When you visit Nancy Nyambura’s dairy business in Eastlands, in Nairobi, it would not be easy to tell how far she has come. The business is a beehive of activities with customers coming in and out, and orders and supplies going out. “I am the founder and director of Animal World Feeds, an agribusiness distributorship that specializes in the distribution of animal feeds such as dairy meal and chicken feeds,” says Nyambura.

She started her business in Nairobi in 2002 as a small-scale farmer. “I lived in the Donholm area. I was a small-scale urban farmer,” she says. To sustain her framing venture in an urban setting, Nyambura relied heavily on dairy feeds which were only accessible at good prices at the factory in the Industrial Area.

“My biggest challenge was traveling all the way to the Industrial Area to buy dairy feeds,” she says. “I would walk from Donholm to the Industrial Area, which is a distance of about 4 kilometres. After buying my dairy feeds, I would hire someone to carry them to my place using a bicycle. This was an extra cost.”

Along the way, she began to wonder how many more urban farmers were struggling with access to affordable farm feeds as she was. “My struggle turned into my eureka moment. It was clear that there was a market gap for dairy feeds in Nairobi that was not receiving adequate supply,” she says. 

Nyambura decided to open an animal feed shop in the Kayole area, in the larger Eastlands area of Nairobi. “I would source for my stock on wholesale from Unga Feeds Limited in the Industrial Area,” she says. Her business began to grow and she became a noticeable, regular customer at Unga Feeds.  

“After operating for a while, Unga Feeds Limited got curious about my business. They wanted to know more about how I operated an animal feed in Kayole. They came to visit my business and during this visit, I pitched to them that I was willing to become their main distributor in the larger Eastlands area,” says Nyambura.

Read More: EIB unlocking development in Kenya with financing for small businesses

Unga agreed. However, the conditions that Nyambura needed to meet in order to qualify as their main distributor were too high. She needed to have at least three trucks and a bank guarantee of Sh. 1 million. 

“In 2019, I approached the Co-operative Bank where I had been banking and shared my proposal to Unga and the predicament I was in with their credit officers.” The bank agreed to step in and help her meet the requirements. 

“They told me they would extend financing to my business and true to their word, a financing package was processed within a week, and I started my new phase of business as a distributor,” says Nyambura. 

This loan package was heaven sent for Nyambura’s business. Incidentally, Nyambura’s business blossomed in 2019 when the 2019 pandemic struck. “Every other business closed down in 2019 as the pandemic spread. People retreated to their homes and there was a huge demand for chickens. The trickle effect was a high demand for chicken feeds whose supply we had in plenty,” she speaks on her break-even point.

As she continues to expand her distributorship business, Nyambura points out to the critical funding that she received as the turning point for her business. “My business broke even in 2019 after I received this funding. Without this funding, I would probably not have broken even” she says.

How did she access it? An evaluation by Bizna Kenya shows that Nyambura’s business was one of many that received financial support from the European Investment Bank (EIB) through local banks such as the Co-operative Bank. For instance, in 2021, the EIB extended Sh. 7.2 billion ($56.06 million) to the Co-operative Bank for onward lending to small businesses to help them recover from the economic impact of the Covid-19 pandemic.

Interestingly, this support of small and medium businesses by the EIB has been running for many years across the African market, with Kenyan SMEs being a major beneficiary. For instance, in the 2023 financial year, the EIB provided Sh. 444.8 billion (€3.2 billion) for public and private investment across the continent. Out of this amount, this amount Sh. 152.9 billion (€1.1 billion) went into supporting the private sector. 

In Kenya, the EIB has invested over Sh. 222.4 billion (€1.6 billion) in different projects over the years. Of this amount, close to Sh. 97 billion (€ 700 million) has been for support to the small and medium enterprises such as Animal World Feeds through intermediated lending to local banks such as the Co-operative Bank. 

We make loans to financial institutions which subsequently “on-lend” to final beneficiaries. Our support improves access to finance and financing conditions for SMEs and mid-caps.

With the support programs continuing, the financing support that EIB is extending to small businesses is coming in handy at a time when businesses are confronted with multi-layered challenges including access to credit, political instabilities and uncertainties, and changes in risk pricing parameters.

“All these are leading to high levels of crowding out, whereby banks choose to put their money in public debt rather than lend to micro, small and medium businesses, even though they contribute to more than one third of GDP and more than half of direct formal employment amongst developing countries,” the EIB reckons.

According to Japheth Waweru, an economist and financial markets analyst, this type of financing is especially a lifeline for small businesses in the country because of its flexible nature, longer tenors and attractive pricing.

“MSMEs in the country currently constitute 98 per cent of all businesses. They also create 80 per cent of all new jobs annually and effectively employ over 15,000,000 Kenyans. This shows that any financing that EIB extends to this sector is not only tangible for individual business owners, but it also comes with the growth effect where a business can realistically break even or expand,” he says.