This case study gives an overview of a lease-to-purchase blended finance program developed by The Impact Facility for Sustainable Mining Communities (TIF) to provide equipment and foster sustainable mining practices in the ASGM sector of Western Kenya. This case study is part of a larger body of work documenting financial access interventions for the ASGM sector around the world, documented by The Impact Facility team on behalf of planetGOLD, with the support of the Alliance for Responsible Mining (ARM), over the course of the first half of 2024. Click on the download button at the bottom of this page to get the full report of The Impact Facility’s work in Kenya.

Artisanal and small-scale gold mining (ASGM) in Western Kenya has long been excluded from formal financial services, relying heavily on costly informal finance. In response, The Impact Facility for Sustainable Mining Communities (TIF) launched efforts in 2018 to provide equipment to the sector. This model has since evolved into a lease-to-purchase blended finance program to provide equipment and foster sustainable mining practices.

TIF’s financial model blends grant financing from the European Partnership for Responsible Minerals (EPRM) and GenEM Foundation (formerly Genesis Charitable Trust) for due diligence, onboarding, and technical assistance with returnable funds from a private investor used for equipment purchase. Investment decisions are guided by mine environmental, social, and governance (ESG) due diligence scores against The Impact Escalator, an ESG-criteria framework aligned with international standards (CRAFT, Fairmined, Fairtrade). Instead of collateral, miners provide a 10% security deposit upfront for equipment investments and make monthly lease payments after an optional grace period. TIF oversees equipment orders, installation, and training.

TIF collaborates with Solidaridad East & Central Africa, who provide miners with operational health and safety (OHS) and gender mainstreaming capacity support; the Chambers Federation, a gold trading family office that supports miner formalization efforts and explores offtake opportunities; and Datastake, an open-source software development company supporting TIF in the creation of a digital due diligence and ESG tracking platform to improve both miners and investor’s access to credible mine data.

To advertise the leasing model to potential clients, TIF hosts recruitment events in the gold mining communities, where participation is by word-of-mouth referrals or referrals from the Regional Mining Officers in the localities. The minimum requirements for onboarding include business registration to verify the legitimacy of their operations, land rights for their area of operation, active production status for at least six months, and a minimum of three months of production records.

TIF has secured a financing commitment of USD 450,000 in returnable funds on a debt basis, from a private investor to provide equipment through the lease-to-purchase model in 2022. To date, USD 138,000 has been deployed across ten ASGM operators in Kenya. Contracts range from USD 7,800 to USD 51,000, with 12-36-month repayment periods. Miners have received generators, compressors, water pumps, ball mills, and winches (mine hoists) with one outlier, a mining operator in whom TIF financed the construction of a VAT leaching plant, a mercury-free chemical processing facility that uses sodium cyanide for gold processing.

Once onboarded, miners receive continuous support based on Investment Partnership Plans (IPPs) created against their baseline ESG performance to enable and incentivize continuous mine site improvements, where mercury reduction is emphasized as a priority, encouraging the long-term adoption of gravity-based systems or direct leaching or as medium to long-term substitutes. Miners are incentivized to make improvements against the Impact Escalator to unlock larger financing amounts and better contract terms in subsequent investments.

Qualified ASGM operators receive equipment investments on favorable contract terms contextualized to the sector; these include grace periods, complimentary payment breaks, and market-rate interest. The initiative reports a 10% default rate so far, with most contracts nearing completion.Through the implementation of the project, TIF has encountered several findings:

• In the absence of stringent collateral requirements, miners are willing to repay loans at standard market rates;
• Extensive due diligence is required to onboard credible and viable ASGM operators;
• Mine operators should proactively apply for funding, rather than onboarding mines based on 3rd-party recommendations or pre-existing donor project selections;
• Data fatigue by miners can occur if the data-gathering process is too lengthy;
• There needs to be flexibility in the contractual terms to prevent future defaults; and finally,
• Grant funding is crucial to cover the onboarding of miners, de-risking through capacity support and monitoring of smaller ASGM operators yet to professionalize their businesses; in the absence of blended finance, a more commercial approach would be needed, focusing exclusively on already more advanced small-scale miners.