Siraji Sacco Secures Ksh170 Million World Bank Facility to Revitalize COVID-Hit Small Businesses in Kenya

Kenya’s cooperative financial sector continues to serve as a critical conduit for international development financing, with Siraji Savings and Credit Co-operative Society Ltd becoming the latest recipient of World Bank-backed funding aimed at revitalizing small and medium enterprises still grappling with the economic aftershocks of the COVID-19 pandemic. On Friday, AVLC Group formally handed over a Ksh170 million offer letter to the SASRA-compliant cooperative, marking another significant disbursement under a comprehensive recovery programme that has already channeled billions of shillings to grassroots financial institutions across Kenya.

The facility comes at a crucial juncture for Kenya’s micro, small, and medium enterprise sector, which forms the backbone of the national economy but continues to face persistent challenges in accessing affordable long-term credit. Siraji Sacco, which has built its reputation on supporting small and medium-sized enterprises through accessible credit products, will use the funds to provide targeted financial assistance to members whose businesses were severely disrupted during pandemic-related lockdowns and the subsequent economic downturn.

This latest disbursement follows closely on the heels of a Ksh500 million loan to Githunguri Dairy and Community Sacco just two months earlier in October 2025, structured by AVLC Group and sourced from the World Bank through the Kenya Development Corporation. That facility demonstrated the scalability and effectiveness of using cooperative societies as intermediaries to reach MSMEs that traditional banking channels often overlook or underserve.

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The SAFER Programme: A $100 Million Post-Pandemic Recovery Initiative

The financing being accessed by Siraji Sacco and other cooperative societies across Kenya forms part of the World Bank’s Supporting Access to Finance and Enterprise Recovery programme, commonly known as SAFER. This $100 million initiative was approved in December 2021 specifically to address market failures in the provision of finance to MSMEs—failures that were dramatically exacerbated by the negative economic impact of COVID-19.

The SAFER programme recognizes that Kenya’s 7.4 million MSMEs hold the key to job creation and greater productivity but face persistent challenges in accessing credit to scale operations, raise productivity, and deliver shared prosperity. These enterprises comprise 98 percent of all business entities in the country, generate approximately one-third of job opportunities, and contribute roughly 40 percent to gross domestic product annually. However, the sector remains highly informal, with only 20 percent of MSMEs operating as licensed entities, creating additional barriers to formal financial services.

The funds are being channeled through the Kenya Development Corporation, which serves as the apex institution wholesaling lines of credit to participating financial institutions. These include SASRA-regulated savings and credit cooperative organizations, licensed microfinance banks, and tier III commercial banks focusing on MSME lending. The consultancy firm AVLC Group has been hired to advise selected local financial institutions on how to access this World Bank funding, guiding them through the complex application and compliance processes required by international financiers.

According to the SAFER programme framework, facilities carry a tenure of between three and five years at an interest rate of nine percent, offering cooperative societies long-term, affordable capital to support enterprise recovery and growth. This represents significantly more favorable terms than what SACCOs typically access from commercial banks, allowing them to on-lend to members at rates around 12 to 13 percent while maintaining healthy interest rate spreads to cover operational costs and build reserves.

SAFER Programme’s Impact Across Kenya’s Cooperative Sector

The SAFER programme has already demonstrated substantial impact across Kenya’s financial landscape. By November 2025, the Kenya Development Corporation had disbursed Ksh3.2 billion to 11 SACCOs for onward lending, supporting 36,990 MSMEs including 12,221 women-owned enterprises and resulting in the creation of 25,637 jobs across 32 counties. An additional Ksh3.9 billion has been earmarked for 13 more SACCOs under the programme’s digital lending window, deepening outreach and strengthening Kenya’s financial inclusion landscape.

The programme’s multi-window approach allows it to serve different segments of the MSME market. Window one focuses on providing immediate liquidity support to MSMEs through community-based financial institutions such as SACCOs and microfinance banks. Window two drives innovation targeting informal sector MSMEs by leveraging digital channels to extend offerings to micro and small firms that may lack the documentation or collateral required for traditional loans.

Under the digital lending components, individual microenterprises can access loans ranging from Ksh7,000 to Ksh150,000, while small enterprises can avail themselves of loans ranging from Ksh150,001 to Ksh250,000. Microloans have a tenor of up to 18 months, while small loans extend for up to three years, providing flexibility for different business cycles and investment needs.

For larger facilities like those being provided to SACCOs such as Siraji and Githunguri, the financial support ranges from Ksh10 million to Sh500 million, with tenure of 60 to 120 months including a moratorium of up to 12 months. This extended timeframe allows SACCOs to build sustainable lending portfolios without the pressure of immediate repayment obligations, creating breathing room for both the institutions and their member-borrowers to recover from pandemic-related disruptions.

The COVID-19 Impact That Necessitated SAFER

The economic devastation wrought by COVID-19 on Kenya’s MSME sector cannot be overstated. According to data from the United Nations Department of Economic and Social Affairs, close to half of Kenya’s MSMEs—46 percent—temporarily closed their businesses for more than one year during the pandemic, while two-thirds of women-owned businesses faced extended disruptions. About 92 percent of MSMEs scaled down their size of operations, and one-third had to release employees to cope with the harsh economic conditions.

The majority of affected businesses released between one and three employees, though some shed as many as 30 workers. This massive contraction in employment and business activity rippled through communities, devastating household incomes and local economies. Many businesses that managed to survive did so by drawing down savings, selling assets, or accumulating debt from informal sources at punitive interest rates.

The lockdown measures, while necessary from a public health perspective, created impossible situations for many businesses. Siraji Sacco CEO Felix Ochieng provided a vivid illustration of the challenges members faced: “We’re glad that KDC has approved for us Ksh170 million which we’re going to utilize to support our members who were affected by COVID. Siraji Sacco was affected…we had our members who were doing poultry, and when COVID came there was lockdown when we had 22,000 birds ready. We had contracts and were supplying those birds to hotels in Nairobi. It came a day when the government said that there was lockdown so there was no movement.”

This single example captures the cascading failures that occurred across supply chains. Poultry farmers who had invested in raising birds to meet contracted orders suddenly found themselves unable to deliver, unable to access feed, and unable to dispose of stock. Hotels that would have purchased the birds were themselves closed or operating at minimal capacity. The financial losses were compounded by the complete disruption of cash flows and the inability to service existing loans, creating a debt spiral that threatened to destroy businesses that had taken years to build.

SACCOs as Critical Infrastructure for MSME Finance

The SAFER programme’s emphasis on channeling funds through SACCOs reflects a sophisticated understanding of Kenya’s financial landscape and the unique role cooperative societies play in reaching underserved populations. SACCOs collectively manage approximately Ksh500 billion in member savings, making them systemically important financial institutions whose performance significantly affects household welfare and local economic development.

Andrew Kanyutu, Chief Executive of AVLC Group, articulated why SACCOs are particularly well-positioned to deliver pandemic recovery financing: “During Covid time, there was a lot of damage done to the MSMEs. Saccos are one of the best avenues to reach those businesses because they’re on the ground, they understand the need, they have customized the need for their clients and they’re able to collect feedback continuously to ensure that they walk through the journey of recovery.”

This grassroots knowledge and community embeddedness represents a significant competitive advantage over larger commercial banks. SACCO loan officers typically live in the same communities as their members, understand local business conditions intimately, and can assess creditworthiness based on reputation and character rather than solely on formal documentation and collateral. This relationship-based lending model allows SACCOs to serve borrowers that would be automatically rejected by traditional banks’ credit scoring algorithms.

Furthermore, SACCOs have demonstrated resilience and continued growth even during challenging economic periods. The sector has seen rapid expansion in recent years, with institutions like Githunguri Dairy Cooperative now operating nine branches across Nairobi and Nakuru counties, demonstrating strong governance, financial stability, and sectoral impact. The cooperative has more than 38,000 members, most of whom are dairy farmers and small business owners who rely on access to affordable credit to maintain operations and invest in growth.

The adoption of digital platforms has further enhanced SACCOs’ reach and efficiency. Githunguri’s “Bonyeza Digital Loan” product has emerged as a transformative tool offering fast, affordable, and accessible financing for MSMEs, enabling farmers to access facilities easily on their mobile phones. This technological integration allows SACCOs to process loans quickly, reduce transaction costs, and serve members in remote areas without requiring physical branch visits.

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Regulatory Framework and Governance Improvements

The success of the SAFER programme and the channeling of significant international funds through SACCOs has focused attention on strengthening regulatory oversight and governance frameworks for the cooperative sector. The SACCO Societies Regulatory Authority plays a critical role in ensuring that participating institutions meet minimum standards for financial management, transparency, and member protection.

Recent reform efforts have emphasized enhanced oversight under the SACCO Societies Act, including mandatory board rotations, regular independent audits, and strengthened regulatory supervision. These measures respond to SACCO mismanagement scandals in which board members or executives diverted member funds for personal enrichment, highlighting critical weaknesses in governance frameworks.

The SAFER programme’s technical assistance component specifically targets strengthening governance arrangements, risk management capacity, business models, and operational efficiency of participating SACCOs and microfinance banks. Many smaller SACCOs face challenges including limited staff capacity, inadequate financial management systems, and insufficient understanding of regulatory compliance requirements. The programme provides support to build institutional capacity and ensure that funds are deployed effectively and sustainably.

World Bank Financial Sector Specialist Leah Kiwara emphasized the importance of this capacity building: “This partnership demonstrates ongoing efforts to close the financing gap affecting MSMEs across the country. Moving forward, monitoring impact and highlighting success stories is critical to drive meaningful and sustainable growth.”

Government Policy Context and Bottom-Up Economic Agenda

The SAFER programme aligns closely with Kenya’s current government policy framework, particularly the Bottom-Up Economic Transformation Agenda that emphasizes supporting small-scale enterprises, farmers, and local entrepreneurs. The National Treasury’s engagement with the World Bank and the Kenya Development Corporation to implement SAFER represents a recognition that addressing market failures in MSME finance is central to achieving broader economic objectives.

Cabinet Secretary for Investments, Trade and Industry Lee Kinyanjui has indicated that the government is exploring ways to make financing even more accessible and affordable. Speaking at the Githunguri Dairy facility handover, he stated: “Through the KDC, we are exploring ways to extend the lending period from the current seven years to ten years and reduce the interest rate from 9 percent to 8 percent. The objective is to make long-term credit more accessible to investors and institutions, particularly those involved in capital-intensive industrial projects.”

This potential enhancement of terms would make SAFER-type financing even more competitive and attractive, allowing SACCOs to pass additional savings to their members and support larger, more transformative investments. The extension of tenors to ten years would be particularly beneficial for agricultural and manufacturing enterprises that require longer payback periods for equipment purchases and infrastructure development.

In March 2025, Kenya’s Cabinet approved a proposal by SACCOs to integrate into the national payment system, a move aimed at reducing over-reliance on bank loans and enabling SACCOs to offer financial products and services currently provided by banks, such as checkbooks and foreign currency trading. This integration represents a significant evolution in the competitive landscape and could dramatically expand SACCOs’ service offerings and revenue streams.

Challenges and Opportunities Looking Forward

While the SAFER programme has demonstrated significant success, challenges remain in ensuring that recovery financing reaches the most vulnerable and underserved MSME segments. The programme’s social assessment identified that vulnerable and marginalized groups, including indigenous communities like the Ogiek, Maasai, Turkana, and Samburu, face particular obstacles including non-registration with relevant regulators, limited access to financial services, exclusion from banking services due to geographic distances, and language barriers.

The programme has incorporated specific measures to address these challenges, including concerted information provision, awareness campaigns in local languages, and engagement with community organizations and local government officials who work directly with these populations. For pastoralist groups, the potential to use SAFER loans to expand livestock and meat businesses beyond local markets into urban centers represents a significant opportunity for income enhancement and economic integration.

Women-owned enterprises constitute another priority segment. With 12,221 women-owned enterprises already supported through the first phase of disbursements, the programme has demonstrated commitment to gender-inclusive finance. However, targeted efforts remain necessary to ensure that social and cultural barriers do not prevent women entrepreneurs from accessing available resources.

The total credit demand for Kenya’s MSME sector stands at an estimated Ksh4 trillion, while the market currently delivers only Ksh793 billion—less than 20 percent of identified needs. This enormous financing gap underscores both the scale of the challenge and the transformative potential of programmes like SAFER that can mobilize international capital to supplement domestic resources.

The Role of AVLC Group in Facilitating Access

AVLC Group’s role as intermediary and advisor has proven crucial to the success of SAFER disbursements to SACCOs. The firm guides institutions through the complex process of understanding international lender requirements, structuring proposals to meet those standards, conducting risk assessments, navigating regulatory compliance, and addressing challenges that emerge during the application and approval process.

Andrew Kanyutu explained the value proposition: “Our role is really to assist them in understanding what the lender is looking for, understanding your needs, putting the structures together, then holding your hand on all the risk assessment, the processes, dealing with the regulators, if there is any challenge how do we address it until the point where you have received the funds.”

This technical assistance fills a critical gap, as many SACCOs lack the internal expertise to navigate international development finance procedures, prepare financial projections that meet World Bank standards, or demonstrate compliance with environmental and social safeguards required by multilateral institutions. By providing this specialized knowledge, AVLC enables otherwise-qualified institutions to access capital they would be unable to secure independently.

The success of this model is evident in the growing pipeline of SACCOs accessing SAFER funding. With more than seven SACCOs having secured over Ksh1 billion in funding within a short period, and 13 additional SACCOs approved for the digital lending window, the momentum is building. AVLC Group has called on more SACCOs across the country to apply for consideration, noting that cooperative societies remain a critical link in extending credit to MSMEs at the grassroots level and strengthening the country’s broader economic recovery.

Looking Ahead: Sustainability and Long-Term Impact

The SAFER programme is designed not merely to provide temporary relief but to build sustainable capacity within Kenya’s MSME finance ecosystem. The programme’s third component—Technical Assistance to Build Resilience—specifically focuses on ensuring that improvements outlast the project lifecycle. This includes strengthening the capabilities of the National Treasury, Central Bank of Kenya, SASRA, and participating financial institutions to continue serving MSMEs effectively after World Bank support concludes.

Monitoring and evaluation systems are being established to track programme impact, identify success stories, and make mid-course corrections where necessary. Key performance indicators include the volume of bank financing provided to COVID-affected MSMEs, the number of new financial products launched, the survival rate of firms receiving support, and disaggregated data on lending by gender, location, and sector.

For Siraji Sacco and its members, the Ksh170 million facility represents more than just numbers on a balance sheet. It represents the possibility of rebuilding businesses that were devastated by circumstances beyond anyone’s control. It represents farmers who can restock their operations, traders who can replenish inventory, and service providers who can invest in the equipment needed to restart operations.

Felix Ochieng’s example of poultry farmers who lost everything during lockdown captures the human dimension of what this financing makes possible. With access to affordable working capital, those farmers can purchase new chicks, rebuild their flocks, and reconnect with the hotel supply chains that were severed by the pandemic. The ripple effects extend through feed suppliers, veterinary services, transport providers, and ultimately the communities that depend on the economic activity these enterprises generate.

As Kenya continues to navigate the complex post-pandemic recovery, the partnership between international development institutions like the World Bank, domestic apex institutions like the Kenya Development Corporation, technical advisors like AVLC Group, and grassroots financial cooperatives like Siraji Sacco demonstrates a model for channeling global resources to local needs. The success of this approach could inform similar programmes across Africa and other developing regions where MSMEs face comparable challenges in accessing the long-term, affordable finance necessary for sustainable growth.

The coming months will be critical in demonstrating whether the recovery financing translates into measurable improvements in business survival, employment creation, and household income. Early indicators from institutions like Githunguri Dairy, which is implementing and monitoring its facility annually to evaluate impact on more than 38,000 members, suggest that the model is working. If Siraji Sacco can replicate this success and if the pipeline of additional SACCOs continues to grow, the SAFER programme may prove to be a defining intervention in Kenya’s economic recovery trajectory—one that strengthens not just individual enterprises but the entire architecture of community-based finance that serves as the foundation for inclusive economic development.

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By: Montel Kamau

Serrari Financial Analyst

26th January, 2026