The Funding Question
Before leaving for Kenya, we sought guidance from just about anyone who was willing to listen to our story. So much of what we learnt in these conversations has already proved invaluable, but one particular piece of advice keeps coming back to me; “Don’t get too attached to your idea, you can be sure it will have transformed by the time you get home”. I could not have predicted how accurate this statement would prove. It seems that by the end of each day a fresh challenge or suggestion has forced us to re-think our strategy. The process can be tiring, but it’s also incredibly rewarding when new a approach is successfully adopted.
Today’s major challenge came out of a meeting with a representative from Equity Bank (our list of Kenyan contacts eager to help is ever-growing). He was really positive about the idea but confirmed a worry that we had long suspected might be true; micro finance institutions in Kenya will only fund established businesses with at least six months of trading experience and evidence of a steady profit (among other things). This rules out securing financial support from MFIs for the start-up projects that we intend to co-design (at least in the short term).
That leaves the Youth Enterprise Development Fund as our only current source of funding. This may sound like a fairly major blow, but luckily for us the YEDF has already awarded loans to more than 2000 youth groups in Rift Valley (our province) this year and we have been assured by the district office that there is plenty still available for the right ideas.
More worrying is what seems like a general risk aversion among investors when it comes to financing projects that are not simply reproductions of existing businesses. So far, all of the successfully funded groups that we’ve come across have been working in markets that already appear to be well served (e.g. fruit and veg stalls, motorcycle taxis, second hand clothes stores). Perhaps with a growing population supporting tried and tested business models is a good way to secure reliable returns. However it’s hard to see where our programme, built around encouraging innovation and creativity, will fit in with such an approach.
With this in mind, we have also begun to consider other potential sources of funding, perhaps from the UK. Even relatively small amounts can go a long way if distributed responsibly. So, for example, we have been discussing the idea of offering to match any money that groups manage to put aside while attending the KENYAWORKS programme (on the condition that they have also demonstrated a commitment to the course and can provide evidence to suggest that their proposed business is commercially viable). Work definitely still needs to be done on the details, but we know that banks operating in Kenya have the authority and facilities to manage such transactions, and it seems like a good way to encourage collective saving.
I suppose at this point it’s best not to get too attached to the idea. Let’s wait to see what tomorrow brings. Another re-think, no doubt.