Challenge
Access to finance for micro, small, and medium-sized enterprises (MSMEs) remains a key challenge in Kenya. This is a particular barrier for women and youth entrepreneurs, as well as small agribusinesses that are often located in rural areas.
Solution
With funding from FMO, the Frankfurt School of Finance and Management supported Sidian Bank in expanding its services to MSMEs with a specific focus on women and youth entrepreneurs, as well as MSMEs active in the agriculture sector. This included helping Sidian Bank to better understand the financial and non-financial needs of target MSMEs, and to design and roll out new financial products for these clients. The technical assistance complemented financial support that FMO provided to the bank to further stimulate lending to underserved groups. FMO guaranteed up to 94 percent of Sidian Bank’s MSME lending portfolio through FMO’s Nasira Risk Sharing Facility. This means that if MSMEs default on their loans, FMO will cover 94 percent of losses.
As part of the project, Making Cents conducted a baseline assessment of the financial needs of women, youth, and agribusiness entrepreneurs in Kenya and carried out an institutional assessment and portfolio analysis of Sidian Bank. Based on the results of these assessments, Making Cents provided recommendations to Sidian Bank to design new products and services to reach these target groups.