The Project at a Glance:
Resilient Agriculture & Self Help Groups – In Partnership with the Local Church
Location – Machakos, Makueni and Kitui Counties, Kenya
Local Church Partner – Fadhili Trust
People Impacted – 118,283
Women Impacted – 79%
Total Project 2019-2020 – $160,000
2018 Investment Opportunity – $124,357
Approximately 74% of Kenyans live in rural areas where farming is the primary livelihood. Isolated rural communities cannot easily access services from the formal banking sector as there are few banks, great distances between branches, and poor farmers often don’t meet minimum deposit requirements. Despite some mobile phone services, there is still a significant service gap for Kenya’s rural population for sustainable saving and loan services.
This project builds on existing traditional savings models; providing training to villagers that provides structure, improves the security of assets and increases the income of participants. Fadhili Trust implements the program, by working with village leaders and hand-in-hand with local churches, to provide effective, sustainable solutions to poverty within their own local communities.
- Extreme poverty, food insecurity, and malnutrition.
- Weak economic activity.
- A changing climate resulting in drought, followed by
- No formal banks or electricity in rural areas.
- Lack of minimum requirements to access capital from the
formal financial sector.
How Savings Groups Work:
- Tearfund and Fadhili Trust works with community leaders and village chiefs to assess interest and need. From there, groups are formed through a self-selection process and begin training.
- A Village Savings and Loan Group is 20-30 people, usually, women, who save money in a group fund, take small loans from the group’s savings and repay with interest.
- Members make weekly deposits in the fund and begin to accumulate savings. A member can borrow up to three times their savings, typically for a maximum of three months with the agreed-upon interest rate.
- All funds are kept in a metal box with three locks and three different key holders to ensure security and transparency.
- Each group is provided with individual member savings books, a calculator, stationery and a share stamp to facilitate record-keeping and accountability.
- After 12 months, all loans are repaid, and savings are returned to each depositor, along with the share of the profits from interest and late fees and the cycle begins again.
- Village Agents mentor the groups for a period of 12 months, at which time the group becomes self-managed and minimal oversight is required.
- Group members receive specific business training on:
– Vision and governance
– Basic book and record-keeping
– Loan administration
– Basic business development principles
How we work with the Local Church Partner:
Fadhili Trust and Tearfund:
In the past nine years, Fadhili Trust and Tearfund Canada have started over 1,400 Village Savings Groups with over 35,000 direct beneficiaries, impacting over 210,000 family members. Five years after a group training ends, 91% of groups still operate. That’s true sustainability!
Work done in the last five years:
- Fadhili has mobilized 764 groups with 21,561 members. Of these, 404 groups with 11,643 members have already graduated.
- 90% of the savings group members are women. Women’s empowerment has been key in this project, as their influence and support on their household and communities has been substantial.
- 11% of members are aged 24 and younger, meaning that the next generation is preparing for their future and is breaking out of the cycle of poverty.
- 55% of savings funds were circulating in the communities as loans and generating additional interest income for members.
- 89% of those in groups started over 5 years ago are still in groups because the benefits are so life-changing!
Looking to better provide for herself and her family, Teresi Nkeki, a small business owner, farmer, and mother of four turned to her nearby VSL group. Lacking access to a formal bank and restricted by her current loan group model, Teresia found herself feeling financially stuck and unable to invest the earnings from her small business.
Introduced to the Village Savings and Loans model by a friend participating in a group nearby, Teresia was quick to see the benefits of the model. She decided to join a newly formed group in her village and began to see her life change. Teresia was overwhelmed by the new opportunities. The loans have helped her pay her children’s school fees, expand her business, and buy three goats. She is thrilled as she can now sustain herself and her family.