Women’s World Banking (WWB) is the global non-profit devoted to giving more low-income women access to the financial tools and resources they require to build security and prosperity. In 2016 Argidius supported WWB to partner with Kenya Commercial Bank (KCB) in a 3-year project to optimize financial and non-financial services for women-led micro, small and medium-sized enterprises (MSMEs) in Kenya. The project aimed to 1) develop a relationship management model; 2) implement a new cash flow-based credit assessment methodology; 3) refine KCB’s non-financial business support services and demonstrate they are integral to serving business customers; and 4) cultivate a strategic gender focus. Most of MSME clients at baseline had revenues between €5k and €500k, with a median of €55k, and tended to employ between 1-20 full time employees. 

An accompanying research effort evaluated the effectiveness of program implementation and the resulting outcomes for KCB’s MSME customers, especially women.

Key findings

Enhanced services for MSMEs can support both the business objectives of a financial institution, as well as positively impacting MSME growth:

  • Results on MSME growth as at the end of 2019:
    • KCB disbursed 3,767 loans with a value of $98 million, and a non-performing loan ratio at just 1.5%. 
    • The median annualised growth rate for these businesses was 10%, with 70% of businesses growing.
    • Median number of employees increased from 5 to 8.5.
  • Results on the institution as at the end of 2019:
    • The relational cash flow-based lending proposition is now running in over 100 KCB branches, following the successes in 10 the pilot branches. Lending improved without increasing portfolio at risk (PAR). KCB are now working with the International Finance Corporation to roll the proposition out to all 250 branches in Kenya. 
    • Customer satisfaction and loyalty improved KCB’s SME portfolio was able to be maintained despite the context of the interest rate cap introduced by the Central Bank of Kenya. 

Financial institutions have an important role to play in advancing outcomes for women-led MSMEs: Lending to women-led businesses grew from 20% to over 50% of the MSME loan portfolio where the new proposition was rolled out

Enhanced services to MSMEs require a multi-level organisational strategy. Given its complexity, the solution required buy-in at all levels of the financial institution.