Kenya has a remarkably active private sector, primarily consisting of small informal businesses with less than five employees. According to the latest World Bank report, there are 7.4 million micro, small and medium enterprises in the country, many of which need additional finance to recover from the detrimental effects of the COVID-19 pandemic.
Aiming to support entrepreneurial ecosystems, Cordaid Investment Management disbursed a follow-up loan to ECLOF Kenya, bringing the investment to this microfinance institution up to EUR 1.5 million. Lorisa Canillas, Senior Investment Manager at Cordaid Investment Management, explains the investment rationale: "We financed ECLOF because it has demonstrated its strong commitment to serving very small businesses, especially in the agricultural sector. These clients are the most vulnerable to economic downturns, climate change, and other uncertainties. ECLOF itself has proven to be resilient throughout the COVID-19 pandemic and well-prepared to continue financing its clients or provide them with some temporary credit relief."
ECLOF Kenya is a member of a network of socially driven MFIs, which all apply high standards to the social performance of the loan portfolio. Currently, 90% of borrowers have income below the country's average and are engaged in micro-entrepreneurship and farming. Sustaining agriculture in the area is especially valuable as it increases farmers' capacity adaptation and provides immediate relief in case of extreme weather conditions such as droughts and floods, caused by climate change.
Moreover, ECLOF Kenya increases its outreach to especially vulnerable populations: over a half of borrowers are women and over 70% live in rural areas. Devoted to increasing sustainability and resiliency in those communities, the MFI provides various financial products, including group and individual loans for water purifiers, septic tanks, solar-home systems, and other environmentally friendly products.
Providing capital for socially-driven institutions like this, Cordaid Investment Management gives a boost to Kenya’s private sector recovery and contributes to increasing the resilience of the country's populations.