“Do you know anything about micro finance?” asked one of our Trustees. Short answer: “No!”. This question came my direction in about the fourth year of operating our little charity, St Peter’s Life-Line, working in a remote, harsh, very conservative and marginalised tribal area of NE Kenya.
Myself and my daughter, Susie, started the charity to respond to the urgent needs of a small, privately founded primary school, St Peter’s, from going under due to exorbitant food prices during a severe drought.
Those early years saw us helping to bring that school back on its feet, and very soon after that, we could not but avoid to start addressing the pressing need to help eliminate the foul scourge of Female Genital Mutilation (FGM) so prevalent in this area, and over which we are currently successfully prevailing.
So when the question on micro finance came along, it intrigued me, but didn’t ring any strong bells – until I started looking in to what it was all about. And, bottom line – it is all about lifting families out of poverty – no brainer!
Specifically, the Grameen system was recommended. This was founded by Professor Yunus in Bangladesh about thirty years ago – where, seeing the potential of women in the community to set up and run small businesses by giving them a small loan, he set his scheme in motion. Its worldwide success was recognised with him being awarded the Nobel Peace prize in 2006.
We obtained and read the basic handbook on how the system operates – it looked good, but could we adapt and operate it in our own unique circumstances? We gave the handbook to Veronica, our Project Director, who had so capably set in motion and runs the anti-FGM programme. After having a good look at it, her short answer, “Yes!”.
The system works by groups of women, six to a dozen, say in a village, all who know each other, getting together to form a micro finance Group. They will be instructed in the basic process of operating the scheme, and whilst awaiting for their loans, vote among themselves a Chair, Treasurer and Secretary for the Group.
When funding becomes available, the Group will be told how many loans are coming their way – they will then vote as to who in the Group will receive the loans. And it is a loan – a business deal – typically for a first loan of 10,000/-, on which they will pay interest (currently 3%) of which they do straight away, 300/-, plus 100/- for their Pass book. They will be given a 3 month ‘holiday’ from repaying anything whilst their business gets under way, and from then on are expected to pay 1,000/- per month until the loan is repaid.
When I scoped out this project I was prepared to write off 10% of loans given out, in anticipation of defaulters being unable to pay back. “These are not clever people,” I thought, “with no business experience or acumen…”, and I was not prepared, as a charity, to go chasing after poor women to collect outstanding debts (although we did ask for some form of collateral before making a loan, to emphasise that it was business orientated). How wrong (and arrogant!) I was! Of the 2,002 loans given to date, only one woman (not 1%!) has so far defaulted. This was the beginning of teaching me how dedicated and conscientious these ladies would be in starting their businesses, running them, and their determination to make a success of them.
As the numbers began to grow, the scheme started to take shape in the Grameen fashion. A number of Groups, located geographically close to each other were formed into a Centre, for which we appointed a Chair, Treasurer and Secretary – invariably from women of some standing in the community. One of the undertakings of the loan is for each lady to go with their Group on one day each month to where the Centre is located. Here all the Groups would meet, the collection of loan repayments would be made, new loans issued from the Centre, and generally there would be a pretty jolly, upbeat gathering of ladies, swapping experiences and having a good old natter. A new social dynamic had also been created!
The system is for ladies only (say no more!), and basically operates by peer support, with ladies in each Group being prepared to help a Group member if in trouble, and in whatever way (sometimes with a cash boost), and generally giving each other advice and encouragement. Problems should initially be sorted out in and by the Group, and if not, can be referred up to the Centre management for resolution, and in the rare case, on up to the Management Board. An elegant and simple system!
Some time along the line, it occurred to us that we might be able to incorporate some sort of savings scheme. These women are unable to get to a bank, and many are illiterate anyway to cope with any paper work. So we set up our own ‘bank’ taking into trust their precious savings – and giving them interest – currently 2%. Many women now have solid savings for a rainy, or sunny, day, and which we also use to set against the amount of loan that we give – for those who seek second or third loans to expand their business. This was also an exercise in trust amongst each other – as these ladies were parting with their hard accrued savings.
Businesses vary widely. Popular is the bulk buying of foodstuff (maize, beans) and selling-on in smaller lots at a small profit in the twice-weekly market, or in their own villages. Goats and chickens are traded; tailoring and dressmaking is also widespread, as the only source of buying clothes. Some run wayside cafes, others sell porridge in the market, and others sell household cooking essentials from their little shops, some with hairdressing and beauty salons.
From setting up just over four years ago, there are now over 1,200 members, gathered in over 90 Groups, forming 5 Centres. The whole operation is driven by the Management Board, made up of the Centre Chair ladies and our Project Director. They formulate and implement policy – not without a lot of debate, and very much taking their members’ views on board. Central to the whole scheme is the oversight given by the St Peter’s Parish Priest, who is answerable to his Bishop for the correct and ethical conduct of the scheme. Our charity is a Christian organisation, wholly dependent on acting in a Christian manner, and by applying copious prayer! We are quite clear, though, that anyone of any faith or none is always welcome to join this scheme.
The other vital element to the whole project, as with any generated by external aid agencies, is to eventually hand over complete ownership to the local people, as a sustainable and robust going concern. We have reached that happy stage with our micro finance scheme. It is completely self funding, with loan repayments going back out as new loans, and so on round the circle. The ladies were quite rightly concerned that the inevitable running costs would gradually erode their capital. We are currently trialing a 10 hive apiary, being run by the Management Board ladies, with the proceeds from the sale of honey and other related products, covering running costs.
The reward for me is attending their AGM every year, experiencing the joyful celebration of the hundreds of women gathered, and talking to these ladies, sensing how proud they are in their achievement, and telling me how they could now start to pay secondary school fees to send their children to school, and sometimes with a twinkle and a giggle, “I can now buy myself things that my husband could never afford!”
If you would like to learn more about the work of St Peter’s Life Line or make a donation to help support their work, please visit their website.