KBA CEO CHAT - Intellectual Property as Possible Collateral for Youth Loans

CEO | Joseph Njuguna , Rafiki Microfinance Bank, CEO
MONTH | March 2022
Chat Admin
Good morning everyone, we are pleased to have you on the chat this morning
Chat Admin
Today's topic is Intellectual Property as Possible Collateral for Youth Loans. An exciting topic topic that we look forward to discussing with you. Our host for today is Mr. Joseph Njuguna , Rafiki Microfinance Bank, CEO
Chat Admin
Before the official start of the chat we welcome you to share your thoughts, questions or insights on the topic and the host will take them from 10am.
maina NJUGUNA
Good morning and it is good to be back here this morning.
Chat Admin
Wonderful Maina! We are happy you could join again today and look forward to engaging further on the topic of the day
Chat Admin
We recognise the presence of Dorine, John, Nyamboga, Hillary, Gertrude, Erick and Fredrick. Karibuni!
Nyamboga Ogaro
Good morning Admin we appreciate the opportunity to be here this morning. looking forward a great engagement again today.
Fredrick Juma
Good morning great people! Glad to be here!
eric asuma
Good Morning Mr Njuguna. Which items do you think can be potentially accepted as collateral under intellectual property?
Fredrick Juma
Good morning CEO. My question is will the usage of Intellectual Property as collateral increase?
Chat Admin
Limo, Lynet, Colince, Cleopatra, Korir, Godfrey... Karibuni. Glad you could join the chat this morning.
maina NJUGUNA
Good morning Mr. Njuguna: What is rate of usage of IP as collateral by KBA members and Rafiki MFB in particular?
Michael Makanga
Good morning, I am Michael, and glad to join this morning.
Korir Issa
Well, good morning everyone. Here is a question to kickstart the session. Do Intellectual Property Rights present potential to the banking industry to expand the frontiers of access to credit?
Nyamboga Ogaro
Goodmorning Mr. Njuguna do we have valuations methodologies in place in the country since IP valuation is one of the challenges for its use as a collateral for loans.
Chat Admin
Ladies and gents, help me welcome Mr. Joseph Njuguna , Rafiki Microfinance Bank, CEO to the chat. He will take us through the rest of the session.
Joseph Njuguna
Good morning everyone. My name is Joseph Njuguna, the CEO of Rafiki Microfinance Bank. On behalf of Rafiki Microfinance Bank, KBA and the entire banking fraternity, I welcome you all to this chat...
Getrude Matayo
Good morning Mr. Njuguna: What is the key challenge inhibiting optimum usage of Intellectual Property rights as collateral?
Joseph Njuguna
During this chat we are going to explore the growing strategic importance of intellectual property as a source of competitive advantage for business and economies and how they can leverage upon this to access credit and capital for growth.
Fredrick Juma
Are Kenyan banks ready to use IP as collateral? What might be the main hinderance?
Joseph Njuguna
Intellectual property contributes about 2 to 6 percent to GDP of developing economies and is also a major source of employment, tax revenue and foreign direct investment.
Joseph Njuguna
There is, therefore, great untapped potential for businesses, banks as well as the economy at large.
Godfrey Boro
Sorry to interrupt but I think there some of us who don't know even what an intellectual property is?? Kindly define for us
maina NJUGUNA
According to a report by the British Council the creative sector in Kenya contributes about 5% to the GDP, outside the MPSR, why has KBA members not tapped into this sector all this long, and withing the MPSR, what are the plans to empower, fund and support the sector in the coming years?
Joseph Njuguna
Thank you Getrude for the question. Some of the key challenges that inhibit the use of IP in Kenya and globally is lack of proper established valuation models for IP as well as infringement, which interferes with consistency and predictability of cash flows arising from the IP.
Lynet Awino
Good morning Mr Njuguna, is a quick question....Using intellectual property as collateral obviously comes with challenges. So, how is the banking industry, through KBA, working with all stakeholders to address these challenges?
Angie O.N.
Quite curious about today's topic. How does the bank validate and measure the value of IP? Also is there a limit to industries?
Joseph Njuguna
Thank you bwana Nyamboga for your question. Valuation methodologies do exist and it is important for holders or owners of IP to engage qualified IP valuers. However, locally here in Kenya there is need for proper framework for the training, certification and accreditation of IP valuers to ensure these are readily available and adherence to professional standards.
Joseph Njuguna
Hello Korir. You are right that IP presents great untapped potential for businesses and also lenders. There is, however, need for training and awareness to create the necessary mindset and paradigm shift from traditional tangible assets such as land and motor vehicles to high value intangible assets such as patents on inventions and technological innovations.
Joseph Njuguna
Michael, welcome to the chat and thank you for joining us.
Nyamboga Ogaro
Mr. Njuguna thank you very much for your response, I believe IP as an emerging issue in the banking industry, KBA and the Central Bank are working on the training awareness, and legal framework to ensure that the potential market is tapped while working within a regulated framework.
Joseph Njuguna
Hello Fredrick. Thank you for being ready to use IP. To be able to use your IP, it is critical to ensure that it is registered with Kenya Industrial Property Institute and also entered in the Collateral Registry.
Joseph Njuguna
Hello Boro. Thank you for your question. Intellectual Property refers to high value intangible assets that arise from creative works of individuals and used for business and commerce.
Joseph Njuguna
Maina, thank you. It is true that the creative sector contributes 5 percent and has even bigger potential to contribute to GDP and economic growth. Kenya Bankers Association and the banking sector remains committed to work with other stakeholders to address the challenges that have hindered seamless use of IP to access credit. For business that use IP, it is important to ensure that they have the formal structures and record keeping and financial statements which can demonstrate the ability of the IP to generate revenues, cash flows and value for the business. This can also make it easier for potential lenders and investors to asses the worth of the business.
Joseph Njuguna
Hello Angie, a bank or potential lender can validate by undertaking a search in the Collateral Register. It is therefore important to ensure that your IP is entered in the Collateral Register.
Fredrick Juma
In 2017, the Movable Property Security Rights Act (“MPSRA”) was enacted in Kenya as a policy guiding how movable property such as intellectual property rights can be used as collateral for credit. Has the benefits been realized?
Getrude Matayo
Do we have any bank that has started admitting IP as collateral?
Joseph Njuguna
Nyamboga, it is true that KBA and other stakeholders are keen to promote the use of IP in line with emerging digitization and technological innovation.
maina NJUGUNA
What has your bank, RMB done to support the youth in the creatives sector so far?
eric asuma
As a creative, the biggest worry would be the possibility of losing your IP incase one defaults on a facility, what is your view on how innovators should protect themselves incase such issues arise?
Joseph Njuguna
Thank you Fredrick, it is true that MPSR Act was enacted more than five years ago and to date its full potential has not been realized. As earlier stated, there is need for collaborative stakeholder engagement, including banks, KBA, regulators to address the challenges which have hindered the use of IP as collateral.
Angie O.N.
This is good to know. Thank you for the insights. Itthe collateral registry seems to cover movable assets. It's not clear whether they cover immovable assets such as software based assets
CLIFF MUNENE
which tools does the bank has to determine the value of IP for purposes of of using it as collateral? Is there any bank that has done this so far?
Joseph Njuguna
Thank you for your question, Maina. Rafiki Microfinance Bank has very innovative products that address the needs of SMEs and youth owned enterprises. We also keen to embrace use of IP in line with emerging trends here in Kenya and globally.
maina NJUGUNA
Has KBA started to engage artists and KIPI on the MPSR Act and the opportunities available to all stakeholders in the creatives industry?
JOHN KACHIBO
How can IP be leveraged to create opportunities for youth to further their businesses?
JOHN KACHIBO
What's your take on intellectual property as KBA, OR How are individual banks treating Intellectual property when it comes to it being used as collateral?
Joseph Njuguna
Eric, good morning. Potential items include patents on inventions such as products or a process, copyrights of creative works such as books, music, computer programmes, trademarks that distinguish goods of one company from another, technological innovations, rights to confidential information, which has value or can be sold or licensed.
Winnie Kiratu
Do we have any case study in any of our local banks that have actually packaged a loan using IP as collateral? Or even made a study for such possibilities?
Joseph Njuguna
Hello, Cliff. For a business or individual to value Intellectual Property it is important to engage the services of qualified IP valuer. The critical consideration would be potential cash flows to be generated by the IP as well as the ownership rights and how they are protected from infringement to ensure predictability and consistency of the cashflows.
maina NJUGUNA
What %age of the total KBA members has used IP as collateral and what milestones are being planned to tap into this sector that contributes a significant 5% to the GDP?
Joseph Njuguna
Maina, KBA is committed to engage with other stakeholders, including KIPI, the regulators and commercial banks to promote use of IP in order to tap the great potential under IP. KBA has coordinated preliminary studies on the use of IP as a way of tapping into its potential. There are also ongoing engagements with other stakeholders on how to operationalize the use of IP.
Chat Admin
Our chat is nearly coming to a close. Our host will soon be wrapping up the session
Michael Makanga
I hope banks are putting up more measures to recognize Ip as a valid asset, there are genuine inventors,but their sweat results in nothing.
Joseph Njuguna
On behalf of Rafiki Microfinance Bank, KBA and the entire banking fraternity, I take this opportunity to thank all the participants for the insightful and thought provoking questions. Based on this chat, it is clear that the use of IP has great potential to contribute in wealth creation, growth of local enterprise and is also critical to attract foreign direct investment. KBA and banks will continue with ongoing stakeholder engagements to ensure that this potential is realized for the growth of our businesses and the Kenyan economy.
Joseph Njuguna
Thank you once again and I wish you a good day and a nice weekend ahead.
Chat Admin
Join me in thanking our host Mr. Njuguna for a particularly insightful session.
Chat Admin
We also thank all our participants for the insightful questions, comments and thoughts shared. You truly have made this an educative session
Limo Taboi
Mr Njuguna, thank you for the lessons on IP
fredrick owino
Thank you Mr Njuguna for that great insight.
Chat Admin
As we wrap up, we would like to assure you that the chat transcript will remain available in this website and can be found at any time in future.
Chat Admin
The chat room will close in a couple of minutes but the chat transcript will remain available. Thank you once again and have a wonderful day.
CLIFF MUNENE
Thank you Mr Njuguna and the planning team.
maina NJUGUNA
Thank you for your time Mr. Njuguna.
Ken Watitu
The you Mr. Njuguna for the interactive engagement.
Nyamboga Ogaro
We appreciate the opportunity and your time Mr. Njuguna.
Hillary Mulindi
Thank you Mr Njuguna
Eva Ireri
Thank you Mr. Njuguna
Tynka Victoria
Thank you Mr. Njuguna
maina NJUGUNA
Kindly upload this into the archives so that artistes who were not in a position to join in can get an opportunity to go through the chat session. Thank you