Village Savings Groups – how to nurture financial services in the remotest corners
I recently visited the village of Nangarua in Beringo District, Kenya. The journey from Nakuru town to Nangarua took 4 hours, of which 2 hours was on tarmac roads and 2 hours very definitely wasn’t. During the last hour, we passed through several villages and picked up a local priest to act as our translator, as the Nangarua villagers spoke little Swahili, let alone English.
We were visiting with Anthony Mambo, recently appointed Microfinance Officer in Nakuru. His role is to help villages form savings groups, save regularly and then, once there is enough in the pot, make loans to one another from their pooled savings. Anthony offers training throughout; first on group dynamics, writing a constitution for the group and electing its officers, opening a group bank account, keeping records of savings and loans, how and why to save and invest; and then, once the group is up and running, he gives training on basic business skills: marketing, diversification, customer service, business planning, adding value and so on.
We found the villagers in Nangarua very receptive. Like many poor communities, they struggle to make ends meet but they bring massive resources of hard work and entrepreneurism to the struggle. The women of Nangarua had already formed a vegetable co-operative and the men had saved together to buy a posho mill, but they were keen to save in a more structured way and to receive training on developing their small businesses.
Anthony’s problem is that he is one man with one old car and a district over 300 miles from side to side. His ambition is to reach the remotest villages, communities with no access to safe places to save or capital to borrow for productive investment. But reaching just one of these villages can be a day-long trip, and impossible in the rainy season. If Anthony were trying to operate the ‘traditional’ form of microcredit, holding monthly loan disbursement and repayment meetings, the job would be impossible. Not even mobile money transfers, the answer in many remote communities, would work in Nangarua. We met one enterprising young man who had built a shelf into a tree on which to stand mobile phones – the only place in the village to get good reception!
Fortunately, Anthony’s model of microfinance is more about capacity-building and releasing the resources already in the village, and for that you don’t need regular access to the bank or even reliable mobile phone signals. Anthony’s role is to train the villagers to manage their own money, channelling surpluses from one household to meet demands for credit in another, and generating dividends to be shared amongst the group at the same time. Once the group is strong, Anthony only needs to visit to deliver refresher training and check up on the progress; he can move on to a new village to liberate their resources and talents too. In time, one of the banks will open a small agency in one of the larger villages, realising there’s a whole population with savings and credit needs ready to become their customers. But until then, at least the people of Nangarua can operate their own village bank – and keep the dividends for themselves.