Case Studies

The Kenya Investment Mechanism (KIM), a five-year USAID program that closed in 2023, provides an impressive success story of how mobilising capital, especially private investment, can accelerate economic development and improve lives across the board.  

Over the 5-year life of the project, the team successfully mobilised over $650 million of capital investments in small businesses from $35 million of USAID funding. The capital raised across the Kenyan financial ecosystem, which was invested in more than 400 businesses across the country, prove that through smart incentives and demand-driven technical assistance, you can facilitate private finance and leverage investment to bolster whole sectors of an economy. 

$650 million is a difficult amount to fully fathom but when we consider that the capital led to the creation of more than 3,000 jobs, it starts to put the number into perspective. And that’s just the beginning.  

For the team to get to that number, they had to unlock capital for the agriculture sector. To do so, KIM helped to improve the use of the International Development Finance Corporation (DFC) credit guarantee as a tool to provide much needed credit to enterprises in the underserved agriculture sector.  

One of KIM’s key partner financial institutions with a DFC credit guarantee facility was Musoni Microfinance. Founded in 2010, Musoni is the first microfinance institution (MFI) whose operations can be termed as 100% cashless. The organisation leverages innovative technology to provide financial services to micro-entrepreneurs and smallholder farmers in Kenya.  

In 2018, Musoni set out to deepen its financing offering to MSMEs by targeting customers in the agriculture sector. To do so, Musoni’s management sought out the DFC credit guarantee as a mechanism to support its efforts in lending to the agriculture sector. A guarantee of $9.3 million was set up in 2018 with a validity period running until 2026.  

To support Musoni’s use of the DFC credit guarantee, KIM provided technical assistance through staff trainings on the credit guarantee, new product development, and transaction structuring advisory, among other support services. Within just 15 months, Musoni had fully utilised the guarantee and disbursed 22,400 agriculture loans exceeding $9 million.  

The technical support from KIM enabled Musoni to reach new agricultural areas, enter new value chains like dairy, and other milestones. To enhance the uptake of its guarantee facility, Musoni also extended training to 100 staff in rural branches, predominantly lending to agriculture clients.  

These trainings were to help staff conduct agriculture loan analysis and portfolio management and were conducted through a Trainer of Trainers model. Some of the areas covered in the training included agriculture and group lending, customer relationship management at the branch level, and setting up client facing apps for clients.  

Musoni also trained all 22,000+ borrowers as a pre-requisite in its group lending approach – the main lending medium for the agriculture loan borrowers.  

Capital is one thing but deploying that capital hand-in-hand with tailored technical assistance and support is what takes $1 and turns it into so much more.