The narrow street in central Nairobi seethes with shoppers and delivery trucks and food stalls. Inside the covered market, stores are piled to the ceiling with every kind of merchandise, sprays of multicoloured tubs and pots and tins and clothing. In one small booth, Phyllis Muthoni reaches hair gels and skin creams off the high shelves of her cosmetics booth, advising a client about her look. The scene is so crowded that everything might seem plentiful.

But it’s not. Finance is hard to come by in Kenya. Phyllis was lucky. She went to Faulu Microfinance Bank, which gave her a loan of just over EUR 10,000 to set up her shop, Jophy Cosmetics. “Since we got that loan, for sure we’ve seen great improvements,” she says. “It has really boosted our profits. The income we earn has increased. We make a nice profit.”

African microfinance impact

Faulu is one of the local microfinance institutions supported by the European Investment Bank. The EU bank’s investments in African microfinance have a big impact on the lives of people like Phyllis. In East Africa alone, the EIB works with 11 microfinance institutions in Kenya, Tanzania, Uganda and Rwanda, supplying EUR 125 million of credit to 278,270 final beneficiaries, 42% of them women and 29% of them young people. Average loans of EUR 5,276 support or create more than 874,000 jobs.

“I feel very happy—very, very happy, seeing as business is not going down,” says Phyllis, 30, who employs two people. “Without the loan, I would be having a hard time. If I didn’t receive the loan from Faulu, I would not be where I am now.”


Phyllis advises clients on beauty products

Phyllis advises clients on beauty products

EIB expands African microfinance

Across Africa, the EIB’s microfinance facilities add up to EUR 270 million with almost 1.5 million beneficiaries like Phyllis. They’re so successful the EIB has started another facility to lend EUR 60 million to agricultural smallholders. All microfinance facilities have an important technical assistance component, too, helping financial intermediaries improve credit methodologies and outreach, as well as working with final beneficiaries.

“It really helps Africa, especially the young people who need loans,” Phyllis says. “It had been very difficult, especially when it comes to approving the loan, which could take a long time. I loved Faulu, because they were quite quick.”

A shop named New Hope

A short drive from Phyllis’s shop, Gladys Muthoni Njagona runs New Hope, a general store jammed with Chinese and Indian products. The 39-year-old has seen her life changed by her EIB-backed Faulu loan.

She started with a loan of less than EUR 500 and gradually increased her borrowing to its current EUR 4500. That allowed her to buy stock for her shop, bringing a profit each month of a little less than EUR 2000, which she in turn has used to buy property.


Gladys Muthoni Njagona in her New Hope store in Nairobi

Gladys Muthoni Njagona in her New Hope store in Nairobi

“The loans have really helped me,” she says. “I started the business. It allowed me to educate my kids and to buy a piece of land, where I rent out houses. Now I’m a landlord.”

Njagona intends to take further loans from Faulu to expand still more. “I’m very happy with Faulu.”

That’s the intention of Phyllis, too. There’s not much room to spare among the cluttered market stalls that surround Jophy Cosmetics. But Phyllis has big plan. “I hope the Faulu guys will help me push through,” she says, “because I know I will make it. With them, I will make it.”