Juhudi Kilimo’s Success in Agricultural Lending

Mr. Bernard Kivava, CEO, Juhudi Kilimo.

Lender provides wealth generating solutions to rural smallholder farmers and micro entrepreneurs by providing   unique products and value added services, besides   embracing   cutting edge technology

By Chrys Chacha

Over the years, microfinance institutions (MFIs) have played a critical role in deepening financial inclusion in Kenya. The institutions have filled the gap created by the failure of mainstream banks to develop financial products for the low-income clientele. Since the enactment of the 2016 Microfinance Act, the sector has undergone many changes, key among them being the establishment of microfinance banks which mobilize deposits and are regulated by the Central Bank of Kenya (CBK). However, the sector is currently grappling with a major challenge of an increasing   number   of    micro lenders, mainly riding on digital platforms and positioning   themselves as  microfinance institutions, yet they are neither members of the Association of Microfinance Institutions – Kenya (AMFI-K) nor are they focused on alleviating the plight of the economically disadvantaged populace in line with the sector’s mission. As AMFI-K continues to lobby for the passing of the credit only microfinance regulations, Mr. Bernard Kivava, the Chief Executive Officer (CEO) of JuhudiKilimo believes the move will help in building investor confidence, offering a clear regulatory framework and  creating a level playing field.


Founded in 2004 as a social enterprise project within a wider development agency under K-Rep Bank (nowSidian Bank), Juhudi Kilimo has over the years curved a niche in the competitive microfinance market by   providing credit to smallholder farmers. It spun off from K-Rep in 2009 and became a for profit credit only microfinance institution owned by three social impact investors.  The fast growing MFI has its headquarters in Nairobi and has an asset base of Kshs. 1.9 billion. It targets rural smallholder farmers and micro entrepreneurs in the agricultural sector based in various parts of the country.   The decision to serve this market was informed by the fact that many financial institutions in the country shy away   from providing credit facilities to rural smallholder farmers because of the perception that they are high risk borrowers.

With 28 branches in 18 counties and 257 employees, Juhudi Kilimo is currently serving over 41,000 active borrowers using mainly the group lending methodology (the Grameen model). Juhudi Kilimo has bravely defied the widely held perception that  lending to rural smallholder farmers is risky business. The lender’s current loan portfolio is Kshs. 1.4 billion of which 52% has gone to women.  “Women are engaged in various agricultural activities throughout the country and they are very faithful in servicing their loans,” says Mr. Kivava adding that is why women are their major clientele.

Agriculture is associated with unpredictable weather conditions, poor infrastructure, lack of information and access to markets, inadequate government policies to support the agricultural value chain among  other uncertainties. “However, with good financial products for smallholder farmers and effective training of the target market, it is possible to overcome some of these hurdles,” the CEO points out. “We understand the significance of agricultural development in the economy and that is what informs our values and commitment to penetrate the rural areas deeply with our well tailored products,” he adds.

 Product offering

Distinct from the conventional products offered by many microfinance institutions, Juhudi Kilimo offers six products that are market driven and meant to build the capacity of the smallholder farmers. Crop financing takes the lion share of the products offered by Juhudi Kilimo at 49%. Working capital loans on the other hand (which provide financing within the agricultural value chain) stand at 25%. In the same breath, 17% of the loans offered by Juhudi Kilimo finance the purchasing of farm equipment, while 5% go to purchasing of farm animals.  Consumer and clean energy loans comprise the remaining 4%.The clean energy loans support farmers to have biogas digesters, energy saving jikos, and solar lanterns. “Our products are 99% agri-focused and   we are continuously innovating and adopting models that support the agricultural sector,” the CEO emphasizes.

Emerging trends in the microfinance sector

There are several key trends that are emerging in the microfinance sector whose impact has been major.  Since Juhudi Kilimo does not operate in isolation, it has also been affected by these trends. To start with, there has been the invasion of the micro lending space (loans ranging from Kshs. 1,000 to Kshs. 50,000) by mobile network operators (MNOs), commercial banks through digital platforms and other fintechs. Traditionally, that market has been the domain of microfinance institutions.  While fintechs have made access to credit fast, they are known for charging exorbitant interest rates on short term (one month) facilities. “The competition offered by the new entrants is healthy and we view it as an opportunity for members of the microfinance sector to either start or acquire their own fintechs,” says Mr. Kivava who is also a board member of AMFI-K.

Secondly, there has been a shift by players in the sector from cheque and cash disbursements in group lending methodology to product offering through the mobile phone. Whereas this has enhanced convenience and efficiency, it has minimized the one-on-one interactions between the staff of the microfinance institutions and their respective customers.

Thirdly, the use of technology in product and service delivery has led to the escalation of the cyber crime threat with the culprits losing critical and expensive data.  Nevertheless, this threat is not   limited to the microfinance sector – it has also negatively impacted on commercial banks. “To address this challenge, many players in the sector have invested in robust financial systems which are regularly audited,” says Mr. Kivava adding that the sector’s umbrella body (AMFI-K) has also been organizing regular workshops to train its members on how to detect and handle cyber crimes. As one of AMFI-K’s members, Juhudi Kilimo has been sending some of its staff members to these workshops. In turn, the beneficiaries of the said workshops have been sharing the knowledge acquired with their colleagues.

In order to align itself with the emerging trends in the microfinance sector, Juhudi Kilimo has partnered with likeminded organizations including AMFI-K and Safaricom’s M-Pesa. “For instance, to enhance efficiency, we have digitized our loan application and disbursement processes,” says Mr. Kivava adding that the organization has also started making and receiving payments digitally either through electronic funds transfer (EFT) or M-Pesa.

Road ahead

The secret of Juhudi Kilimo’s turnaround and profitability has been its ability to attract highly talented , motivated and innovative staff who are not only equal to the tasks assigned to them, but are also willing and able to go an extra mile in serving their organization. In addition, it has developed innovative products which are relevant to the needs of its target market. Most importantly, Juhudi Kilimo endeavours to give its customers exemplary services, bearing in mind that they are the pillars of its business.

A solid organization whose current asset base is Kshs. 1.9 billion, Juhudi Kilimo is looking forward to growing its loan book to Kshs. 3 billion in the next 3 years as outlined in its 2017 to 2021 strategic plan.  In the same breath, the institution is planning to have a presence in 26 counties from the current 18 and grow its branch network from 28 to 41. Of critical importance, the fast growing lender is looking forward to growing its customer base from the current 41,000 to 70,000 by 2021.  If its current momentum is anything to go by, Juhudi Kilimo is set to not only achieve the said target, but also scale greater heights.










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