A significant gap exists in the financial services market for medium-term finance for small and micro-enterprises (MSEs) looking to invest modest amounts (e.g. US $ 500 - $ 5,000 ) in capital equipment. Such enterprises rarely qualify for tradition bank loans, and require smaller amounts than are accommodated by commercial leasing companies. MSEs usually therefore have to purchase capital equipment for cash up-front. This significantly increases business risks, discouraging enterprise start-ups and the graduation of MSEs into established businesses.

Micro-leasing services (MLS) (defined below) could encourage MSE investment in business equipment by reducing cash-flow problems, and providing a less risky exit-strategy where businesses prove non-viable. However, in most developing countries, especially in sub-Saharan Africa, there are a range of obstacles that prevent the spontaneous emergence of viable micro-leasing services:

	MLS are relatively unknown and untested as a financial service, both among potential lessees and also  among micro-finance institutions / lessors.
	The legal basis for contracting MLS arrangements is uncertain, and enforcement of contracts is difficult
	Potential MFIs (lessors) have limited experience and thus confidence in assessing the business-risks associated with MSE investment
	Potential MSE lessees often face excessive uncertainty about the technical-viability, reliability and maintenance costs of business equipment
	Equipment suppliers (who stand to gain most from the existence of MLS) are often socially and economically divorced from the potential customer-base among MSEs

This project will tackle the challenge of developing micro-leasing services in one country: Kenya. It will explore and provide insights into the obstacles above from the perspective of different stakeholders.