April 9th, 2026

In 2025, FSD Kenya seeded a water and sanitation rotational credit fund with the Association of Microfinance Institutions (AMFI). The fund provides microfinance institutions (MFIs) who have an existing well performing Water, Sanitation, and Hygiene (WASH) portfolio but are capital constrained, with small loans of KShs 4-6 million for on lending.

The WASH rotational fund structure built on 2 existing initiatives: WASH product development with microfinance institutions by the  Association of Microfinance Institutions (AMFI) and water.org; and a Covid-19 credit rotational (CRF) fund seeded by German Sparkassenstiftung (DISK) in 2020.

The  Association of Microfinance Institutions manages the credit rotational (CRF) fund with oversight from a committee drawn from board members and industry practitioners.

FSD Kenya provided the funds at 0% interest to AMFI, which AMFI then lends on at 10.5% to  create a margin for sustainability for its operations. Microfinance institutions are currently lending at their prevailing interest rates so as not to cannibalise their current lending book (as the credit facility is a small percentage of its overall loan book). The credit facility between AMFI and the MFIs is a 24 month amortising facility which includes a two month grace period. From recycling their loan facilities with their borrowers 1-2 times in the 24 months, each MFI will have expanded their capital base with which to continue on-lending, even after repaying AMFI in full.

In approximately seven months of 2025, the three selected MFIs on-lent KShs 8.9 million to 317 households (47% female: 53% male ). The loan sizes range from KShs Ksh 8,060 to KShs 85,000 with the average loan size of KShs 27,500.  The typical loan product is a 12 month water tank loan to a household which is the greatest need in peri-urban and rural areas. The most common water tank size financed is 3,000 – 5,000 litres. The borrowers are typically in micro and small businesses from farming, posho mills, tailors, retailers etc and the tanks often serve both household’s and the microbusiness needs. Only one borrower had a large loan of KShs 500,000 which was used to provide water to rental units he had built. Portfolio at Risk (PAR) across the three MFIs is 1% at 30 days. One MFI has a weekly repayment schedule while 2 use monthly repayments. The three beneficiary MFIs are repaying their monthly instalments to AMFI in a timely manner.

The bigger vision is to collect the data of the borrower and MFI performance and attract a wholesale lender, with an impact funder, to provide blended local currency financing for this deep demand of small loans from households who have an ability to pay. The biggest funding requirement seen in the market from MFIs is between KShs 20 million to 50 million, whereas most wholesale lenders tickets start at $ 1million placing currency risk on the MFI. The technical assistance provided by water.org to borrowers to ensure the water tanks are well maintained over long durations is also important, as a borrower could easily lose the asset if the tank cracked due to poor placement or extreme heat.

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