Evaluation of KCB and Multiparty guarantees and an assessment on prospects of guarantee projects in Kenya

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This evaluation considered two loan portfolio guarantees supported by the Swedish International Development Cooperation Agency (Sida) in the period 2012-2021 in Kenya. The Sida guarantee support was provided as co-guarantees with USAID’s Development Credit Authority (DCA), currently revamped as the Development Finance Corporation (DFC). Sida has delegated the coordination and follow-up of loan portfolio co-guarantees to DCA and currently DFC and supporting Technical Assistance was coordinated and implemented by USAID in Kenya. The two loan portfolio co-guarantees were implemented with:
- The Kenya Commercial Bank Group (KCB), with a co-guarantee total value of 11.5M USD;
- Three Micro Finance Institutions (MFIs):
o Kenya Women Finance Trust Deposit Taking Microfinance Limited (5M USD);
o Deposit Taking Microfinance Limited (SMEP) (4M USD);
o Micro Africa Limited Kenya (Letshego) (2M USD);
A reserve facility of 2M USD was made available for good performing MFIs.

The purpose or intended use of the evaluation was to assess the efficiency, relevance, effectiveness, sustainability and the improved management of natural resource utilisation with a focus on sustainable agribusinesses growth that benefits poor people, as well as commercialization of smallholder agriculture, employment creation and food and nutrition security and particularly, to what extent poor people and/or those living in remote areas benefitted from implementation of the guarantee intervention. The primary users of this evaluation were the Swedish Embassy in Kenya and Sida’s loans and guarantee unit.

The Swedish Embassy and Sida commissioned an external evaluation of the two co-guarantee arrangements in the period 2012-2021. This evaluation looked back at the results of these facilities and secondly, tred to compile how to learn from this experience for future planning periods.
The evaluation was realised in the period May - August 2021, by an external team of four international consultants.

The evaluation team combined the following research methods and tools to ensure a balance of qualitative and quantitative analysis of the evaluation criteria and research questions: 

- Briefing workshops with the Swedish Embassy, USAID and the loan taking institutions to discuss methodology and planning and to prepare for the final details for the locations to be visited;
- Desk-review;
- Analysis of the loan guarantee portfolios of the loan guarantee taking partners;
- Semi-structured and checklist guided key informant interviews;
- Field visits to five selected locations with each of the loan-guarantee taking institutes were conducted;
- A short and simple survey was administered to collect basic data of beneficiaries on satisfaction of services and with performance of service providers;
- Stakeholder mapping of relevant partners in loan and TA provision in the agricultural and energy sector in Kenya, as input for identification of possible cooperation partners for Sida in the future; 
- Debriefing and validation workshop  with the Swedish Embassy after the end of the field visit  to present and discuss preliminary research findings and to identify remaining gaps in the data-collection and analysis.
Relevance and additionality of guarantees to move financial institutions more towards lending in agricultural value chains was varied. The use of the guarantees was sub-optimal, but improving over time. The guarantees were generally efficient. The most important effect is seen in improved and extended availability of tailored lending products and services to MSMEs in agriculture.

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