Microfinance in Kenya

The microfinance industry in Kenya took its present shape on the onset of economic liberalization between 1992 – 1994. As the regional trade and financial hub for East Africa, Kenya has developed a network of micro-finance institutions that extend loans to small farms, businesses, and entrepreneurs. The Association of Microfinance Institutions (AMFI) was formed to serve the interests of these institutions by creating an enabling environment for micro-finance, sharing best practices, and creating business connections between various regional firms.

At invest-in-kenya.com, we wish to work directly with clients to build in-house programs or to develop multi-stakeholder, industry-wide solutions that will create a sustainable industrial base without losing sight of our clients' immediate business needs.



We will try to help clients to prioritize investments using agreed selection criteria so that stakeholders will see results in both the near and long term.

We will also bring our local area knowledge and experience to help clients design local content programs that will benefit relevant local communities. The current high levels of poverty combined with slow economic growth in the formal sector have thus forced many Kenyans into self-employment and informal activities, yet access to financial services remains a major challenge. By providing access to financial services through microfinance enables people to take control of their own future.

Some of our long term goals that can be facilitated through microfinancing include:-

• Avoid unproductive agreements that sound good on paper but deliver few results.

• Build roads.

• Change cultivation practices.

• Strengthen agricultural training institutes.

• Create funds for villagers to start small businesses.

Forty-seven microfinance projects last year allowed individuals with HIV/AIDS to obtain basic business training that helped them increase their incomes, improve their health and nutrition, and expand their access to anti-retro viral drugs. Equity Bank started its operation in 1984 as Equity Building Society. The initial focus was to offer mortgage services but in the early 90s Equity Building Society(EBS) changed its focus to micro-finance services. EBS grew to become a leading micro finance institution providing a wide range of products and services.

Equity’s mission is to “Mobilize resources to maximize value and economically empower the micro-finance clients and other stakeholders by offering customer-focused quality financial services and solutions.” Equity’s vision is “To be the leading and preferred micro-finance services provider.”

Equity has been extremely successful in its efforts to provide microfinance services in Kenya.

It has identified a significant market niche, designed products and delivery systems that respond to and satisfy the needs of that niche and is now making significant returns on its investment. Equity has gradually evolved from a product-driven through a selling-driven and social-marketing to a full-fledged, client-responsive market-led approach. This evolution has been clearly reflected in the organization’s results over time.

As a result all the banks and building societies are looking for opportunities to lend where they have not needed to before. Equity is continuing to focus on its core business of lending against salaries and tea/coffee/milk deliveries but has begun to pilot-test a cash flow based, individual lending micro credit product.

Micro-finance initiatives would greatly uplift the living standards of the many Kenyans living below the poverty line. It would help farmers to purchase irrigation equipment, pesticides and manure for their farms. Secondly, businessmen who are given access to capital through micro-finance will be able to expand their businesses thus maximizing profits. It is sad to note that in some countries government-owned development finance institutions are limiting their micro-finance lending to the strongest micro-finance institutions. This leaves the increasing number of private lenders to seek out smaller and riskier investments.