In its efforts to assist the Government of Kenya to improve the livelihoods of its population, the Nairobi office of the UN Development Programme (UNDP) identified microfinance as an effective tool in eradicating poverty. In 1999, UNDP contracted UNCDF, the lead technical unit serving the UNDP Group, for its assistance in setting up a MicroStart Kenya Project as a part of the global MicroStart Pilot Programme. The development objective of the programme is to improve access of financial services offered to the economically active poor, in order to enhance their economic activities, increase their revenues, and create and consolidate employment. MicroStart is achieving its aim through

1) building the capacity of four local organizations to provide microfinance services to low-income microentrepreneurs on an operationally sustainable basis;

2) building the capacity of a local technical service provider to provide ongoing technical assistance and developing the structures to support these local organizations over the long term; and

3) contributing to local and global knowledge of the impact of microfinance on clients and how to build the capacity of young organizations.

These objectives are fulfilling the main requirements of the Kenyan microfinance sector identified by the Government in its National Poverty Eradication Plan (NPEP). MicroStart Kenya has been successful thus far, with major project inroads made in the areas of building the institutional capacities and outreach of the four participating organizations. However, the MFIs now have to grapple with controlling their delinquency rates, managing liquidity, and following accurate accounting procedures in order to improve their operational capacities.