kenya-based Uwezo Microfinance Bank that was founded 12 years ago but has struggled to post profits for an undisclosed price, Central Bank of Kenya announced on Thursday.
“This follows CBK’s approval on December 24, 2020 under Section 19(4) of the Microfinance Act and approval by the Cabinet Secretary for the National Treasury and Planning on January 12, 2021, pursuant to Section 19(3) (b) of the Microfinance Act,” CBK said in a statement.
“CBK welcomes this transaction which will strengthen the business model of Uwezo MFB and enhance the resilience of Kenya’s microfinance banking sector.”
The Islamic lender, which holds 30 per cent of the total bank accounts in Djibouti, has a presence in Ethiopia through a representative office and in Kenya through an investment bank licensed by the Capital Markets Authority.
Licensed by the Central Bank of Kenya (CBK) in 2010, Uwezo is a microfinance bank operating in the Starehe division of Nairobi County.
Its services include savings, mobile money, remittances and loans for individuals and smaller businesses. According to CBK, Uwezo held total assets of KSH 168 million (USD 1.5 million) and total deposits of 25 million (USD 232,000) as of 2019.
Incorporated in 2007 in Djibouti, SAB is an Islamic bank licensed and regulated by the Central Bank of Djibouti. Islamic finance employs mechanisms such as the sharing of profit and loss in lieu of conventional interest payments, which are not allowed under Shariah law.
SAB provides services such as credit cards, fee-free savings accounts, investment accounts, asset-based financing and loans. The bank had 11 branches and 18 automated banking machines as of 2019.