Kwale’s poor chart path to financial inclusion

Despite the recent move to cap loan interest rates, ostensibly to protect Kenyans from expensive credit, a section of the country’s population still finds the current costs prohibitive.

Financial institutions shy away from serving this section of borrowers, deeming them too risky.

But in the midst of the hardships, Kwale residents have learned how to navigate this challenge thanks to their ingenuity and through public-private partnership (PPP).

Some 990 women are benefiting from a financial inclusion programme that was initiated by mining company Base Titanium.

The programme, dubbed Village Savings and Loan Association (VSLA), seeks to empower community members to access savings and credit services at affordable rates.

Through the VSLA programme, there are 55 saving groups across 20 villages in Kwale County.

Currently, members of these groups have amassed savings of Sh6.2 million. Some Sh11.7 million has been disbursed in loans to members since the group’s formation three years ago.

The VSLA groups are administered by the members themselves, using training from the mining company on how to properly run the venture, affording members credit and savings at affordable rates.

At the end of a saving period, the members share out the dividend accrued from shares, loan interests and income from small investments.

The venture is operated through a VSLA kit (metal box), which is always under lock and key unless members are transacting. Members are not allowed to go home with their transaction books that are always locked up in the box.

“We keep our savings (shares) and welfare money in different bags. We also have a file and loan forms inside the bag,” said Ms Halima Salim, a member of Bidii Yetu VSLA, Likoni in Kwale.

They operate under strict discipline and rules and regulations and if they flout them, they are fined between Sh20 and Sh30 per sitting.

To cater for social welfare, every member contributes Sh50 to the kitty during the meeting. The social welfare kitty caters for short term loans which do not exceed Sh3, 000 per member per two weeks.

The money collected through selling the forms is also saved and or re-invested, and later shared out together with other forms of income. All VSLA groups in the county meet regularly to transact. For example, Bidii Yetu VSLA meets every Sunday.

The Bidii Yetu VSLA group aims to become a sacco in the near future.

Ms Salim says she does not regret joining the programme: “I have a son at the Umma University in Kajiado. I have taken loans of up to Sh40,000 to finance his education,” she said.

READ: Kwale-based titanium miner Base to pay more royalties

This is in addition to the fact that some group members have established small businesses, some from the proceeds or loans from the VSLA.

Some members make detergents and sell to other community members not in the VSLA group or use at home to cut costs of buying the products in the market.

Ms Nafuu Kassim is also a beneficiary of the programme. Since joining, her standard of living has improved.

“VSLA is a great programme. We now depend on ourselves, we fend for our families and have an income through the different business ventures,” said Kassim during a recent interview.

Ms Kassim opened a shop where she sells wheat flour, maize flour, sugar, beans, rice, cooking oil and other commodities. She also rents out utensils during events or to hotel owners.

The profits from her businesses allow her to educate her children, she said.

Mr Rashid Bakari from Fioni Village in Magaoni, Msambweni Sub-County, bought three goats in 2015 through the village VSLA. Today, he has more than 25 goats and two cows.

“It is a great programme that has helped the villagers improve their living standards,” he said and added that he was happy that his life has improved.