After leaving Lwala, our team traveled through the incredibly scenic tea country of western Kenya to Kericho to meet with Juhudi Kilimo, a microfinance organization focused on agricultural, asset-backed loans. Juhudi Kilimo was started in 2009 and is now led by Nat Robinson, one of Project Pyramid’s founding members. Under his leadership, the company has grown to serve over 15,000 farmers around Kenya.
We started our day with Juhudi by riding along with field staff as they met with a potential loan group. These farmers and businesspeople join together to reduce risk and guarantee each other’s loans to secure much lower interest rates than would be offered via other capital sources. Although not explicitly stated, it seems the social contract aspect of the loans reduce the risk of these asset-backed loans even more. Most members will take out loans ranging from 30,000-65,000 KSH ($375-$800) to purchase cows, goats, and basic equipment for other businesses. After paying back the loans in 12 months, many groups choose to take out larger loans to further increase their cash flow. Based on our interviews with these individuals, the highest focus for the incremental cash flow was ensuring a quality education for their children and improving their standard of living.
Overall, it was fascinating to see how a relatively simple loan product can move the under-banked population of these rural communities toward mainstream capital markets. After three or four loans, Juhudi customers can start using banks for larger loans with even lower interest rates. So while it’s easy to measure the financial returns of Juhudi, the social impact is even more far-reaching.