Giving a financial lifeline to micro entrepreneurs

    Michael Monari, Founder and CEO, LONGITUDE FINANCE

    Longitude Finance focuses on making a positive impact in the society by providing micro loans.

    One of the persistent challenges facing small and medium sized enterprises (SMEs), micro entrepreneurs and organized groups is lack of access to credit to meet their varied needs.

    The statistics are scary. Data from the Kenya National Bureau of Statistics shows that 52 per cent of all loan applications made by SMEs were rejected by banks and other financial institutions.

    To change this narrative, Michael Monari set up a micro lending institution, Longitude Finance, which focuses on making a positive impact in the society by providing micro loans.

    “Majority of SMEs and organized groups need two things to grow; access to affordable credit‎ and structures. With this hindsight, we are partnering with like-minded companies and organizations to transform people’s livelihoods,” says Mr. Monari, adding that they don’t just provide finance to start-ups but also train them to manage their business circle and risks.

    Mr. Monari offering a training certificate to a client

    “I have worked as a banker across over 10 countries in Africa and I have realized that many small to medium enterprises lack the very basic and simple financial management skills which is key for their growth and sustainability,” explains the CEO.

    Strategic partnerships

    One of the key partnerships is with Copia, an American online store that targets women. “Before the partnership, women would organize themselves into groups to save and buy products. With our entry this has changed. Copia now delivers these products to their doorstep and they repay later via Longitude Finance,” he says. The partnerships has made it possible for these women to access farming and household items like water tanks, water pumps, chuff cutters, furniture, cooking stoves, wire mesh, iron sheets and other domestic items.

    The items have been instrumental in improving the quality of their lives, says Mr. Monari.

    The firm is also working with M-PAYG Solar, a Danish company that supplies Solar Home Systems to off-grid communities in rural Kenya and SMEs in peri-urban areas. The solar systems are given to households that make repayments in instalments while using the solar gadget.

    “We are also negotiating a new partnership with Water.org to support targeted communities across the country to access clean water and live in a clean environment,” explains Mr. Monari.

    Besides, the firm is further working with Monarch Insurance to help riders buy insurance products for their bodabodas, a facility which the CEO says has been widely embraced.

    “The law requires bodabodas to have insurance which many of them lack. With our intervention, they are able to acquire the insurance and pay a daily fee of Sh 50 to cover them against unforeseen risks,” he says.

    It recently partnered with Afya Poa a provider of affordable inpatient medical cover underwritten by Sanlam to provide the cover to their clients to ensure minimal business disruption in case medical emergencies.

    The institution has also partnered with Mars Group, collaborating with the University of Oxford and providing microloans to distributors in Nairobi, Nyeri, Kisumu and Nakuru for the purchase of bicycles.

    Besides these, another partnership with UNHCR is in the pipeline. The project aims to support refugees living in urban areas and camps in Kenya to runs profitable small businesses.

    A section of Longitude Finance clients pose with some of its staffers after a training session

    For the three years it has been operational, Longitude Finance has become as darling to the youth and women who are looking to service government’s contracts. Most of them allude to its quick processing of loans, personalized services, a flexible repayment model, low interest rates and a supportive customer care.

    “It is a simple process for you to get a loan from us. We only require the necessary papers,” says Mr. Monari who holds a master’s degree in global management from the University of Salford, in the UK, an executive diploma from the University of Oxford and an advance entrepreneurship certificate from Strathmore Business School.

    The firm’s unique business model has seen it appeal to thousands of borrowers who are now processing their 11th loan. “The default rate is below 10 percent and we have some regions like Murang’a whose repayment method is 99 per cent,” says the CEO.

    He is leveraging on his extensive experience in the industry to help build sustainable enterprises and livelihoods. He says most micro and small businesses collapse under the burden of heavy loans because financial institutions have stiff structures for repaying credit. This informed the firm to develop unique credit models. “For instance if a client is unable to repay, they come to us and we restructure the repayment schedules.”

    Mr. Monari set up Longitude Finance after an illustrious career in the banking sector. “I used a savings of Shs 25 million to set up the microfinance. But that wasn’t enough as lending requires huge capital investments.” So he embarked on a difficult journey to convince investors to buy into his idea. “It was difficult at first but many investors joined us along the way due to our professionalism and service excellence,” he says.

    The firm now employs 18 staff and operates branches in Koinange Street in Nairobi, in Mombasa, an agency office at Murang’a Catholic Teacher’s House, in Kitengela and its head office in Nairobi’s Kilimani.

    Longitude Finance raked in a turnover of more than Shs 100 million last year, with Mr. Monari attributing this impressive growth to its strategic partnerships spanning varied sectors of the economy.

    The firm plans to have a footprint in Rwanda, Uganda and South Sudan in the next two years.

    “You can only grow as an organization when there is energy,” says the executive who occasionally mentors his youthful staff members. He adds, “We are the only institution that has a robust internship programme that aims to teach students and young individuals key skills that they can use to navigate a complex business arena.”

    As an experienced CEO, Monari has interacted with many entrepreneurs to understand their plight. In order to establish sustainable enterprises, he advises them to be disciplined in keeping times and managing the little money they make, read a lot and consult widely before making any decision.