Feasibility study report - Participative microfinance development project in Kenya

Publication proposée par Marie-Annick Sinou


CIDR started in 2001 a programme for the development of participative microfinance systems in three East-African countries : Ethiopia, Kenya, and Tanzania. In January 2003 it conducted an opportunity study for the implementation of a rural participative microfinance scheme in Kenya, through which it identified two potential partners for the feasibility study : the Financial Services Associations (FSAs) implemented by K-Rep Development Agency (KDA) in Bomet district and the Gusii Rural Farmers SACCO (GRFS). The GRFS is a savings and credit cooperative (SACCO) that covers rural areas with good agro-economic potential.

The feasibility study was conducted by CIDR in february 2004 with the collaboration of GRFS. The cooperative activities then relied on the tea and coffee sector, although the region offered a wide range of diversification opportunities that could enable its customers and the area’s rural population to develop other sources of income.


This document consists of a baseline study elucidating and mapping out the social, technical, financial and institutional feasibility of developing the SACCO’s activities by increasing its member base and diversifying its loan portfolio, notably through the creation of a microfinance unit. It demonstrates the high potential impact of developing microfinance in Kenya through SACCOs, as their size, number and geographical outreach represent key opportunities in promoting financial inclusion.

Its methodology and composition can be used as a model for the screening of other possible partnerships with SACCOs interested by getting support for their diversification and/or institutional strengthening. It unfolds how to deal with all the major subjects to look at before designing a support strategy.

The original situation of GRFS can stand as an example of a relevant environment where the model can be applied.


- This study provides a snapshot of what GFRS was just before it started partnering with CIDR, together with an analysis of the SACCO’s environment and target clients.
- It sets out its objectives and methodology and gives a description of the 2004 Kenyan macro-economic context.
- It provides a description of the socio-economic environment of the SACCO’s area of intervention and an analysis of the activities and needs of the target groups (cf attached appendix).
- This is followed by a description and SWOT (Strength, weakness, opportunities and threats) analysis of the local partner activities, services provided and situation compared to competition.
- The document also gives a first outline of the strategy, methodology and expected results of the partnership. It includes a two-year program for the implementation of the partnership between CIDR and GRFS which draws the major principles behind the institutional model –close customer care, improvement of the governance and operations...- and the microfinance product development -deep outreach of rural areas, group lending methodology.