Investors often believe their greatest threats are political uncertainty or economic volatility. But the truth is more subtle. Writes John Andrew Musundi, MD-Africa, Sicuro Group.
We walked into an assignment that, at first glance, appeared straightforward. A development-funded programme had been operating in Kenya for several years, supporting small businesses through capital equipment and a unique social-entrepreneurship repayment structure. On paper, the initiative was thriving. The documentation suggested structure, accountability, and measurable outcomes.
It looked like the kind of project any investor, donor, or social-impact partner would proudly showcase. But the truth was waiting quietly beneath the surface hidden in backrooms, in unvisited workshops, in the stories of beneficiaries who felt unheard, and in the gaps between what was reported and what existed on the ground.
Nothing in the initial briefing hinted at what we were about to uncover. But that is the nature of field audits. They don’t reveal what’s written. They reveal what’s real. And reality, in this case, was far more complex.
Impact funding is meant to unlock opportunity. But mismanagement had turned it into a burden for many.
Two Different Worlds
When my team began the on-site visits, everything felt routine. We had a schedule of businesses spread across different localities. The implementing partner had provided their list. The expectations were clear.
The first few businesses gave us hope. We walked into lively workshops filled with the hum of equipment that had clearly changed these entrepreneurs’ trajectories. One tailoring business had transformed into a mini-production hub. A small manufacturing operation had scaled its process line. A trainer proudly introduced us to the young people he had been mentoring, explaining how the equipment had opened new doors. These were the kinds of scenes you expect and hope for in impact funding. And for a moment, we believed the programme was functioning exactly as designed.
But then we stepped into the other world.
I remember walking into a premises where the owner looked uneasy even before we spoke. When we asked about the equipment that was supposed to be there, he hesitated, glanced around the empty room, and said quietly, “It hasn’t arrived.” Yet according to the documentation, he had already received everything.
At another site, we found a shut door and a neighbour who told us, “They moved long ago. Nobody knows where.” The implementing partner had marked this business as active and compliant. One proprietor insisted they had received all their equipment, but the only items in their workshop were old, worn-out machines that clearly predated the programme. Another business had received equipment but admitted that several items had gone missing. Others had been given partial equipment despite the records showing full disbursement.
And then there were the beneficiaries we could not find at all. Some had travelled. Some had relocated. Some had closed shop. Some had left the country entirely.
With every site visit, the neat picture painted by the paperwork unravelled further. The number of defaults, gaps, absences, and contradictions exceeded what one would expect in any functional programme. We realized we were seeing the early signs of something deeper- something the documentation could not explain.
Broken Systems
Midway through the exercise, we began speaking to a different group altogether: the applicants who had been selected and approved but had never received any equipment.
Their voices carried frustration, exhaustion, and a quiet anger sharpened by time.
They had gone through a rigorous selection process. They had been congratulated. They had been told equipment was coming. They had reorganized their expectations, their business plans, and in some cases even their premises. But nothing ever arrived- no items, no updates, no explanations.
Their disillusionment was striking. For them, this wasn’t just a mismanagement issue. It was betrayal.
These interviews forced us to revisit every assumption we had made about how the programme functioned. If beneficiaries approved for equipment that was never received, yet their names reflected in documentation- then the issue was not operational inefficiency. It was systemic.
Internal Collapse
Every audit eventually reaches a moment where all evidence converges into a single unavoidable confrontation. That moment came during the interview with the implementing partner.
The atmosphere was tense before a single question was asked. When we began presenting the discrepancies such as missing equipment, unverifiable repayments, beneficiaries who never received support, and inconsistencies across multiple years, the explanations crumbled quickly.
Piece by piece, the truth surfaced. Funds meant for beneficiaries had been diverted to unrelated activities. Funds meant to be repaid to the overarching programme had been used locally. Monitoring had been inconsistent, and in some cases fabricated. Staff had gone unpaid for months. Critical programme obligations had been abandoned entirely.
It became clear that the internal structure designed to protect donor capital had collapsed. Not in a single moment, but gradually through unchecked decisions, weak governance, and the absence of accountability mechanisms.
Sitting in that room, listening to the admissions, I could feel the weight of what we now understood: this was not a breakdown, it was a slow erosion that no one had challenged early enough.
The Human Consequences
What stayed with me most were not the financial discrepancies. It was the human cost.
One entrepreneur had taken a loan to expand her premises because she believed the equipment was guaranteed. When it never came, she was left with debt and a declining business.
Another beneficiary had taken on trainees, promising them hands-on experience with modern equipment. When the machines never arrived, those trainees left disappointed, confused, and convinced that they had been misled.
A business owner showed us her empty workshop and said, “I kept waiting. I kept calling. At some point, I stopped believing anything would change.”
The paradox is that the program had produced both the best and worst outcomes of impact funding. The successful cases were not anomalies; they were evidence of what could have been achieved at scale.
Where governance worked, businesses flourished. Where monitoring was real, repayments were credible. Where support was consistent, impact was measurable.
The report became not just an audit, but a blueprint for how investors must approach frontier markets if they want sustained, protected impact. Systems needed to be rebuilt from the ground up. Partnerships needed to be reassessed. Governance needed to be redesigned to withstand pressure and protect capital.
Impact funding is meant to unlock opportunity. But in this case, mismanagement had turned it into a burden for many.
And that is where the real damage lay- not in the lost equipment, but in the lost trust. Trust that is far harder to rebuild than capital.
A Journey into Supply-Chain Vulnerability-Lessons from a Nairobi Investigation.
