How Pesa Mingi Bank can finance Jesse

As the legal advisor to Pesa Mingi Bank, I will explore how the bank can provide financing
options to 1Jesse and help him achieve his goal of mass-producing and installing his invention in
every home in Kenya and eventually in the international market.
Section 6 of the Movable Property Security Rights states that a security right is created
by a security agreement as long the grantor has rights in the asset to be encumbered or rather they
have the power to encumber it. Section 6(2) of the Act goes further to state that a security
agreement may provide for creation of a security right in a future asset. Security right in that asset
is however created only at the time grantor acquires rights in it or power to encumbered it. With
that regard, Jesse had already acquired the security rights as his solar backup gadget is patented.
Section 6(4) of the Movable Property Security Rights Act states that a security right
entered in accordance with this section is enforceable and it creates a security right whether or not
requirements that may be imposed in any other written law are satisfied. This section therefore
protects Pesa Mingi Bank since incase of default, the agreement can be enforced to settle the debt.
Business Loans
One of Jesse's most common financing options is a business loan. Pesa Mingi Bank can
provide Jesse with a business loan to finance his production. The loan can be structured with a
reasonable interest rate and a flexible repayment plan that aligns with the expected cash flows from
the project. Depending on Jesse's creditworthiness and the bank's risk appetite, the loan can be
secured or unsecured. A business loan from Pesa Mingi Bank can help Jesse cover his upfront
costs, such as raw materials, equipment, and labor. The loan can also help Jesse to manage his cash
flow more effectively and reduce his dependence on external sources of financing. Additionally, a
business loan from Pesa Mingi Bank can help Jesse build his credit score and establish a good
relationship with the bank, benefitting his future financing needs.
Pesa Mingi Bank must comply with the Central Bank of Kenya's (CBK) business lending
regulations when providing Jesse Muriithi with a business loan. The CBK has set guidelines for
commercial banks to follow when lending to businesses to ensure that the banks maintain sound
credit risk management practices. Under these guidelines, Pesa Mingi Bank must perform a
thorough credit analysis and underwriting process to determine whether to approve the loan.

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Laibuta K.I., (2016). Principles of Commercial Law (2nd Edition). Nairobi: LawAfrica Publishing (K) Ltd.
 To qualify for a business loan, Jesse Muriithi would need to provide the following
documentation:
• Business plan
• Financial statements
• Bank statements
• Tax returns
• Collateral (if applicable)
The bank would need to verify the information provided by Jesse and determine whether
he can repay the loan. When granting the loan, the bank would need to comply with the provisions
of the CBK's Prudential Guidelines for Institutions Licensed under the Banking Act.
Equity Financing
Another financing option that Pesa Mingi Bank can provide to Jesse is equity financing.
The bank can invest in Jesse's company in exchange for business ownership. This could be done
through a partnership or the purchase of equity shares. Equity financing can provide Jesse with a
significant amount of funding that he can use to finance his production. 2 Additionally, Pesa Mingi
Bank can provide Jesse with valuable resources such as expertise and access to networks to help
him grow his business. In return, the bank can share in the business's success by owning a portion
of the company.
For equity financing, Pesa Mingi Bank would need to comply with the Companies Act of
Kenya, which sets out the legal framework for forming and managing companies. Jesse Muriithi
would need to incorporate his company and issue shares to Pesa Mingi Bank in exchange for equity
financing.
To incorporate a company in Kenya, Jesse would need to follow these steps:
• Reserve a company name with the Registrar of Companies
• File the company registration documents with the Registrar of Companies
• Obtain a company registration certificate
Pesa Mingi Bank would need to comply with the provisions of the Companies Act when
acquiring shares in Jesse's company. The bank would need to hold the shares in trust for its clients,

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Laibuta (n.1).
comply with the disclosure of interests 3, and ensure that it does not violate the provisions on insider
trading.4

Grants
Pesa Mingi Bank can also advise Jesse to seek grant opportunities from government
agencies, non-profit organizations, or private foundations supporting renewable energy initiatives.
These grants could give Jesse the funding to jumpstart his mass production efforts. Grants can
provide Jesse with non-dilutive funding, which means he does not have to give up equity in his
company to receive funding. Additionally, grants can help Jesse build relationships with
organizations that share his vision and provide him with other resources, such as expertise and
access to networks.
For grants, Pesa Mingi Bank would need to advise Jesse Muriithi on the various grant
opportunities available in Kenya and help him to prepare and submit grant applications. The
relevant laws for grants would depend on the specific grant program, which government agencies,
non-profit organizations, or private foundations could sponsor. To qualify for a grant, Jesse would
need to demonstrate that his solar backup gadget is aligned with the grant program's goals and that
he can implement the project successfully. The grant application process can be competitive, and
Pesa Mingi Bank needs to guide Jesse in preparing a strong application.
Supplier Financing
Pesa Mingi Bank can also facilitate supplier financing for Jesse Muriithi, which involves
helping him negotiate favorable terms with suppliers of raw materials, equipment, and other
resources needed for mass production. The bank would be a guarantor for the supplier financing
and must comply with the relevant Kenyan banking laws and regulations. To qualify for supplier
financing, Jesse must demonstrate that he has a viable business plan and can repay the financing.
Pesa Mingi Bank would perform a thorough credit analysis and underwriting process to determine
whether to approve the financing. The bank would need to verify the information provided by
Jesse and ensure that he is not engaging in any fraudulent activity.
The bank must also comply with the Central Bank of Kenya's Prudential Guidelines for
Institutions Licensed under the Banking Act when providing supplier financing. The bank must

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Section 535 of the Companies Act of 2015.
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Section 32B of the Capital Markets Act.
maintain sound credit risk management practices and ensure supplier financing complies with the
regulatory framework. In addition, Pesa Mingi Bank would need to comply with the provisions of
Kenyan banking laws and regulations when acting as a guarantor for supplier financing. The bank
must ensure that the supplier financing is properly documented and that the terms and conditions
comply with the law. The bank would also need to ensure that it is not engaging in fraudulent
activity and violating any laws or regulations.
Conclusion
I recommend that the bank grant Jesse Muriithi a loan to fund his project for mass
production of the solar backup gadget and use his patent as security. To ensure compliance with
relevant laws and regulations, Pesa Mingi Bank must perform a thorough credit analysis and
underwriting process for business loans .
It is also important to draft a security agreement since it creates security rights with respect
to Section 6 of the Movable Property Security Rights Act which states that a security right may be
created in a future asset.
A security agreement is enforceable and creates security right regardless of whether or not
other written laws imposed have different requirements. This therefore offers protection to Pesa
Mingi Bank because legal action can be taken and agreement enforced incase of default.
 Bibliography
Primary Sources
Legislation
1. Banking Act of Kenya 2015
2. Capital Markets Act, Chapter 485A of the laws of Kenya
3. Companies Act of Kenya of 2015
Secondary Sources
Books
1. Laibuta K.I., (2016). Principles of Commercial Law (2nd Edition). Nairobi: LawAfrica
Publishing (K) Ltd.