In 2017, Findex data showed that 1.7 billion adults worldwide remained unbanked, including an estimated 400 million in Africa. However, financial inclusion in Africa has improved from 35% in 2017 to 48% in 2022. According to research papers, microfinance institutions had reached almost 8 million borrowers across Africa as of 2018.

Yehu Microfinance Services Limited (“Yehu” or “the MFI”) is a nondeposit taking microfinance institution that was incorporated in Kenya in 2007. Yehu is an impact driven institution with its headquarter in Mombasa. It has branches in rural and underserved regions e.g., Kilifi, Lamu, Kwale, Taita Taveta, Meru and Makueni. The MFI is amongst the few financial institutions in Kenya that are solely implementing the group lending methodology (Grameen lending model) as well as offering credit to rural and marginalized microborrowers who co-guarantee each other’s loans. To cater to their borrowers’ needs, the MFI has curated various products across various sectors e.g., crop and animal farming, trade, education, house improvements, sustainable energy etc. A key highlight is that over 76% of the MFI’s borrowers are women.

The photo below was captured during the on-site due diligence client visit, where our investment officers attended a center meeting in Kilifi to assess the credit underwriting and collection practices. The center we visited comprised of three groups with five members each. The meeting was attended by 15 of the center members (all female), the center officer (Yehu personnel), and the branch manager. All the attendees ran small-scale businesses i.e., fruit and vegetable kiosks, mandazi and fish street vendors, poultry farming, crop farming etc. In brief, the meeting procedure comprised of; the recording of attendance, ratification of previous meeting’s minutes, financial principles training by the center officer, savings collections and loan repayments at group levels, as well as discussions on other matters.

The institution’s profile aligns with the mandate of both funds under EQ’s advisory i.e., Spark+ Africa Fund and EMF Microfinance Fund. We are in the process of closing the first transaction with Spark+ to support Yehu’s clean cooking product offering. The MFI sells clean cooking solutions (improved cookstoves and LPG cylinders and accessories) on credit, hence playing a key role in transitioning end users away from dirtier fuels i.e., firewood, charcoal, kerosene etc. Our combined investees in the Africa and ME region have about 2 million active borrowers. The investees with relatively more borrowers have a digital lending product in place, and hence client acquisition is not limited to the traditional brick and mortar channels. Africa has been a trailblazer in expanding access to digital financial services, which has driven the expansion of financial inclusion. The improvement in financial inclusion has been significantly fueled by the quick uptake of mobile money accounts. Data from the Global Findex Database indicates that in some Sub-Saharan African economies, such as Kenya, Tanzania, Uganda and Zimbabwe, more adults have a mobile money account than a financial institution account.