Beginning as a project of Choice Humanitarian-Kenya, an international non-governmental organization, ambitious microfinance institution is focusing on tripling its current business size within the next ten years
By George Gichuki
Many individuals have very brilliant business ideas. Unfortunately, they lack the drive and wherewithal to actualize them. Unfortunately, there are also those who hold the misconception that you need sacks of money to venture and succeed in business. Nothing can be further from the truth. Very many outstanding businesses in Kenya and across the globe started small, but with time, they have scaled up. Their stories of growth amidst turbulent times sound like scenes straight from movies. They are incredible. The compelling story of Yehu- a credit only microfinance institution (mfi) – with a major presence in the Coastal and Eastern regions of Kenya – fits in that category. Yehu aptly means ‘ours’ in Mijikenda. Symbolically, words are potent. Undoubtedly, the strong ownership of Yehu in the communities where it has a presence has significantly contributed to the growth in its customer base and loan portfolio from 5,000 and Kshs.30 million in 2006, to 80,000 and Kshs.1.4 billion in 2025 respectively. The lender’s roots are very humble and its steady growth over the years is quite captivating.
Going down memory lane
Yehu was founded in 1998 by Dr. Rita Lugogo, the then country director of Choice Humanitarian, an international non-governmental organization (NGO), based in the US, the state of Utah. She was visionary. It started as a project of Choice Humanitarian – Kenya. “Initially, Yehu was a financial services intervention to complement the work of Choice,” says Mr. Adet Kachi, the chief executive officer, Yehu. “We began humbly by organizing our customers to mobilize savings in groups (chamas) ,” he adds. The project was based in Mwambalazi; Kwale county.
Choice Humanitarian actively engages local communities in all its projects. Every year, various teams from the NGO Organizes expeditions to all the projects it is facilitating. This cements the relationship between all parties, creating a high level of mutual understanding and trust. “In one of these expeditions, three directors from Choice got impressed by Yehu savings groups and they decided to chip in some little money to help members access loans,” Mr. Kachi reminisces. Each contributed $ 5,000 to this noble cause. The project kicked off with only three hundred women. Within three years only, this number grew to three thousand. When he was recruited in 2006 to head the project having worked in Botswana’s microfinance sector, the first assignment of Mr. Kachi was to put up the necessary structures, supporting systems as well as processes that would make the project sustainable in the long run.
VISIONARY: Dr. Rita Lugogo, founder, Yehu Microfinance.
His greatest motivation was joining Yehu was its focus on rural women residing in the Coastal region. “Based on their history as well religious and cultural practices, this region has tended to lag behind the rest of the country ,” says Mr. Kachi adding that he was quite excited to join an institution dedicated at enhancing the livelihoods of socio-economically marginalized individuals.
Passionate as he was about serving Yehu, Mr. Kachi was constrained by the fact that it was operating as a project of Choice Humanitarian – Kenya. “During the board meetings, Yehu was just an agenda item and quite often, other issues viewed as more pressing were given consideration and approval,” he observes. Consequently, the board was requested to have Yehu as an independent institution that would drive its agenda and mandate in a more focused and responsive manner. Upon the board’s approval, Yehu Microfinance Trust was established in 2007. At this juncture, Mr. Kachi and his team worked tirelessly to bring on board partners who would inject funds in Yehu and avoid relying wholly on donor funding. This effort paid off in 2008 when MESPT – a wholesale lender – loaned Yehu Kshs. 10 million. With time, a board was established to drive Yehu’s strategy, while the management team was beefed up with new talent
As Yehu –the new kid on the block- continued to soldier on, it was realized that the lender was still being perceived as a non-profit institution because of using the name trust. Against this background, Yehu Microfinance Services Limited was incorporated in 2014 as a company limited by shares. “In a bid to attain more growth, we started strengthening our governance and management structures and putting in place the right management information systems among other critical initiatives,” Mr. Kachi says. In 2009, upon the enactment of the 2008 Microfinance Act, Yehu chose to remain a credit only microfinance institution.
Currently, the lender has a strong team of eight board members with diverse skills set in fields like finance, law and audit.
Growth
Since 2006, Yehu has grown significantly. Women take about 95 % of the lender’s loan portfolio which currently stands at Kshs. 1.4 billion. The staff members were thirty in 2006; currently the number has grown to one hundred and sixty. In the same breath, the branches have grown from four to eighteen within the same period. “In our early days, we were dominantly in the coastal region; especially in Kwale county, “Mr. Kachi observes. “Currently, we have a presence in all the six coastal counties: Kwale, Mombasa, Kilifi, Tana River, Lamu, and Taita – Taveta.” By the same token, Yehu has established branches in the Eastern region of Kenya: Makueni, Meru and Tharaka Nthi counties. In South Rift, Yehu has a branch in Kajiado county.
ENVIRONMENTAL RESPONSIBILITY: Yehu Microfinance staff members together with community members planting Mangrove trees.
Mr. Kachi further says that Yehu mainly focuses on women in order to unlock their potential in the socio-economic development of the rural areas. “Most of our communities are paternalistic and men are more economically advantaged,” he observes adding that women in the rural areas undertake menial jobs – for instance fetching firewood and water, cooking and washing – which consume a lot of time yet they do not generate any income for them. To address that challenge, Yehu has developed innovative financial solutions targeting women in order to uplift their socio-economic status. Ultimately, this benefits their respective households and they are able to educate their children, build better shelter and enjoy a healthy nutrition.
Standing out
Yehu is driven by a deep philosophy of customers’ and communal ownership. “From the experience that we give our customers, they strongly feel that the organization belongs to them just as our name indicates,” Mr. Kachi avers. In that vein, the lender has developed structures that position its customers to have a major stake in making decisions about it. To achieve that goal, a vehicle – aptly named Yehu Members Welfare Association – has been established. It is a forum for the members to push for their best interests. For instance: the policies which they feel are not favourable to them as well as the products that they want the lender to develop.
The leadership of Yehu Members Welfare Association starts from the grassroots and it mirrors the Grameen model popularized by Professor Mohammed Yunus – a nobel laureate, founder of Grameen Bank and pioneer developer of microcredit and microfinance concepts. The grassroots centres elect three officials – chairperson, secretary and treasurer. The next level of leadership is the sub branch and it is handled by a credit officer. “ A typical sub-branch will have about forty centres and each has three elected officials : chairperson, secretary and treasurer,” says Mr. Kachi. This model is replicated at the branch level whose members elect the executive chairperson, secretary and treasurer. “ I meet the executive officers once in three months and they engage me directly on the issues that they want my team to address,” avers Mr. Kachi.
Yehu has also embraced a soft approach of dealing with its customers. “Before we take any adverse action on customers, we engage them to iron out any challenges and come up with the necessary solutions amicably,” Mr. Kachi observes. This has made the lender to stand out in the market.
Product offering
Yehu offers an array of innovative loan products based on the needs of its customers. They include: business, agriculture, education (elimu) and green energy loans. Business loan is the lender’s flagship product because it plays a pivotal role in empowering customers economically. The agriculture loans on the other hand are tied to seasons. Those farming crops pay after harvesting, while the poultry farmers settle their loans after making sales. This minimizes the pressure on servicing them. In the same vein, the elimu loan product is split into two – part of it is disbursed to the parents so that they can purchase uniform and stationery for their children among other needs, while the other goes straight to schools to settle the tuition.
Yehu cutomers during a group meeting.
Considering that we are currently in the era of digitalization, the lender launched a mobile banking product dubbed Yehu Cash in 2023. According to Mr. Kachi, the uptake of this product among their customers has been positive. In response to the needs of its customers, Yehu has also developed an innovative product for livestock farmers and traders. Customers are financed to buy cattle and goats at fairly low prices at established markets when there is a drought. They then fatten them, and after three to six months, they sell them at a profit – mainly during the festive seasons when the demand is high. Yehu is also planning to develop a customized market for fish since it is one of the major economic activities at the Coast. This will involve financing the entire value chain of fish: nets, boats and fish stalls.
Defining moment
When Yehu put in place a robust management information system, it was a defining moment in its business. Before that, its operations were manual. For instance, it would take ten to fourteen days to process loans. Currently, that process takes only two days.
In the same vein, after being rated Grade A in 2024 by MicroFinanza Rating Agency – an international social and finance rating agency which specializes in microfinance – Yehu has attracted creditable international financial partners. This has helped the lender to gain traction in the market place since partners are now aware that its governance, systems and structures are strong. “The international financial partners do not require any collateral before lending us,” affirms Mr. Kachi.
Currently, Yehu is undertaking a client’s protect ion certification process reflecting its commitment to best practices while serving a market segment perceived as risky by many lenders. These initiatives enhance transparency and they are well embedded with the philosophy of Yehu founders.
Yehu received the 2024 best microfinance institution in Mombasa Award.
The road ahead
Yehu has planned to leverage digitalization as it endeavours to grow to the next level. “As the market continues to evolve due to digitalization, we are developing products that are responsive to our customers’ needs in order to become efficient in our service delivery,” says Mr. Kachi. In the same breath, the lender is putting in place sound mechanisms that will allow it to embrace new technologies – for instance artificial intelligence platforms – in its business model. These platforms will make it more responsive to data driven decision making processes. “In five to ten years, we should triple our current business size,” Mr. Kachi optimistically says.
Globally, Yehu Microfinance is rated highly.
To achieve that ambition, Yehu is opening its doors to credible social investors to take a stake of its business. These investors will not only bring in capital, but also their wealth of experience and professionalism gained from operating in other markets to the benefit of Yehu. Mr. Kachi gives an assurance to all the stakeholders of the steadily growing financial institution that they are reliable and committed to being responsive to all the emerging needs in the market. “We are not transactional, on the contrary, our goal is to build a lifelong relationship with all our stakeholders, besides adding value to their aspirations and dreams,” he concludes.
