An interdepartmental OPIC team traveled to Kenya last year to monitor the performance of three financial institutions whose microfinance lending is supported by the agency: Musoni, the Kenya Women’s Finance Trust DTM Ltd (KWFT), and Equity Bank. Over the course of three days, members of OPIC’s Office of Investment Policy, Portfolio Management Department, Small and Medium-sized Enterprise Finance Department, and Office of External Affairs met with staff from each institution, microloan groups organized by each, and with individual loan recipients. The goal was to assess the financial performance and developmental impact of the institutions’ microfinance lending, and more broadly, their efforts to implement the principles of the Smart Campaign, a global effort to integrate client protection into MFIs’ due diligence, investee selection and loan covenants. OPIC’s Tim Harwood reports from the trip.
Day Two: Kenya Women’s Finance Trust and a revolution realized
Where the previous day’s visit to Musoni hitched the OPIC team to a game board piece – mobile banking – that is enabling Kenya to leapfrog a dozen steps to greater financial inclusion, the second day was something else entirely. The Kenya Women’s Finance Trust (KWFT) was on the far side of an already successful banking revolution, one which had financially empowered tens of thousands of Kenyan women across virtually every sector and region of the country. To OPIC eyes, KWFT had evolved during its 30-year history into a fixture on the country’s financial landscape. Its success is backed by reams of data which vindicated its founding principle – that women entrepreneurs were a sound and untapped investment pool. 
Our first stop was KWFT headquarters in Upperhill, Nairobi, to review two OPIC loans totaling $6.5 million through OPIC’s microfinance partnership with Citibank. Managing Director Mwangi Githaiga and his senior team outlined KWFT’s impressive infrastructure: 2,000 staff members in 222 offices nationwide, serving 580,000 clients, managing a loan book of $144 million and a deposit book of $93 million. What had begun in 1981 as an MFI designed to “provide access to financial services to women entrepreneurs to enable them to improve their economic status and livelihoods” had grown into a mature powerhouse serving predominantly rural customers (about 80 percent of KWFT’s clientele) through a state-of-the-art T24 MIS reporting system.
What stood out throughout was KWFT’s adaptability – a knack for offering successful new products drawn from having an ear to the ground rather than an eye to a spreadsheet. KWFT’s biggest watershed moment was its decision in 2010 to become a deposit-taking microfinance institution (DTM) through a license from the Central Bank of Kenya. Prompted by a drop-off in clients caused by competition from “lots of” banks entering the microfinance sector, the transition was not a easy one, but nonetheless successful: KWFT is now first among Kenya’s six DTMs, with a market share of 68 percent.
Attention to client needs informs all of KWFT’s work. It signed onto the Smart Campaign in 2011, offers a 24-hour call center for clients and closely monitors over-indebtedness by ensuring that KWFT loan groups limit members’ exposure and conduct rigorous assessments before approving loans.
Perhaps most impressive was the host of KWFT products tailored for sectors and groups critical to the country’s future: water and sanitation loans to enable access to clean water; agricultural loans for crop farming, livestock purchase and aquaculture; clean energy loans to enable purchase of solar panels and lanterns, LPG cylinders and biogas systems. Additionally, they created children’s savings accounts, called Tausi Junior (complete with rubber ducks for young account holders), to promote saving for education.
“KWFT takes the solar lanterns to rural group meetings, educates members on their use, and so shop owners are able to stay open later and let people in the area charge their cell phones. Through this value chain we were able to sell 10,000 lanterns in one year,” said Githaiga. “By the same thinking, we are delivering water tanks to rural areas, creating biogas products using dung as energy and for fertilizer, and supporting goat farming, since goat milk is good for children. Not all of our loans are necessarily growing businesses, but raising standards of living, which is equally important.”
KWFT’s latest adaptation? Becoming part of the mobile banking revolution. In 2012, KWFT signed 7,000 clients by March and is hoping for 20,000 by the end of the year. Next up may be expansion into Rwanda and South Sudan.
“We proceed from a simple philosophy: a woman who is economically deprived has no voice,” said Githaiga. “The biggest asset for women is the ability to make choices for their families and themselves. And it has worked. That’s why, 30 years later, we now are able to serve the entire family.”
Ongata Pine Breeze Academy
An hour’s drive northwest of Nairobi, at the foot of the Ngong Hills, was the bustling town of Rongai. The OPIC team stopped to pick up staff from KWFT’s local branch and moved onto the first loan recipient of the day: Lillian Alwi, founder and director of Ongata Pine Breeze Academy. 
Sitting bright blue-and-red within an otherwise depressed neighborhood, the Academy owes its existence entirely to the will of Alwi. Formerly a teacher at another school nearby, Alwi followed her “passion for kids” to open her own school in 2000, going door-to-door to recruit students, counting her then three-year-old son as her first.
A dozen years on, Pine Breeze Academy brims with the energy of 522 uniformed students, aged 3-12, under the watchful eyes of 32 teachers. Outfitted with a smart-looking school bus and an infectious optimism, the Academy is clearly the envy of its neighbors. School fees range from $20 per month to $35.
Alwi was introduced to KWFT in 2011, and has since obtained two loans, one for $5,700, and the more recent one for $11,500. While a school director may not seem the prototypical entrepreneur, Alwi is nothing if not entrepreneurial: she is using the loans to develop bean-farming at her home, the produce from which she provides to the school.
“It was my dream to take this place and see it grow. And I’ve really labored, I can tell you,” she said. “A friend introduced me to KWFT. They were an institution that could listen to me, I felt. I was able to get a loan, and it has helped tremendously because it was coming at a time when parents were starting to pull out because school fees. And now we are going well.”
Angelina Hostel
Not far from the Pine Breeze Academy, our next stop was a leafy Rongai neighborhood where a smart-looking, two-story stone building was nearing completion. Angelina Musyimi, a gracious hostess who served tea and muffins, is using an $1,800 KWFT loan to build a ten-room hostel for students attending the universities nearby.
Courtliness aside, Musyimi’s business acumen and adaptability rivals KWFT’s. Having previously sold sodas, run her own grocery and a second-hand clothing store, Musyimi decided as she got older that she wanted “something less involving – a plot to call home.” She moved to Rongai, noticed a need among Nazarene and Maxwell university students for housing, compared rental prices and decided to build a hostel.
“I met KWFT in 2010,” Musyimi said. “I had used other MFIs before and found them time-consuming. But I’ve had a very good relationship with KWFT; they’ve always been ready to answer my questions. [In addition to the construction loan] I now have my savings with them, and I can pay my electricity bill by phone. Once my construction is complete, I’ll start advertising for rooms.”
For Musyimi, something in KWFT’s DNA had clearly tipped a scale in her.
“It’s made me want to be part of the things women are doing, because I can see exactly what KWFT can do for women” she said. “The biggest challenge for women is getting collateral, but it’s hard to get permission from men. KWFT’s services help women overcome fees associated with the lack of title.”
“I’ve learned a lot from owning a business. I got out of the cocoon of raising children. Because, it takes so long to grow unless your look beyond yourself to the ability to make an investment.”
