Source: European Investment Bank
Before starting her animal feeds company, Nancy Githuku ran a small poultry and dairy farm in eastern Nairobi. “Business was alright,” she says, “but I had a big challenge accessing quality feeds. So I decided to venture into the business of sourcing and selling animal feeds.”
Githuku saw a lot of potential to build her animal feeds business, but she had trouble finding affordable loans. “Most banks wanted me to produce collateral, like a title deed or logbook, as security for a loan, which I didn’t have,” she says.
The lack of collateral for loans is common in emerging markets like Kenya, especially for women. Most property ownership documents for land, homes or cars are in the names of men. This makes it hard for women to get business loans or other forms of financial help. During the COVID-19 pandemic, businesses run by women were particularly hard hit, as credit from other sources like families and friends dried up.
EIB Global, the European Investment Bank’s international development arm, has invested nearly €700 million in Kenya since 1976 to help small and medium companies work with local financial institutions. Through deals known as intermediated lending, the European Union’s financial arm offers financing to local banks so they can give more loans to small businesses.
Githuku received a loan from the Co-operative Bank, which had in turn been backed by the European Investment Bank in one of these intermediated deals. “The funding I received didn’t require collateral or a guarantor,” she says. “This took a heavy load off my shoulder. And the interest rate was subsidised, meaning the loan was way more affordable than what was available in the market.”