In times of financial crisis, only two institutions have funds: shylocks and government. Banks, by nature of their operational guidelines, tend to conserve the little resources they have and go into “lending hibernation”, because they typically onward lend depositors money. Covid 19 is one such crisis, and the onset of banking sector layoffs signals this. As at the writing of this article, three banks have declared layoffs and several have announced branch closures.
With liquidity tightened, people and entrepreneurs in particular have to make quick decisions and source for alternative financing arms. Historically, one such popular borrowing mechanism for Kenyans has been through chamas, our informal financial groups. Their membership tends to be clustered around a common interest, women’s group, work place, church, industry eg matatu, shopkeepers, vendors and recently boda bodas.
