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What does a co-operative microfinance program look like?

Women’s Co-operative Program in Kenya

The first time Team Africa learned about the Women’s Co-operative Program was when we visited a small grocery store while out on a stroll with Joshua Machinga, the founder of the Common Ground Project (CPG), in the Kiminini marketplace in Kenya. The store had a few rows of wooden shelves, mostly empty except the first two, which carried bags of cassava flour and dried maize along with some fresh offerings such as bananas and tomatoes. Joshua introduced us to the women working in the store and noted that this was a co-op ran by the Women’s Co-operative Program.

Joshua’s goal for establishing a women’s co-op was to increase the marketing power of local women in hopes of increasing their income. The Nasimiyu-Nekesa Fund was established to provide local women the small loans they needed to start their businesses. The program resembles other microfinancing programs except for one important distinction: no Microfinancing Institutions (MFI) are involved.

Instead, the Nasimiyu-Nekesa Fund receives money from donations, the co-op store, and most importantly, the women in the Women’s Co-operative Program. Women who want loans must first contribute some savings to the Nasimiyu-Nekesa Fund. They are then allowed to borrow up to three times the amount of their deposit. Additionally, similar to other micro-financing programs, a woman must have 5 guarantors before a loan is received to ensure that the amount can be repaid. The Women’s Co-operative Program also provides continuing support by setting up the co-op store as a community buyer to enhance the viability of the businesses. Women can choose to sell their products (usually food) to the co-op store and any revenue the store generates from selling in the market goes right back into the Nasimiyu-Nekesa Fund. Women in the co-op program can also invest in shares of the store and receive annual dividends based on the store’s profit.

This model of microfinancing can offer some significant advantages over the conventional route involving MFIs. With the middleman out of the equation, more revenue is recycled back into the program and the community. The penalties for defaulting are less severe than those imposed by a lot of MFIs, yet the incentive to succeed remains strong, enforced by both the guarantors and the community of women who have invested in the fund. Furthermore, this program affords an opportunity for the women to learn about investment and saving techniques. Every month, participants congregate to settle debts, borrow money, and make new investments. The monthly meeting serves as a platform for the women to socialize, bond, learn, and share their ideas.

Joshua was nice enough to invite us to such a meeting and it gave us a chance to interact with the women of the program. Although the women were at first shy and curious of our presence, they warmed up quickly as we mingled and socialized with the crowd. Some were excited to share their experiences and their opinions of the program.

I personally spoke with a woman who had borrowed money to start a chicken farm. Even though she only attended school until she was 13, she spoke eloquently and analytically of her situation. She was widowed a few years ago and has two children of her own. The amazing part is that she has also been caring for eight other children who have either lost their parents, or have guardians who are unable to take care of them. She borrowed money from the Nasimiyu-Nekesa fund a year ago to start a chicken farm which she says is low maintenance and fairly profitable. The business is growing, and she is now in the process of taking out her third loan for a farm expansion. Having repaid her first two loans in full, she is able to borrow an even larger amount to invest in her business. When asked what improvements she would like to see in the program, her reply was simply that she wished more women would trust this program, invest their savings so they can take advantage of the loans, and be able to do what she did.

I asked her what enabled her to take a leap of faith and she told me it was because she trusted Joshua and felt safe to give money to this fund. “You have to trust someone right? Otherwise you are on your own,” she said.

Helen Li is a program manager at Microsoft during the day and volunteers with Jolkona doing business outreach. She also traveled with the Jolkona team who visited our partners in East Africa this past December.

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