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Yawezekana Sacco: the making of the poor people’s ‘bank’

With the legislation of the Mi crofinance Act, introduced in parliament during 2006 prior –
to its enactment in 2008, the micro-lending
services have undoubtedly spurred notable
growth particularly across the SMEs sector.
This is a significant shift from the case
slightly over two decades, when access to basic banking services in Kenya was supposedly
regarded to be the preserve of only those
well-endowed.
Consequently, the micro-finance sector
attests to substantial gains accrued by investors in the sector increasingly making tremendous strides to develop their enterprises.
“It is pertinent to point out that Kenya took
a bold stance at a time when most countries
stifled growth of the micro-lending industry.
We are grateful the government listened to
us and adopted stakeholders’ recommendations,” asserts Ingrid Munro.
According to the Central Bank, the Microfinance Act 2006 and Microfinance [Deposit
Taking Institutions] Regulations Act 2008
set out the legal, regulatory and supervisory
framework within which players in the sector
were meant to operate within its stipulated
guidelines.
The principal purpose of Microfinance Act
is to streamline and regulate establishment,
business and operations of microfinance
institutions in Kenya through licensing and
supervision.
More significantly, the Act further enables
Deposit Taking Microfinance Institutions
licensed by the Central Bank of Kenya to
mobilise savings from the general public,
thus promoting competition, efficiency and
access.
It was, therefore, projected that the microfinance industry would play a pivotal role in
deepening financial markets and enhancing
access to financial services and products by
majority of the Kenyan soon after the Microfinance Act became legally operational during
May 2008.
About 18 years ago, Ingrid helped establish Jamii Bora Charitable Trust, which grew
into a grassroots institution – providing
micro-loans services for the poor, marginalized for decades by mainstream banks.
“We started out with a group homeless
street boys, mothers and beggars. Soon
thereafter it was rather obvious they also
had other family members out there, all who
were looking up to them for support,” recalls
Ingrid.
Back then, the soft-spoken Swedish architect, was working as head of the Africa Housing Fund and urban housing expert with the
United Nations stationed in Nairobi.
Undisputedly, it has been a long and winding journey, one which gradually nurtured
the premise of a charitable trust seeking to
empower Nairobi’s growing population of
street boys, families and beggars.
The mandate of Ingrid`s office required her
team to devise practical solutions to ensure
affordable houses were within reach for especially Africa’s booming urban populace.
But her career took a turn as she encouraged a group of beggars and families then
living off the streets to try and save 50 cents
from their meagre and erratic cash flows.
In essence, she was laying the foundation
of an entity which through months of consistent effort, morphed into the Jamii Bora Trust.
The initial informal members took up Ingrid’s
challenge and begun making regular savings
by` contributing 50 cents every week.
Ingrid assisted pulling the women together into credit groups of five members
each. They would be individually expected to
guarantee each other on all loans which were
advanced to everyone.
The credit schemes granted revolved
around the beneficiaries, whereby they were
given basic guidelines on buying products,
which could then be resold and thus making
profit from their daily budgets.
Several months later on, the slum-based
street beggars community ‘merry-go-round’
begun to flourish since inception in 1998 –
banking on the commitment of a growing
300,000 strong social economic ‘bottom of
the pyramid’ movement.
With loans averaging about Ksh 8,000, a
member could borrow twice as much as they
had already saved in their accounts for at
least one-and-a-half months.
The social enterprise approach was not
entirely for profit. Its target market primarily
aimed at lending to customers organized in
groups, mostly keen on the informal sector
businesses.
This model was initially supported by numerous donor organizations. It then evolved
over the years, leading up to Jamii Bora’s
gradual growth into a commercial entity and
micro-finance institution
Some of the most visible benefits include
transformed lifestyles for the borrowers and
members besides also provision of numerous
innovative business loans packages.
Most of these micro-lenders products are
bound to be tailor-made to specifically address needs of those previously unbanked or
under-banked communities at the grassroots.
The charitable trust also invested in expansion of credit outlets from the capital, Nairobi
to an estimate 104 branches traversing both
urban and rural counties across the country.
And by late-2008, the micro-lender’s total
loan portfolio had grown to Sh3 billion on
the basis of at least 329,000 loan applications
having been disbursed.
At this juncture, Jamii Bora Trust sought to
broaden its operations. The approval for the
regulated co-operative bank status, ensured
the trust could provide consumer services
across the country on the same footing as
the big banks.

The burden of non-performing loans occasioned by displacement of members during
the 2007/2008 post elections skirmishes, had
however informed the founder’s decision
to grapple with possibility to relinquish of
shareholding.
Jamii Bora Trust stood out arguably among
Kenya’s micro-finance industry’s trend-setting
institutions until 2010, when the City Finance
Bank acquired significant stake.
The acquisition of the micro finance trust
gave rise to the establishment of Jamii Bora
Bank, which now operates as a fully-fledged
banking institution.
Yet from the onset, Ingrid has been a
steadfast believer in banking on the humble
growth pegged on members’ savings in the
pursuit of financial inclusion for all.
She is constantly proud to have been part
of the movement which so far has sustained
and upheld the initial noble vision to assist
the neediest in society.
“This is the same vision which guides the
establishment of the Yawezekana Sacco
under the auspices of the Jamii Bora Kenya
Limited – still functional as an independent
entity from the Jamii Bora bank,” clarifies
Ingrid.
“We realized after acquisition that needs
of the people we worked with as a charitable
trust would be unfulfilled as mainstream
banks business transactions requirements
will typically remain beyond reach for majority of them,” she asserts.
This was the basis on which Yawezekana
Sacco has stepped in the gap, to serve and
offer affordable solutions tailored to address
interests of the members and consumers
who previously sought finances from the
charitable trust.
In essence however, the Sacco’s core objectives have not changed much from the Trust’s
initial ideals. But the scope of services, capacity and range of products on offer is much
broader in tandem with evolving economic
practices.
And with the rapid growth and competition in the sector, Yawezekana aims at
coming up with innovative solutions to retain
and attract clientele. “We intend to provide
packages that are flexible and affordable to
all,” `notes Ingrid.
The institution intends to be at the forefront of a fast changing micro-finance sector,
breaking new ground and offering its rising
clientele customized products and packages
Most contemporary micro-lenders groups,
are likely to adopt aspects of the Grameen
model, which seeks to build upon the poorfocused empowerment of the unbanked
people from the grassroots level.
This globally widespread model entails
having credit lending packages that encourage individuals who are keen to pool their
resources, come together to engage in collective investment.
Besides individual, members or group business loans, Yawezekana Sacco’s other services
include medical /health insurance cover, provided in partnership with numerous Mission
Hospitals across the country.

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