Micro-lender banking on rural women groups

For a long time, financial institutions have shied away from banking on rural women, especially those considered poor.

The logic of this financial exclusion is that this category of people is risky as it does not have required collateral.

However, with the advent of chamas (groups), rural women are beginning to look viable as micro-lender Bidhaa Sasa is realising.

For four years, the micro-credit institution that has provided more than Sh300 million loans to women groups, was launched in 2015 in Bungoma by David Disch and Rocío Pérez. The lender has built a name selling solar lamps and kits as well as cooking gas, energy-saving jikos and post-harvest loss products via the chamas on credit.

“This is an underserved community whose financial capacities remain untapped and his has meant self-pity, lack of enthusiasm and an extremely dull life for rural women,” Ms Perez says in a virtual interview.

Perceiving rural women as poor, she notes, denies them a chance to uplift their lifestyles and make many believe “certain household products belong to big cities”.

“Local banks and microfinance institutions hardly consider rural women as viable customers due to their extremely low-income status, lack of financial history and lack of collaterals,” she adds.

The situation is worsened by exclusion from public investments that largely target vote-rich regions and classes mostly in urban centres while ignoring development needs of remote regions.

“Kenya must consider investing in essential infrastructure in rural areas to deter increased rural-urban migration that leads to stretching of public infrastructure and amenities as well as proliferation of slums,” she adds.

Bidhaa Sasa, she says has managed to redefine rural life and discovered new dignity in rural women who use their groups to improve their lot. This ensures a collective responsibility towards specific causes such as education and cattle dip committees, prayer cells as well as market groups.

“We never invented any of these groups but just plugged in our business model that understands their low income status and avails to them products that help them save money as well as improve livelihoods,” she says

Without collateral, Ms Perez notes, each women group closely monitors its members and ensures repayments are made on time. Defaulters will see their equipment taken away.

“The rural women need decent and safe lighting for their household but cannot afford electricity. We saw this gap and used our own savings as seed capital to facilitate soft loans for buying the items as requested by the women groups,” she says.

Ms Perez says as the women and their families realised health benefits and monetary savings from using cooking gas and solar lighting, their groups grew stronger and stronger, becoming avenues where pertinent issues affecting them are discussed and solutions sought.

Bidhaa Sasa makes money by bulk-sourcing for the items that are then sold at wholesale prices via the women groups thereby ensuring a high repayment rate.

“We approached local banks for funds to buy our products and did engage product suppliers for credit but none listened to us. Banks want collaterals and suppliers can only give a month-long credit, so where do we serve these low income customers?” she poses.

She asserts that excluding rural women from economic activities only denies Kenya an opportunity to tap into their ability to contribute to national economic development

The firm, which now employs 80 people has deferred plans to expand to Uganda till next year due to shortage of funds.

The lender says each women group’s repayment ability is profiled and used to determine their future financial exposure to each group.

“We are surprised the women groups have managed to pick up again with all repayments now on schedule. This emanates from savings made from using our products,” she says.

“Those who used to buy kerosene for their lamps now rely on solar lanterns while safer storage for foodstuffs means less losses and more savings.”

HIGHER MARGINS

Ms Perez says higher volumes in product-sourcing means higher margins and lower product prices.

They are currently seeking patient funds from partners to enable them deepen their ability to give micro-loans for buying household products where women groups decide repayment rates.

Bidhaa Sasa’s business model saw it shortlisted for possible funding by Vodafone Institute last Month.

Bidhaa together with other shortlisted startups from UAE, Rwanda, Uganda, Chile, Brazil United Kingdom, Pakistan, Sweden and Denmark will be taken through a five-week personalised support, mentorship, training, networking and access to an impact investor network programme ahead of the final virtual pitching event on November 5.

Bidhaa Sasa has not been spared the challenges posed by Covid-19. Repayments in April and May sank as most of their 60,000 members lost jobs.