Microfinance holds the key to unlocking the potential of the Small and Micro Enterprises sector to contribute to Kenya’s economic development and alleviate poverty, a top bank official said.

Mrs Winnie Kathurima, the Change and Corporate Affairs Director of Equity Bank, said SMEs should be well funded in order to contribute effectively to economic growth. “Microfinance is our anchor for economic growth,” said Mrs Kathurima. “It could revolutionise Kenya’s transformation to a developed country status.”

poverty: n. The state of being poor; lack of the means of providing material needs or comforts.

Rich or poor, first world or third, everyone wants to better their lives.

In February 2005, I applied to be part of the team to test the BoP Protocol™ in Kenya with S C Johnson. I came to Cornell's Johnson Graduate School of Management to shift my career from management and strategy consulting towards sustainable enterprise. I was focused on developing the skills and experience necessary to help companies towards financial, social and environmental sustainability.

A participatory rural appraisal saw the Nyota community in Kenya overturn commonly held assumptions about needs of the rural poor.

A participatory rural appraisal saw the Nyota community in Kenya overturn commonly held assumptions about needs of the rural poor.

It was in fact creating internal competition and gluts driving prices down for the community's products, even as the community was importing higher cost inputs and services from outside, the analysis revealed.

Nyota was resettled in 1973 to provide 2.5 acre homesteads/farms for black Kenyans. The area is relatively high (2258-2800 meters) and hilly with a few steep valleys and a few seasonal streams flowing southwards. Two tribes are dominant here—the Kikuyu and Kalenjin who fought in violent tribal clashes in the area in the early 1990s. Since then peace has been relatively stable. People depend on agriculture and livestock to earn income. The major cash crops in the area are pyrethrum and potatoes. High pyrethrum prices in the 1980s led to community reliance on the crop, but payment by the Pyrethrum Board of Kenya (PBK), a government-created parastatal organization, has been unreliable which has caused community suffering, especially from 2002 to present, and a current reliance on potato farming.

Nyota residents engage in a number of agricultural activities for income. These include: selling raw, unprocessed produce, selling livestock to local restaurants, selling milk, and daily farm labor. In addition, a limited number of non-farm jobs and trades are also sources of income. These include: carpentry, metal-smithing, bicycle repair, diesel-engine maintenance, charcoal making, transportation (using bicycles, donkey-carts, lorries and tractors), religious activities and land leasing. Self-Help Groups and Merry-Go-Round savings schemes are common and provide limited access to capital and small debt financing.

Analysis

The resource flow analysis was undertaken in Nyota as part of a BOP project. The aim of the analysis was to develop a deeper and more holistic understanding of economic activities in the community. Using Participatory Rural Appraisal techniques and working with community members, the BoP team identified the resources flowing into the community, the resources created/used/traded within the community, and the resources flowing out of the community.

The Nyota settlement itself was originally chosen because SC Johnson, a sponsor firm of the project and a partner in the Base of the Pyramid Learning Lab at Cornell University, is the single largest buyer of Kenyan pyrethrum or "Py". SCJ has suffered from erratic Py supply caused by uncertainty in the Kenyan Py industry caused primarily by mismanagement at the PBK. Nyota has traditionally been a pyrethrum-growing area and has been hard hit by non-payment for Py crops by the PBK. SCJ uses Py in several of its Raid products because Py is more efficacious and safer than similar synthetics and is an organic input that could be crucial to the economic development of rural Kenya.

The resource flow analysis showed that Nyota "imports" far more products than it "exports". Resources sold by residents are mostly farm produce, livestock or raw wool, or labor. Farm produce includes potatoes, maize, peas (not often) and green onions (not often). Livestock is mostly sold to restaurants—eggs, chickens, cows, sheep, goats, rabbit, turkey, geese, pigeons, and pigs. The community trades multiple goods and services within, including produce, livestock, fuel wood, labor, water, and goods such as sweaters, crochet coverings and furniture.

On the other hand a wide variety of resources are being "imported". These are: produce, packaged food, farm inputs, tools and agricultural implements, domestic consumables (e.g.: petrol, paraffin, soap, moisturizers, etc.), utility items (e.g.: paraffin lanterns, charcoal cook-stoves, cooking utensils, water containers, etc.), building materials for houses and, finally, clothing.

The analysis underlined and confirmed the need to increase the diversity of income-generating activities in the Nyota area. After the analysis, the BOP team worked with the community to generate ideas and plans to go forward. The community itself developed several plans like, for example, farmers adding value to the produce they grow (drying, preserving, canning, pressing), selling in the off-season and accessing new markets for their goods.

This article was written with material sourced from Justin DeKoszmovszky's PRA report which emerged from his work through the BOP Protocol Pilot team in Kenya in Summer 2005. Justin DeKoszmovszky completed the PRA Analysis with Catherine Burnett. He thanks Patrick Mburu, Elijah Kimani Wang’ombe, Mama Salome, James Kimani, the Pamoja Pioneers Self-Help Group, Richard Cheruiyot, and the more than 250 community members who participated in the workshops for their contributions to this work.