MICRO-FINANCE PROGRAM

INTRODUCTION

Poverty that persists in the midst of a sincere desire to work hard and advance financially is a chronic illness that persists in the heart of Kenyan society. Change among the poor is possible only when they are empowered with the tools necessary to bring about sustainable transformation.

SELIDEF microfinance is a new innovative department within the organization; it is in the business of changing lives.  We systematically address the market with the greatest need in Kenya—the rural poor. We provide highly targeted, small, low-interest loans. We provide free training, not on organizational policies and procedures, but on business development and entrepreneurship.  We promote savings, not as collateral against our loans, but as an exercise in financial responsibility.

Our commitment to the poor is steadfast.  As many MFI's grow, they cover their increasing costs by dispensing larger, higher revenue loans to more affluent clients, often in urban centers.  This market “drift” usually leaves the rural poor on the periphery, lacking microfinance services with the scale and scope to truly impact their lives.  In our view, a MFI can serve the poorest segments of the population while growing into a profitable financial institution.  A commitment to the poor and a commitment to profitability are not mutually exclusive endeavors.  Rather, through innovative thinking and unique strategies, the two are inextricably linked.  Our potential for aggressive growth arises from its ability to leverage such strategies.  The result is an organization that maximizes revenues, minimizes costs, and addresses client needs.

Though over 60% of the Kenyan population lives on less than a dollar a day, only one tenth of this population has access to micro finance services. This market, regrettably, has been largely underserved by other MFI's (micro-finance institutions) that have instead chosen to focus on urban, middle-class, business owners who are able to take out larger loans with higher interest rates.  These larger, high APR loans have been traditionally viewed as necessary to cover the high costs associated with running a sustainable MFI. 

The niche market consists of the rural poor living well below the national poverty line.  These individuals often have a small business or are attempting to start one.  They do not have access to even the most basic of finical services.  They are not targeted by traditional financial institutions or even traditional MFI's.  Furthermore, they generally do not qualify for loans from traditional financial institutions or MFI's.  Their capital assets are generally illiquid, while their loans generally come from local friends and family.   

Not only is this market large, it is also displays several qualities that make it highly attractive for microfinance investment:

• High Demand Results in High Selectivity —high demand means that we can be selective in which clients it chooses to fund.
• Excellent Repayment History —this market niche has been shown to have a very impressive repayment rate.  Their relative inexperience dealing with financial institutions makes them very wary of paying loans late.
• Willing and Able to Pay High Interest Rates —clients in this market segment has shown a willingness and an ability to pay the higher interest rates that are needed to cover the costs of a microfinance operation
• Demand for Many Product Offerings —apart from microcredit, clients are also in need of many other financial services.  As a result, there are many opportunities to roll out new services in the future
• Diversified Risk —small loans mean that risk is spread out across many clients.  A defaulting client only represents a small fraction of the loan portfolio, resulting in minimal impact to portfolio performance.

Our Methodology

Microfinance group based loans are loan facilities designed for micro-enterprise operators, who do not have conventional collateral. These loans are usually small in size and have a short tenor. To supplement collateral requirements, the loans are secured partly by cash and partly by group guarantees. To access these type of loans one has be a member of the respective groups.

Apart from group loans, customers are able to access individual loans. This is an excellent facility for those clients who have outgrown group loans.

Who Qualifies    

• Business Entrepreneurs
• those willing to join the above groups

Benefits

• No conventional security is required
• Can be in any business
• Easy repayment period
• Affordable interest rate and no hidden charges
• Quick processing and disbursement
• Loan amount depends on ability to repay