Oya Microcredit eyes local expansion amid surge in sector’s NPLs

 

Pan-African microlender Oya Microcredit is experiencing a lending profit windfall despite a surge in the sector’s non-performing loans (NPLs) and a high-risk operating environment, saying it will continue to increase loaning, driven by the need to grow revenue and the belief that higher, targeted lending can coexist with improved risk management.

The firm’s Board Chairman, Kobbina Awuah, said the Ghanaian–headquartered micro lender is significantly expanding its focus on Kenyan small and medium enterprises (MSMEs), shifting away from traditional, rigid lending models to embrace a more inclusive approach to financing as the demand for loan services is expected to rise across the country.

“The Kenyan market has been very good to us because we are in other African countries as well, and Kenya is one of our best-performing markets. We have successfully managed to plug into this ecosystem despite concerns with the surge in NPLs,” said Awuah, who is also the firm’s co-founder.

It is a move, Wycklife Ochola, the company’s Chief Executive Officer (CEO), says they will continue to watch closely with sectors like service industries, agriculture, manufacturing, and SMEs, offering growth opportunities for the brand as part of its expansion drive that will include new physical branches accross the country, to enhance ‘customer feel.’

“While digital offerings is a good initiative, we want to go further by opening physical branches to offer services directly to our customers…for us that customer interaction is very important, it also boosts business trust,” said Ochola.

The microlender’s bold expansion promise comes even as Kenyan businesses are increasingly suffering to repay their debt with the rate of non-performing loans (NPLs) climbing to a 12-year high (in the banking sector alone), according research by the Kenya Bankers Association (KBA), which said the build-up of NPLs over the five years ending 2018 has been noticeable for its persistent rise, representing a shift from the preceding five years when there was a significant improvement in quality of loans to between 4.4 per cent and eight per cent during the 2009–2013 period.

“The industry’s performance in 2018 shows a delicate balance between careful asset growth amidst returns-risks trade-offs and cost management and efficiency enhancement,” said Jared Osoro, director of the KBA Centre for Research on Financial Markets and Policy.

The value of bad loans in the banking sector hit a new high of Sh345 billion at the end of March, raising questions on the health of the economy even as the lenders booked double-digit profit growth in the first three months of the year.

The banks have in the meantime grown their lending to government, which analysts say is helping to shield them from the negative effects of non-performing loans. They are also tapping non-interest earnings, which include fees and commissions charged on customers to boost their top line.

AfCFTA opportunities 

They were speaking on Friday during a courtesy visit by the Ghana High Commission in Kenya to the company’s Nairobi offices aimed at strengthening economic collaboration between Kenya and Ghana and unlocking opportunities under the African Continental Free Trade Area (AfCFTA).

The visit focused on the role of small and medium-sized enterprises (SMEs) in driving regional trade and economic growth across Africa.

As AfCFTA continues to reshape intra-African trade, countries are increasingly exploring partnerships that support entrepreneurship, financial inclusion, and cross-border business expansion.

The visit comes against the backdrop of growing bilateral cooperation between Kenya and Ghana aimed at boosting economic empowerment, job creation, and sustainable growth by supporting the formalization and scaling of SMEs.

Both countries are already strengthening economic ties to expand opportunities for small and medium-sized enterprises and enhance financial inclusion, with a focus on cross-border trade, digital finance, and improved access to credit.

The Ghanaian High Commissioner to Kenya His Excellency Paul Evans Aidoo commended Oya Microfinance’s role in providing accessible credit solutions to entrepreneurs and underserved communities, noting that such initiatives are vital for driving innovation, job creation, and sustainable economic growth. The visit highlighted the potential for cross-border collaboration in strengthening SME ecosystems and expanding financial access across Africa.

Discussions during the engagement focused on opportunities for synergy, including knowledge exchange between Ghanaian and Kenyan microfinance institutions, the development of regional SME support programs, and leveraging digital finance to reach rural populations. The High Commissioner emphasized that partnerships of this nature not only empower local businesses but also foster stronger bilateral relations between Ghana and Kenya.

“This engagement reflects our dedication to fostering partnerships that strengthen African trade and promote sustainable development,” said Oya’s CEO Ochola.