Oikocredit focused on a singular mission of creating social justice through ethical lending
By Joseph Macharia
It is a chilly humid morning in Nairobi. Quietly sequestered in a power board room, over a cup of coffee BL Magazine discourses with Curtis Musembi, Oikocredit’s investment manager for East and Southern Africa. He leads business operations for Oikocredit in the region overseeing a significant portion of Oikocredit’s nearly Euro 200 million portfolio currently invested in Africa ( as at 30th September 2023). He also serves on the board of the Association of Microfinance Institutions – Kenya (AMFI-K).
Musembi did his early school education in Machakos. Inspired by Dr. James Mwangi, the CEO of Equity Bank, he took an undergraduate degree in finance and banking at Moi University. This was at a time when banking was deemed ‘elite.’ Equity Bank then disrupted the status quo by developing products for the bottom of the pyramid market segment. It was a game changer.
“That is when I got exposure that I can transform lives with the right tools,” says the father of two. After university, Musembi began his career at Unaitas. He later transitioned to Kenya Climate Innovation Centre where he worked with small and medium enterprises (SMEs). In 2019, he started as an investment officer and in 2024 assumed the role of the investment manager at Oikocredit.
Calm and collected, Musembi tackles an array of pertinent issues from the economy and life to personal finance.
Give us a brief background of Oikocredit?
Oikocredit, a social impact investor and worldwide cooperative has nearly five decades experience of funding organisations active in financial inclusion, agriculture and renewable energy. Oikocredit’s loans, equity investments and capacity building aim at enabling low income people in Africa, Asia and Latin America to improve their living standards sustainably.
Oikocredit finances more than 500 partners, with an outstanding total development financing capital of € 1,037.2 million ( as at September 2023).
Why did you choose a career in finance?
I think finance happened to be a career that resonated with the things that I’m passionate about. I saw the opportunities in Africa rapidly growing and I knew I could do something with huge social good with a finance background. Finance is one of the few careers that mix both technical and people skills. One always interacts with people. I was confident that a career in finance and banking would equip me with the tools to help communities in pulling themselves out of poverty. I’m happy it has worked.
How does Oikocredit impact businesses as a social impact financier?
We are taking an impact-first lens to investing where the equity and debt investments have the end users’ impact in mind. Our idea is to deepen the impact that they have and expand their outreach. We focus on pertinent areas such as client protection, smallholder farmers’ engagement, climate action and gender equality. As a social impact investor, if you compare with a traditional investor, there are distinct advantages in terms of structuring, flexibility and technical assistance.
In the East African region, we are working with dozens of growth-stage companies that have demonstrable results in improving livelihoods.
What is your best moment in your work?
I am elated every time we onboard a new partner who we know is solving a problem for the community and that our investment will unlock a ripple effect of impact. It’s fulfilling to find ways to work around financing structures to meet the specific needs of our partners.
How many countries do you cover currently?
In the East and Southern Africa region, we cover Kenya, Uganda, Rwanda, Malawi and Zambia. In Africa, we are focusing on thirteen countries in total at the moment. We are always on the lookout for emerging opportunities in other countries.
Tell us about your core business?
It is equity, debt and capacity building within the specifics of financial inclusion, agriculture and renewable energy. The investments can be for onward lending, working capital or CAPEX (capital expenditure) using a wide range of equity and debt instruments. We are focused and serve a niche market but ensure that we have deep roots in that market segment.
With the rising inflation, depreciation of local currencies and governments revising tax regimes, how is the credit situation in East and Southern Africa?
Generally in our markets, the business operating climate is good; safe for a few hurdles. Remember we have had the Covid19 headwinds. We thought we had come out of it in 2022 but 2023 proved to be a very tough year for a lot of businesses. It was characterized by high inflation, international conflicts, high cost of borrowing for both government and private sector, disrupted value chains and governments re-looking at their taxation regimes. All these have an impact on reducing disposable incomes. So when you have that, if you’re looking at it from a financial institution side, the quality of the loan book could be adversely affected.
We’ve been seeing headwinds and market volatility in some of the value chains that we are in, but as a mature and agile organization, Oikocredit has remained dedicated to creating value and developing social impact.
Interest rates have shot up, how does it affect SMEs and the economy?
To start with, it increases the cost of doing business. If the cost of borrowing goes up and a lot of SMEs rely on borrowing to grow, it means they need to recover these costs somewhere. It increases the cost of products and services that they are producing.
If banks can lend to the government at 16 – 18 percent they might not be as enthusiastic to loan SMEs. So it may have an impact on financial inclusion. It has a direct impact on employment. It has been well-researched that when credit is readily and affordably available, businesses are bullish, they grow and create employment. When the operating environment feels constricted, everybody is on a wait-and-see approach.
For Oikocredit, some of the key measurements we want to see are: improved incomes, jobs being created and access to financial services being expanded.
Give us a formula to crack personal finance?
The biggest issue is having a very good view of your costs. You’ve heard that costs rise to meet income. You’ll be surprised that sometimes the costs rise faster than the income. The holy grail of personal finance is just to spend less than you earn and invest the difference.
What inspires you to jump out of bed and do what you do?
I think it is finding that spot where your purpose and passion meet. What you know you were built to do; things that you’re good at, then seeing how you can use them to better the community. That is my guiding principle.
What advice do you have for young people starting their careers?
One thing I would highlight is taking the approach of continuous learning. Once you’ve just begun, you need to become very good at what you do. That only comes from continuous learning, whether it’s academic or from your peers, from mentors or books. You need to apply yourself. Until you can be an expert in your field, you’re unlikely to reach the heights of that vocation.
Getting a job is part A of the challenge. A lot of this learning happens out of school. We have a lot of resources online. We are moving into the Artificial Intelligence (AI) age. You just have to figure out how to live your world in this chat GPT era. Skills that you had before are rapidly becoming obsolete if not continuously honed.
And B, I’ve also seen the value of mentors. Engage people who are ahead of you in the career journey and who can act as guides. They can share some of the nuggets and pitfalls that they made. We can learn by being teachable.
What do you do in your spare time?
I like the outdoors. I just like the feeling of knowing I’m out in the world. I like going to a park or the Rift Valley or the Coast or just to the neighbourhood to see trees. I also enjoy my music. I enjoy playing with my kids. Those are the things you’ll most likely find me doing on a weekend. I also like a good book.
Talking about books…Your favourite book?
For books, I like autobiographies, where it is just people telling their stories in their own words. I have two favourite books: ‘A Promised Land’ by Barack Obama and ‘Shoe Dog’ by Phil Knight.
Your parting shot?
God put us here for a purpose. We have no choice but to live in the best way we can. That always involves making things better for the next person.
