Project Completion Report - Practical Action

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AG 2630 Micro Leasing for Poor Peoples Enterprises7. Pilot testing of supply chainleasingPhase Four8. Experience generated anddocumented proving supply-chainleveraged leasing in Kenya9. Information disseminated andinfluence achieved over targetaudience3 business ideas approved for leaseseach monthBaseline data on MSE clients collectedfor impact monitoringPilot scheme evaluatedImpact evaluation on supply chainleveraged clientsRegional workshop for MFIs /banks andothers interested in leasing in Kenyaachieved7.1 No leases entered into. Interest in leasing as a financemechanism is being generated. The new lease brokerage firm,has already brokered one lease and has several parties interestedin others. These are not necessarily supply chain leases, but somedo include some of the concepts proposed in this projectsdefinition of supply chain leasing.Evidence of a working leasing scheme has not been generated,neither has evidence of a working supply chain lending system.Evidence is required by private sector backers before they willinvest heavily in a new concept. Once evidence has beendocumented, the private sector is likely to take up leasing.This project had the difficulty in persuading the private sector tojointly develop and fund the pilot activity. Evidence from this andother projects seeking to engage the private sector in developingnew concepts have shown reluctance of the private sector tofunding new and unproven concepts.Workshop held in November 2003. Materials on leasing in Kenyadisseminated widely in Kenya and on websitehttp://www.itcltc.com/leasing. Supply chain leasing conceptincluded in new ILO publication on leasing to SMEs in developingcountries (Chp 3 pg 57)http://www.ilo.org/public/english/employment/finance/leasing.htm511PRISM scoring1 = likely to be completely achieved2 = likely to be largely achieved3 = likely to be partially achieved4 = only likely to be achieved to a very limited extent5 = unlikely to be realisedx = too early to judge extent of achievementPage 6
AG 2630 Micro Leasing for Poor Peoples Enterprises3. Performance against purposeThe purpose of the project wasTo generate better knowledge about how to design and deliver micro-leasingservices to MSEsThis purpose has been achieved by the project, as many output have beendisseminated and shared nationally and internationally about the project and thefindings it has made. PRISM score 1The project OVIs however were1. Financially sustainable approach to micro-leasing services by MFI partner2. Significant uptake of micro-leasing services by MSE’s in project areasThe first OVI has been proposed, but has not been taken up and verified by an MFIpartner. The network brokering firm is pursuing this approach and has had limitedsuccess to date in brokering schemes, mostly those that have access to donorfunding. PRISM score 4The second OVI has not been verified. There has been no significant uptake ofmicro-leasing services in the project area due to no pilot scheme being undertaken inKenya. This project has in fact delivered very valuable knowledge about the designof micro leasing services targeting MSEs. The project has corrected importantmisconceptions about the design of sustainable micro leasing services. It is highlylikely that any future effort to develop micro leasing will end up applying the principlesdeveloped through this project. PRISM score 5The purpose assumptions have not been disproved, and both are still validMSE investment in capital equipment is constrained by poor access to microleasingMSE sectors are targeted in which opportunities for business growth existThe hypothesis of the project was that given access to up-to-date knowledge of themarkets for small-scale capital equipment, and the technical parameters for their use;and greater capacity to appraise the business ideas of micro-entrepreneurs, then amicro-finance institution with prior experience of dealing with low-income clientgroups could deliver micro-leasing services to a wide range of poor people’senterprises in Kenya in a financially sustainable way.The key findings of the research do not support this hypothesis. The main incentivesfor leasing are tax and VAT incentives to the lessor and lesee. Most MFIs are notregistered for VAT and so can not make full use of the incentives for leasing. Otherorganisations would be able to make full use of the leasing legislation and delivermore benefits to their customers. MFIs do still have an advantage in their dealingswith low-income client groups, but an improved ability to appraise the business ideasof MSE entrepreneurs is not as critical to successful micro leasing as the ability toanalyse and find opportunities for leasing of equipment within particular supplychains in which lasting participation by MSEs is assured by some sustainablestrategic advantage they enjoy in that supply chain. Prior experience in dealing withlow income borrowers was assumed to be a critical factor in selection of institutionsto offer micro leasing, and hence the assumption that, if micro leasing was to developit would most likely be through micro finance institutions.Page 7
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Project Completion Report - Practical Action

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