Kenya Part Two: Village Savings Groups

After my schools visits, I spent two days in Western Kenya learning about the Salvation Army’s highly successful Village Savings and Loan Programme. Around 3,000 Kenyan women are involved in savings groups through this programme, and collectively they saved around US$200,000 after only one year. Our hope is to replicate this model in four slums in Nairobi in order to enable participants to generate savings and income even from within the slums.

One woman in Kibera who has expanded her vegetable stand with a loan from the savings group.

One woman in Kibera who has expanded her vegetable stand with a loan from the savings group.

How do Savings Groups Work?

Each group is made up of around 25 self-selected women who save together and take small loans from those savings over the course of nine months to one year, after which the accumulated savings and the loan profits are distributed back to members. Together the group decides on a share price (normally around US$.50), and at weekly meetings members can purchase up to five shares of savings. Savings are maintained in a loan fund from which members can borrow in small amounts, up to three times their individual savings. Loans are for a maximum period of three months and may be repaid in flexible installments. The interest rate, or monthly service charge, for all loans is determined by the group, with most groups using an amount between 10-20%.

A member's records book: blue arrows indicate shares that this woman has purchased each week.

A member’s records book: blue arrows indicate shares that this woman has purchased each week.

Groups are highly transparent. Annual elections are held to elect the five-person management committee, whose roles are clearly defined and highly decentralized. The group’s savings are kept in a lock-box, which is safeguarded by the group box-keeper between meetings. The lock-box has three padlocks and the keys are held by three separate members of the group who are not members of the Management Committee. The role of key-holder rotates among all members to ensure further transparency. Learn more about savings groups here.

Savings Group demonstration and their lock-box.

Savings Group demonstration and their lock-box.

One woman purchasing shares in a savings group.

One woman purchasing shares in a savings group.

What Next?

Walking through Kibera.

Walking through Kibera.

After learning about the existing savings groups in Western Kenya, we visited a savings group at the Salvation Army Corps (church) in the Kibera slum of Nairobi. Kibera is heralded as the largest slum in Africa, and with uncertainty over the looming election, our group had to be escorted by armed guards on our visit. Members of the savings group told us that they had come together to ‘uplift’ one another and save their funds together. They noted that most of the slum’s inhabitants were single mothers without jobs. These women spend their days searching for any small work that might provide some income, but often they come up empty-handed. The group had started to save their money together in order to start their own small businesses. Our hope is that we can support this savings group and assist in the creation of others as we begin our work in the Nairobi slums.

Click here to learn more about the Salvation Army International Development’s Generation Programme.

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