1 Contents Acknowledgements ............................................................................................................................................ 4 Abbreviations...................................................................................................................................................... 5 Abstract .............................................................................................................................................................. 6 1 Introduction ..................................................................................................................................................... 8 1.1 Research question .................................................................................................................................... 9 1.2 Definitions and explanations .................................................................................................................... 9 1.3 Delimitation .............................................................................................................................................. 9 1.4 Structure of the dissertation .................................................................................................................. 10 2 Methodology ................................................................................................................................................. 12 2.1 Research purpose ................................................................................................................................... 12 2.2 Research strategy ................................................................................................................................... 13 2.3 Research design ...................................................................................................................................... 14 2.4 Data collection ........................................................................................................................................ 15 2.4.1 Primary data .................................................................................................................................... 15 2.4.2 Secondary data ................................................................................................................................ 16 2.4.3 Emails/Skype .................................................................................................................................... 17 2.4.4 Data triangulation ............................................................................................................................ 17 2.5 Validity of the data ................................................................................................................................. 18 2.6 Implementation of design ...................................................................................................................... 18 3 Theory building .............................................................................................................................................. 19 3.1 Social capital theory ............................................................................................................................... 19 3.2 Principal-Agent Theory ........................................................................................................................... 21 4 Microfinance .................................................................................................................................................. 24 4.1 The Grameen Bank methods .................................................................................................................. 24 4.2 MFI’s and their work ............................................................................................................................... 25 4.3 “The microfinance promise”................................................................................................................... 26 4.4 Microfinance in Africa ............................................................................................................................ 27 4.5 Microfinance services ............................................................................................................................. 28 4.6 Lending possibilities ................................................................................................................................ 29 4.7 Limitations of microfinance .................................................................................................................... 31 5 Mesofinance – small and medium sized enterprises .................................................................................... 32 5.1 Mesofinance obstacles ........................................................................................................................... 36 5.2 Mesofinance opportunities .................................................................................................................... 38 6 Online lending platforms ............................................................................................................................... 39 6.1 Kiva ......................................................................................................................................................... 41 2 6.2 MyC4 ....................................................................................................................................................... 42 7 MyC4 – case presentation ............................................................................................................................. 43 7.1 MyC4 ....................................................................................................................................................... 44 7.2 MyC4 Business model ............................................................................................................................. 45 7.3 MyC4´s financial situation ...................................................................................................................... 48 7.4 Providers ................................................................................................................................................. 50 8 Findings .......................................................................................................................................................... 52 8.1 Kenya ...................................................................................................................................................... 53 8.2 The microfinance industry in Kenya ....................................................................................................... 54 8.2.1 Jamii Bora ........................................................................................................................................ 58 8.3 SWOT analysis – MyC4 ........................................................................................................................... 60 8.3.1 Strengths .......................................................................................................................................... 61 8.3.2 Weaknesses ..................................................................................................................................... 63 8.3.3 Opportunities................................................................................................................................... 70 8.3.4 Threats ............................................................................................................................................. 79 9 Conclusion ..................................................................................................................................................... 83 10 Recommendations ....................................................................................................................................... 86 11 Reflections ................................................................................................................................................... 88 Bibliography ...................................................................................................................................................... 90 Figures, tables and pictures .......................................................................................................................... 97 Appendices ....................................................................................................................................................... 99 3 Acknowledgements I give special thanks to the people who have helped me throughout the process. I am extremely grateful for all the respondents taking the time to contribute to my research and making it possible. I owe a debt of gratitude to Lone Søndergaard, Githa Kurdahl, and Paolo Iezza , who assisted me with all the information I needed from MyC4 and gave me valuable suggestions on how to approach my research. I am also especially grateful to Mia Schomacker, Ove Hoff, Jes Broe Frederiksen and Philippo Stroll for your support and advice which without a doubt has improved the outcome of this dissertation. Thank you so much Robert Ndubi for your help in Kenya. If it wasn´t for your help, I probably wouldn´t have had all the interviews that I got.