Microleasing Transforming LIvES In Eastern AFRICA

Transforming the lives of entrepreneurs and smallholder farmers through innovative financial solutions

Microleasing — which is derived from contract-based, lease-to-buy models in developed countries — addresses the aforementioned issues and eliminates the need for individuals to borrow or commit their resources up front. Risk is mitigated instead by a collateralized and insured asset and creditworthiness is based on future prospects and potential cash flows, rather than on an individual's past credit history.

Instead of monetary credit, microleasing represents a whole new and innovative approach through which productive assets are made available. Using the leased asset itself as collateral (such as a cow, water pump or chainsaw), smallholder farmers have the ability to procure productive assets without incurring debts beforehand. The risks for beneficiaries are also minimized: existing property and credit histories play no role. The basis for providing a lease is the expected future harvest. Microleasing means leasing and procuring productive assets to improve employment possibilities for low-income individuals. To support economic development, Swisscontact promotes the concept of microleasing for smallholder farmers to be able to purchase production inputs.

Microleasing at Swisscontact started when Credit Suisse was celebrating their 125th anniversary in 2006 and had allocated funds to support Microfinance. Swisscontact submitted a concept note and the Financial Services East Africa project delivered the initial Microleasing concept note.

Credit Suisse funded the Microleasing proof of concept and the project partnered with the K-Rep Development Agency whose Financial Services Associations subsequently leased out dairy cows, poultry, beehives and irrigation equipment in the Makueni area. The demand for the leases was high and Microleasing spread into other regions where Financial Services Associations offered the product. After the first few years, smallholder farmers began demanding other assets and the number of leases and assets leased grew.

The beginnings with Juhudi Kilimo

Juhudi Kilimo, the Microleasing company was established as a spin-off from the K-Rep Development Agency. The company initially struggled with all the typical challenges of a start up. Juhudi Kilimo faced a growing demand for the leases of productive assets and the funds needed to finance these assets were never enough. This turned out to be one of the main challenges of the new company and has continued to be to date.

Quality Driven

Other challenges included quality of the assets and their distribution and maintenance. Compromising on these in favor of price could be fundamentally detrimental to Juhudi Kilimo and Microleasing. During those first years, it became clear that “cheap” and “value for money” are not the same thing – Microleasing offered quality assets supplied by companies that has a strong network in the region.

Starting large-scale roll-out in Kenya, Uganda, Tanzania and Rwanda

When Credit Suisse contracted the Swisscontact Financial Services Project East Africa in 2011, it soon became clear that upscaling Microleasing in Uganda, Tanzania and Rwanda could not be conducted as it had in Kenya – by supporting the establishment of start ups. This would unnecessarily prolong the time to market and tie Microleasing to a single supplier.

New partners

The Financial Services East Africa project began partnering with MFIs and SACCOs to distribute Microleasing in the region. It began in Uganda, 2012 in Tanzania and 2013 in Rwanda. Today, there are 23 financial intermediaries that offer Microleasing across the region to a growing number of smallholder farmers and MSMEs. Although the Banks, MFIs and SACCOs have invested funds of over USD 40 million cummulatively over the years to pre-finance the productive assets, this has still been not enough to address the huge demand for Microleasing.

Haron Muchiri says he cannot imagine a life without Microleasing products since they have transformed his life tremendously. He prides himself in being self-employed and confesses that despite not being highly educated like his father who is an engineer by profession and his siblings, he is happy that he is still able to be self-reliant, provide a comfortable life for his family and provide employment to his fellow youth hence playing his part in building the nation.

Key Players in Microleasing

Multi stakeholder networks

The project interventions have changed over the years – from supporting interested financial intermediaries to develop Microleasing in their contexts: defining the specific assets for their clients, setting up the contracts, structuring the financial flows, entering agreements with insurance companies and the asset suppliers, and supporting the initial client information campaigns. Essentially building the capacity of the partners to manage a multi-stakeholder network that defines Microleasing.

Fit for Investment

Today, the Swisscontact East Africa Financial Services project increasingly also supports the financial intermediaries in accessing local and international investment capital. This includes facilitating the partners to become “fit for investment” as many of them were previously financing the leases out of deposits.


Equity Bank (the largest commercial bank on the African continent, by customer numbers) has expressed its willingness to invest up to USD 100 million to fund Microleasing partners and suppliers in a bid to support the project. Since the beginning of 2017, USD 5 million have been invested in Microleasing partners and a further USD 15 million are currently being negotiated with DFIs (Development finance institutions) which offer cheap funding.

Vision for the upcoming years

Going forward, the project’s vision is to introduce Microleasing as a way of accessing investment capital to a new client segment – SMEs who want to acquire productive assets from USD 100’000 to 500’000.

Acquisition of asset leases by beneficiaries has grown from 110 leases in 2007 to 50 000 leases in 2017 with lease value of over USD 45 Million.

Swisscontact Kenya, P.O. Box 47996, 11 Parklands Road, Westlands, Kenya, www.swisscontact.org/kenya

Mobile/Phone: +254 714 05 5954 / +254 20 374 3927 / +254 20 374 4042


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