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Innovative banking that boosts development

The Equity Building Society has gone from the brink of collapse to become a profitable business that also helps lift the rural community in Kenya out of poverty. The adoption of innovative practices and the support of outside experts have been key in its transformation.

Equity has become Kenya’s leading microfinancing institution, serving more than three million low and moderate income people. The bank has been at the forefront in providing new financial products and access to capital for Kenya’s underserved rural population.

However, in the early 1990s the institution was far from the success story that it is today. It was on the verge of insolvency by 1993 after a decade operating as a traditional bank giving long-term mortgage loans to an untargeted clientele.

The bank committed to radical steps to turn its fortunes around in 1994. It brought in microfinance loans and savings products, with a particular focus on agribusiness. A key development was the introduction of mobile banking services in 2000 – delivering innovative new products that catered for the needs of traditionally ‘unbanked’ agricultural customers.

Capacity building and financing came from international partners including the EU’s Microenterprise Support Programme, the UK’s Department for International Development (DFID), the United Nation’s Development Programme and several NGOs.


  • Equity has grown from 12,000 depositors in 1993 to over 1.84 million depositors in 2008. It is the leading microfinance institution in Kenya, with total assets just under €1 billion, and serving 3.3 million micro and small clients;
  • Through its social approach to banking, it has rolled out unique and affordable financial products and services to support farmers and to commercialize farming;
  • It has proved the viability of the low-margin, high volume business model;
  • The mobile banking programme now covers more than 120 villages, from an original target of 20. Mobile units service some 40,000 new customers, of which nearly half are women;
  • It has shown that flexible rural delivery mechanisms such as mobile banking do not need not to be restricted to credit and deposit services, but can also offer other services, including inter-branch cash transfers;
  • Loans secured by contractual agribusiness payments can be an effective method of extending credit to farmers without taking on extensive risk, although this practice can exclude many smaller farmers.