NCBA sees rising asset-finance demand as western Kenya economies expand

NCBA Group expects demand for asset finance to grow as businesses invest in vehicles, machinery and other productive assets to support expansion, a senior executive said.

Lennox Mugambi, group director for Asset Finance and Business Solutions at NCBA, said the lender’s asset-financing business had evolved over two decades from financing vehicles and other movable assets to supporting broader mobility and business investment.

“Behind every customer’s business, there’s an ambition that they are trying to achieve,” Mugambi said at an event marking the 20th anniversary of the bank’s asset-finance business.

NCBA has financed farmers seeking to mechanise their operations, small and medium-sized enterprises expanding their businesses and contractors buying construction equipment, Mugambi said.

The financing has helped businesses acquire productive assets and supported economic activity, he said.

Mugambi said NCBA saw particular potential in Kisumu as economic activity expands across western Kenya.

Kisumu serves as a gateway to neighbouring counties and is benefiting from growth in agriculture, tourism, construction and transport, he said.

“Kisumu is strategic by virtue of its location and the fact that all economic activities originate from Kisumu,” Mugambi said.

NCBA has two branches in Kisumu, reflecting the lender’s assessment of the potential in the city and surrounding counties, he added.

Managing defaults

Mugambi said some asset-finance customers had struggled to repay loans because of economic shocks, unfamiliarity with particular business sectors or regulatory changes that affected the viability of their operations.

He urged borrowers facing difficulties to engage their banks early rather than allow loans to fall into prolonged default.

NCBA can help customers assess alternative sectors where vehicles or trucks can be redeployed, while highly specialised assets can be disposed of when redeployment is not feasible, he said.

“The bank, NCBA, is your partner. It’s not just a bank, it’s your partner,” Mugambi said.

Some customers had moved from default to successful businesses after working with the bank to address challenges, he added.

Kenyan businesses have continued to face pressure from financing costs and uneven economic conditions, making flexibility in lending and restructuring important for firms seeking to preserve cash flow and productive capacity.

Infrastructure investment

Kisumu County is seeking closer cooperation between government and financial institutions to support businesses and infrastructure investment as the city strengthens its position as an economic hub for western Kenya, a county official said.

Jerome Ochieng, Kisumu County Executive Committee Member for Infrastructure, Transport, Energy and Public Works, said government had a responsibility to create conditions for businesses to grow through infrastructure development and business-friendly licensing.

“The principal role of government is to provide an enabling environment on which business is going to thrive,” Ochieng said at the NCBA event.

Improved road infrastructure could stimulate commercial activity and encourage investment in areas that were previously difficult to access, he said.

“Once you open a road somewhere, you will automatically see business beginning to thrive,” Ochieng said.

Infrastructure projects are resource-intensive, however, creating a role for financial institutions in helping bridge funding gaps for businesses and other economic activities, he said.

Ochieng said the county was also seeking to streamline licensing and, where possible, provide incentives such as reductions in land rates to encourage investment.

He said Kisumu’s location gives it an important role as a transport and commercial hub for neighbouring counties.

The city is relatively close to major towns including Busia, Kisii and Kericho, while Kisumu International Airport provides air connectivity for the wider region.

Ochieng said access to finance was critical because businesses could have viable ideas but struggle to implement them without sufficient capital.

Mugambi said the growth of economic activity in agriculture, tourism and construction was increasing the importance of Kisumu and the wider western Kenya market for NCBA.

The bank’s asset-finance business has provided financing for movable assets and vehicles for 20 years, as it seeks to support businesses and individuals investing in productive capacity.