Case Studies in Microfinance: Kenya - Rural Enterprise Program (KREP)
Charitonenko, S., Fruman, C. & Pederson, G.
Publication Date: 1998
Published by: World Bank - Sustainable Banking with the Poor (SBP)
Document Type: Case Study
The Kenyan experiment of transforming an NGO into a successful commercial bank
This study of Kenya Rural Enterprise Program (KREP) provides insights into the process of developing and refining the microfinance operations of a development organization from a non-governmental organization (NGO) providing select groups with access to credit to a full-service microfinancial intermediary serving tens of thousands of Kenya's poor.
It concludes that the transformation has involved innovations in its credit methodology and changes in its management and institutional capacity.
It suggests that KREP faces a set of new and continuing challenges as the leadership in the organization attempts to position the organization for greater growth, client outreach, and continued improvements in self-sustainability. Major issues include:
- Improving its MIS;
- Creating appropriate incentives for good management;
- Working for sustainability;
- Developing cost-effective strategies for expansion;
- A reassessment of the current approach to credit;
- Identifying alternative forms of collateral and ways in which to incorporate that collateral into their lending programs;
- Providing a more complete set of financial services for microenterprises.
There is a general consensus among clients, especially the smaller businesses, that credit from KREP has resulted in improved incomes, increased output and growth in their businesses. Yet, although KREP is already the country's largest single microfinance intermediary, the potential for further increases in market breadth and depth through the establishment of the KREP Bank is considerable.
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