Mwangi Githaiga ,KWFT Managing Director, receiving a trophy for the Best Microfinance Institution from HE the President, Uhuru Kenyatta.

By taking its   services  to  remote and  isolated  areas,  leading microfinance bank turns  the tide of  enterprising   (albeit   economically  disadvantaged)  women  and  their respective  families

By George Gichuki

Women around the world (especially in the developing countries) face a host of legal and cultural challenges which limit their economic productivity. Compared to their male counterparts, many women are held hostage by cultural biases which confine them to their homes to look after children and toil in farms among other domestic chores. Kenya is not an exception. Whereas the country now has a progressive constitution that seeks to narrow the wide socio-economic gap between the male and female gender, it is not yet out of the woods.
To start with, our society is still bound by cultural stereotypes that make it hard for women to climb the socio-economic ladder. In addition, to add insult to injury, many economically productive men are still migrating from the rural to urban areas in pursuit of either formal or informal employment even after the establishment of the devolved system of governance.
The sad reality of this trend is that husbands often leave their wives and children in the rural areas where the latter are engaged in subsistence farming in a bid to eke out a living. More often than not, the economic benefits of such farming activities are nothing to write home about. They are also tiresome and time consuming.
According to a research by Mc Kinsey Global Initiative, once the world succeeds in removing the barriers that limit women from producing and participating in various economic activities at the same level as men, we shall add $ 28 trillion to the global gross domestic product (GDP). One way of achieving the said goal is by facilitating women to access financial products and services.

It is against this background that way back in 1981, a team of Kenyan women professionals established Kenya Women Finance Trust (KWFT). Operating as a non-governmental organization (NGO) in its early years, KWFT’s goal was to offer financial support to women in the rural areas. Over the years, the institution has grown in leaps and bounds.
Currently, it is the leading microfinance bank in the country with a customer base of over 700,000 and a presence in 45 out of 47 counties. With a strong agenda of empowering women, the bank clinched the ‘Best Company to Work For’ award in 2016, in a survey conducted by Deloitte. “55% of our over three thousand employees are women and they also comprise 60% of our top management team,” says Mr. Mwangi Githaiga, the Managing Director. “In the same regard, majority of our customers are women who run micro and small enterprises throughout the country and every day, they work extremely hard to put food on the table for their families,” he adds. One of KWFT’s values is to uphold the dignity of women from all walks of life.

Standing out
KWFT is the leading player in Kenya’s microfinance industry. “Our target group –women- is unique and very loyal to us,” says Mr. Githaiga. “Many women start their businesses in a very small way but we give them the necessary support to grow , and hence we have a very strong relationship,” he adds. Moreover according to him, just as they are committed in taking care of their families, women nurture their businesses with a lot of zeal and they are good finance managers.
In the same breath, besides being the bank’s customers, women own more than fifty percent of its shares and they are therefore dedicated to its long term success.
Most importantly, KWFT‘s employees are very committed to their duties and they often put in extra hours in order to achieve their targets.The microfinance bank also has a very experienced and stable board of directors who offer the necessary leadership and support to the management.
“Moreover, we have been in business since 1981 and over the years, we have gained a lot of critical knowledge from both our success and failure,” Mr. Githaiga observes.

Financial inclusion and product offering
Despite the pivotal role that finance plays in stimulating the growth of various economies worldwide, it is unfortunate that about 60% of Kenyans (especially those living in the rural areas) are financially excluded. “Even though many Kenyans can now transfer money and make payments using the mobile money platforms, that does not mean that they are banked,” observes Mr. Githaiga. Against that background, 80% of KWFT’s operations are in the rural areas where majority of the Kenyan citizens reside and economic opportunities are not in plenty. “Our presence in the rural and far flung areas that other banking institutions shun not only enables us to enhance financial inclusion, but it also ensures that we are able to interact with our customers on a one-on-one basis, as opposed to relying on technology,” he further says.
It is an expensive model which involves the bank’s officers using motorbikes and off road vehicles to navigate the rough rural terrain in their bid to serve such customers. For effective service delivery, the bank has 241 branches throughout the country.
Nevertheless, despite the huge costs, this model has succeeded in enhancing financial inclusion and changing the economic fortunes of many low income households.
Most importantly, the model is driven by KWFT’s conscious decision to embrace the three bottom line approach – profit, planet and people. “While developing our products, we focus on their potential to generate returns (profit), impact on the environment (planet) and their ability to transform our customers’ lives (people),” observes Mr. Githaiga. “We only roll out a product once it has scored highly in all the three areas,” he adds. In the same breath, KWFT does not offer generic products. On the contrary, it carries out market research to establish its customers’ needs so as to develop appropriate products.
Given that majority of KWFT’s customers (women residing in rural areas) do not have assets like title deeds or log books which they can use as collateral for loans, the bank serves them using the group lending methodology – popularly known as the Grameen model.
Through this model, women form groups which meet on a monthly basis to mobilize savings and they access credit by members co-guaranteeing each other. Ultimately, the members who graduate into borrowing huge sums of money can leave the groups and borrow individually from the bank. Often, at that stage, they will have managed to accumulate enough assets which they use to secure bigger loans.
Most of the lender’s products focus on enterprise financing – both agribusiness and commerce. “The only way our customers can be empowered economically is by facilitating them to engage in income generating activities,” says Mr. Githaiga. “We not only finance commercial enterprises, but we are keen on uplifting the standards of agribusiness especially at the bottom of the pyramid, so that small scale farmers can earn a decent living, besides getting food for their households,” he emphasizes.
Secondly, KWFT looks keenly at the needs of rural households (its target market) while developing its products. One of those needs is clean water and sanitation. To that end, it finances its customers to buy modern tanks so that they can harvest water from rainfall. In addition, it also finances them to improve their houses on an incremental basis.
“A customer can start by borrowing a small amount of money to have corrugated iron sheets on her roof as opposed to thatch, before seeking for bigger financing to replace mud walls with stones,” the Managing Director observes. This product ( known as ‘Nyumba Smart’) has become very popular with KWFT’s customers because of the emotional attachment individuals have with their houses, and since its launch, its loan portfolio has hit Kshs. 1.4 billion.
Thirdly, in a bid to deal with its customers holistically, KWFT has developed clean energy products for them. “ We finance our customers to acquire solar energy facilities for lighting their homesteads , as opposed to using kerosene lamps which are not friendly to the environment,” Mr. Githaiga observes.
In the same breath, customers are also financed to purchase cooking stoves that burn wood or charcoal efficiently hence not only saving money and time while cooking, but also conserving the environment. By and large, this holistic approach improves the living standards of the rural areas whose residents are checked from migrating to the urban set-ups in search of better social amenities.
Of critical importance, financial literacy programmes are an integral part of KWFT’s lending model. “Our credit officers are armed with the necessary knowledge and skills that they impart on our customers so that the latter can utilize their loans to grow their enterprises, as opposed to diverting them to unproductive activities,” Mr. Githaiga points out. These financial literacy classes are usually held in group set-ups and they are tailor made according to the businesses that the customers are operating.

Despite having a good balance sheet and a core capital of almost Kshs. 5 billion, KWFT has remained loyal to its social mission as a microfinance bank. It has resisted the obvious temptation of converting into a commercial bank despite the handsome returns such a move might have.
“We focus on the social impact of our business on our customers and how it affects the environment while realizing moderate as opposed to super profits,” emphasizes Mr. Githaiga. In that respect, KWFT’s two strategic investors – Incofin and NMI – from Belgium and Norway respectively share its ideals.
“We were keen on bringing on board strategic investors with strong social missions since we would not want to drift by any chance,” he further says.
To the pessimists, in 1981, the founders of KWFT may seemingly have bitten more than they could chew by establishing a financial institution to serve women of humble economic means. Nevertheless, time has proved that they were audacious and visionary, owing to the pivotal role that their baby has played over the years in shaping the destiny of many leading women entrepreneurs in Kenya. “ We view ourselves as agents of change with a fundamental role of turning around the economic fortunes of women across the country, and their respective families,” Mr. Githaiga emphasizes.
As a microfinance bank, KWFT is already a member of the Central Bank of Kenya’s (CBK) clearing house and it has started operating current accounts. In the same regard, its customers can also transmit money electronically through Real Time Gross Settlement ( RTGS).
Moreover, the lender has already been licensed to start operating foreign denominated accounts by CBK. “ In 2017, we shall strengthen our agency banking delivery channel as we focus on tapping more customers in the rural and remote areas of our country,” the Managing Director notes.

Mr. Githaiga is also the chairman of the Association of Microfinance Institutions – Kenya, (AMFI-K). According to him, Kenya’s microfinance industry is the most developed in Africa. Nevertheless, its growth is being hampered by lack of a law to regulate the credit only microfinance institutions. “ There are many informal financial institutions operating in the country ( some even with foreign roots) taking deposits from customers and lending at exorbitant rates since they are not regulated,” he laments. “Cases have even been reported of such unscrupulous players going under with customers’ deposits,” he adds.
Unfortunately, not every customer is able to differentiate between the rogue lenders and genuine microfinance institutions. Therefore , according to Mr. Githaiga, the government should arrest the situation by fast tracking the regulation of the credit only microfinance institutions.
AMFI is also looking forward to bringing more members on board so that its voice as an advocate of Kenya’s microfinance industry can get louder.